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  admin 11:41 am on 14 May 2012 Permalink | Reply  

  Enhancing the business forecast competency for better decision making 

  In order to successfully compete in today’s fast-moving business environment, it’s very important for a company to develop the ability in reading the future clearly based on available uncertain information. Most businesses are used to typical short-term and long-term planning as part of the annual business management practice. Moreover many companies require a monthly rolling forecast to be done after each month-end close. The profit and loss forecast must be as accurate as possible because action plan has to be developed subsequently. There are also several perspectives such as the operating result of the product group, the individual company, the division and the group as a consolidated financial statement.
  Meeting the forecast number is crucial in the business management especially for those companies listed in the stock market where the actual result can be highly sensitive to the sentiment of investors. In certain situations, the management has to commit to achieving the forecast target and it can mean ‘live or die’ by the actual performance. Unfortunately under current fast-moving operations, the accuracy of the forecast results can be hard to obtain. There are a number of uncertainties to be encountered due to the speed of change such as in the economic information, actions taken by competitors, internal adjustments, and uncontrollable outside factors. For example:

  • Sales revenue can be affected either positively or negatively by the rapid change of consumer behavior and widespread of the information about the products and services on the internet.
  • A new investment opportunity – such as on new sales location, new product development, new technology for machines in the production line, and new joint venture – can emerge without any prior signs but needs fast decision making.
  • Expense control against the budget and forecast becomes harder than before. The cost of business operations can be increased due to higher cost of energy and wage increase and so on.
  • Organization structure has to be changed quickly in response to the business challenges and the past outcome. This may lead to new target set-up for better efficiency and cost savings.

  It appears to be obvious that effective managers have to deal with increased unplanned incidents in a more effective manner. That means the new approach to business forecast needs to take into account the new challenges, and seeks new tools in formulating business strategies. The following are the changing environments and trends that should be observed and considered especially in making the right forecast.

  • The development in business activities will not be linear. In the past, we may be familiar with thinking about the business process as a step-by-step that flows from one function to the next one. But in many cases, it’s not practical to wait for an action to be taken before the next one can be done. Several actions may need to be handled in parallel.
  • The future performance may not be approximated based on the past result. It could be wrong to easily use the average number of the past actual performance to forecast the future. With new factors showing in the planning process, a big change in the forecast number can happen. The annual sales growth of 5% average from the past three year will not be valid in setting the next year target when competitors can grow at 15%-20%.
  • More exceptional cases can be seen. In the past it seemed to be unusual when an exception case occurred which require special efforts to be put into it. But nowadays, dealing with exceptions can be more frequent. It might be an exception to the current procedure, policy or organizational norms. Without proper handling of these exceptions, the company may find itself in the stagnant situation.
  • High impact incidents may need to be incorporated into the business plan process. It becomes more reasonable to be aware of the possibility to have a high impact situation that can cause the business a rapid change in strategies. Risk management and assessment technique are being challenged more today than yesterday for its effectiveness.

  In order to cope with the challenge of unexpected incidents and uncertainties, businesses should be open to new ways of doing business by keep on challenging the traditional practices and creatively find a new solution. Making changes in business practice become part of the routine work for all employees. But before achieving the target, an individual must be able to make his own change in the mind-set that can help prepare for any uncertainties.

  Yanyong Thammatucharee – Senior Vice President for Accounting and Finance at Central Marketing Group

   

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  admin 4:20 pm on 10 April 2012 Permalink | Reply  

  The Mismatch between People and Task 

  As we are approaching 2015 when ASEAN community becomes one large economic union, many businesses in Thailand have been preparing themselves to cope with such challenges by trying to build up stronger and more efficient organizations. With the forthcoming business expansion opportunities, new strategies with more complex considerations have to be formulated and executed in order to achieve targets under tougher competition in the near future. Even though a number of unclear pictures and uncertainties under the new environment, it’s inevitable for businesses to take necessary actions now, especially on the organization development. The faster businesses can adapt themselves, the better chance they can survive in the marketplace. Any businesses failing to plan for unexpected changes to occur are those who plan to fail in the performance enhancement.
  The existing organization structure may well serve the past business models. But today’s volatile environments have forced businesses to explore and review more frequently the relevance of their functional structures. The traditional popular organizational structures are based on functions and particular skills of employees, for example, sales and marketing, production, accounting and finance, human resources and so on. This kind of structure can cause difficulties to respond to unexpected changes on a timely fashion. Moreover, under the business growth and expansion direction towards freer trade and less barrier, new environments have also brought new kinds of work to be handled or higher work load of the same type. This leads to the mismatch of work to be done and who is supposed to handle it.
  In order to be successful in the new mission of an organization, proper analysis of people and task should be performed to better understand the current situation and develop the action plans for it. Emerging new tasks due to unexpected or unplanned business development can come in several forms, for example:
  • Export opportunity – a domestic company which starts exploring export opportunity may need new operations to handle the new business transactions. This may include understanding the export customers’ requirements, handling logistics, ensuring the collection and payment, and studying the impact of overseas laws and regulations.
  • Changes in existing laws and regulations – new laws or amendments to existing laws such as the safety and environment may require the company to meet minimum standard by hiring a specialist in the field to ensure the company is in compliance with such laws.
  • Audit and verification of standard practices – in order to protect the image of the brand owners with worldwide licensees, the manufacturing processes have to be assured that they are in line with the standard requirements of environment protection, employee safety, free from child labor and quality issues.
  • Internal improvement projects – many companies have initiated activities in several forms such as small group activity, total quality management, six sigma projects, and so on. These improvements can be customized to fit the culture and nature of the business. At certain point, dedicated persons may be needed to facilitate the programs.

  In order to be successful, new projects need to be effectively handled by responsible persons. However, it is possible that these people may already have their own tasks in hand. The company may assign additional work to existing employees who can still take new assignments. To certain extent the workload from new work will need additional people to handle it; otherwise it can cause failure to the whole project. Filling people to new projects become a challenge for many companies. When considering hiring a new person, critical factors should be taken into account, for example.
  • Timing – Finding the right person to fill up the required task must be done on a timely manner. It’s risky to wait until most uncertainties become evident, which normally is too late. New people need training and learning curve. Thus, it’s the management responsibility to ensure the operations can be run with qualified manpower.
  • Scope of work – For any new tasks, clear job description should be outlined as much as possible so that it can be used in fine-tuning the expectations between the candidates and interviewers. This can help avoid misunderstanding and misperception that may result in the unwanted turn-over.
  • Team work development – New candidates to be selected should be able to become part of the team that will ultimately contribute to the company. This may relates to the attitudes and mindsets in addition to the required skills and expertise.

  What kind of person we should be filled in the vacant position? Simply, someone who can carry out the responsible tasks in the effective and efficient manner is the one who should be considered first. In many cases, interviewers put emphasis on functional qualifications more than paying attention to the capability to get the work done. It’s possible that companies get disappointed with candidates having good background but cannot carry out the work effectively.
  For example, it’s possible that a person with the education qualification from history subjects can handle the financial functions if he/she has required executive skills and qualification. He/she knows how to get the work done.
  Identifying the mismatch between work and manpower, and understanding how to respond to it can help companies avoid slow-down or failure of strategy execution.

   
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  admin 4:32 pm on 27 February 2012 Permalink | Reply  

  Why Businesses Need to Flip the Coin of Success and Failure 

  In the business world, most companies have been run under the tight resource-controlled approach. This may start from the vision, mission and strategies of the company followed by the review, revision and alteration for a few times in order to respond to changes in business environment. To certain extent, some companies may even need to change their business model in order to get away from the bankruptcy, for example in a service company, by transforming the business from transportation to better integrated logistics services for better revenue generation. Typically many companies still apply the budgeting system as a tool in the business planning process.
  Unfortunately, many companies fail to use it to unfold the emerging opportunities through effective allocation of the resources. The fiscal budget can mistakenly considered as the restriction and limitation of spending rather than the support for business growth support. Misuse of the budgeting system can be harmful to the company’s efforts to leap from the current status. The management should find a new approach to encourage employees to challenge themselves without fear of failing. There are a number of obvious situations where the collective discouraging mindsets result in the standstill or even retreat of the business. For examples:
  • Start from talking about problems.
  In a meeting where the main discussion was finding the solution to fix the problem, participants started from expressing their opinion on why and how the problem occurred. This could be followed by reasons for being unable to overcome the obstacles such as being not ready, lacking of dedicated responsible person, and so on. Under this situation, the effective manager has to persuade the team to see a new direction towards the target achievement.
  • No one wants to take risks.
  Running successful business is concerned with taking prudent risks. However, the performance appraisal today still concentrates on the previous year result through measuring the actual against the old targets which may consist of those key performance indicators such as sales revenue, productivity level, headcount control, and so on. The evaluation of an individual performance should include the new challenge taking and efforts put on the new project implementation.
  • Lack of management support.
  To nurture the culture of being proactive, it’s crucial for employees to obtain sufficient support from the management of the company through several methods and approaches. The positive reaction of the management to the requests raised by lower level employees can help increase the ambition and power to attain the goals. For example, in an attempt to improve the productivity of an existing production line, a team of engineers failed to make any improvement after spending significant amount of money. After the result had been reported to the top management, the message delivered to the team was:
  “Keep on doing it. If it fails, it’s O.K. Don’t get upset if it’s not successful. Learn something from the failure and then try it again. Don’t give up.”
  • Don’t see the same whole picture.
  According to the functional-based organization structure, each department tends to aim at internal target achievement without much care for the whole company’s business target. It is evident that the departmental key performance indicator (KPI) system has caused a negative side effect on the total company’s performance when coordination among different department has been ignored. It is recommended that shared KPI should be considered as a remedy to such situation.

  Embracing the dare-to-fail (DTF) attitude is important in shaping the traditional organizational culture which is too slow to respond to uncertainty and rapid environment changes. It can also help facilitate the innovative endeavor of several entities, especially in the form of research and development (R&D) no matter what types of business they are in, for examples:
  • A service company may seek new opportunities by exploring how to use information technology to enhance internal process efficiency and improve customer’s response time.
  • A government authority may design the new process by surveying the private’s sector opinion before arriving at a new design and/or the adjustment of the existing rules and regulations.
  • A business may try to introduce new products through a systematic way that maintain minimum risks while still open up to potential to grow. The trial and error approach can be considered.

  Finally it is important for businesses to consider instituting the self-challenging atmosphere into the organizations where employees can feel free to discuss on opportunities and associated risks before properly crafted action plans can be made for implementation. Certainly no one can guarantee 100% success on any new effort but the most important thing is that the company has invested in building up the knowledge of their people through failures and successes. The net gain from the continuous learning process is the long-term targets to be achieved by the successful company.

  Yanyong Thammatucharee – Senior Vice President for Accounting and Finance at Central Marketing Group

   
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  admin 6:12 pm on 30 January 2012 Permalink | Reply  

  “You” as the team energizer: How individuals power organizations 

  Have you ever been in a situation where your team members are weak and performance is either lower than expectation or flat for quite some time without new improvement? At the corporate level, the operating result with 5% growth doesn’t necessarily represent a success if the industrial growth is 10-20%. The past success can become the weakness of a company when it forms the complacency among management and employees. The company can assess itself better by benchmarking with strong competitors. As a manager, it is necessary to observe the following symptoms to determine if the company needs more power to drive the team forward.

  • No one wants to report on problems. Hiding problems is a practice seen when a company starts the declining period. The disaster will become evident when it is too late to correct. Once everything looks good for a long time, it may not always means the good sign forever. Instead it needs high attention from the management to discover declining sign.
  • Repeating problems don’t get resolved. Once a problem is addressed, the ineffective solution will result in the repetition over time. It could mean that the responsible person does not really pay attention to the root cause of the problem. It’s a kind of waste to keep on fixing the same problem again and again.
  • Team interaction is less. When people don’t talk to each other, it could be an implication of potential problem on embedded conflict or lack of coordination. When we notice that the weekly meeting is often cancelled or people tend to talk through email rather than face-to-face, the management should not let the situation go on without proper investigation.
  • People don’t want to speak up in the meeting. When there is a new issue that needs brainstorming, the participants should feel free to express and share their opinion so that the best conclusion can be drawn. However, when members keep quiet, the whole team will not get any benefits out of the meeting. This situation may disclose a deep problem of an organization.

  For example, in a production plan meeting, the production manager could not clearly explain the causes of lower productivity and the team also seems to be happy with the current status. This really needs the management to take actions to improve the enthusiasm and the performance. It is dangerous to let such lower-than-standard performance get through until it reaches the threshold. Everyone should act as an energy provider to the whole team. Power injection can be done in several ways but there should not rest on one particular person to care about the lower performance and sign of deterioration.
  Under the traditional silo hierarchical structure, the new initiatives are likely to flow from the top down to lower level. But today rapid competition environment does not allow the top-down approach to run successfully. The company really needs everyone in the organization to think and see the same goal with same understanding about strategic impact on the overall performance. Whatever one think, do and make decision can have significant to the success and failure of the company. This is definitely easier said than done. How can a company create the culture that nurtures the continuous and sustainable growth?
  Each person can generate new power to the team to move forwards to the right direction simply by asking challenging questions to oneself, to colleagues and to the management. The following are basic questions that can be addressed in the meeting or informal discussion.
  • What can we do differently to shift from the current status? Thinking creatively and out-of-the-box can create an opportunity for trying new things and see the result. It’s a challenge to the status quo that everyone needs to embrace.
  • What can we do now to kick start the new idea? Sometimes people just keep waiting for too long until the good chance has passed. It is also possible that necessary and important action does not get done on a timely manner. Just-do-it mindset is important for a slowdown entity.
  • What are we good at that can be used to turn around the situation? Focusing on our strength before trying to fix difficult issue can be an alternative to the deadlock situation.
  • What are stopping us from moving ahead? By knowing the obstacles or barriers that hinders us from trying new things, we can make decision on what actions need to be taken.

  It’s important that everyone should be aware that a small action can create tremendous consequences to the company as a whole. By keeping quiet, the company can get deeper into the downturn direction. So wouldn’t it be better to say something and do something that can contribute to the whole team for everyone in the organization. ‘You’ can become a real energizer.

  Yanyong Thammatucharee – Senior Vice President for Accounting and Finance at Central Marketing Group

   
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  admin 4:21 pm on 21 December 2011 Permalink | Reply  

  The Power of Follow-up 

  Instead of allocating most resources to focus on current issues affecting business operations, productivity improvement can be enhanced tremendously by clearing out the old aging or long outstanding problems. Businesses should have an effective strategy to deal with these issues, for example, pending issues such as customer complaint should receive high attention from the management. Unresolved problem can hurt the company’s image and credibility, which will eventually impact the bottom line. For example, looking into an organization, such long lasting issues can be found as follows:-
  • Production department – unfinished new machine installation that has been dragging for several months causing the delay in resolving the bottle neck problem of a work station.
  • Sales and marketing department – delay in final decision of a new product design has caused investment delay and postponement of the launching to the market.
  • Purchasing department – delay in supplier’s factory audit has limited the number of alternative vendors for the company in sourcing raw materials. This can increase the risk of material shortage by relying only one or few suppliers.
  • Quality assurance department – the postponement of the internal quality audit has undermined the standard practice of the quality assurance operations resulting in ineffective quality controls.
  • Logistics department – the hesitation in making decision on the new warehouse location has caused the delay in construction and put the operations at risk of running out of storage space.

  In many cases, the main reason of delay is due to ignorance or failure in assessing the impact and consequences of the non-progress of outstanding work. It could become hidden waste for the company with a long list of outstanding items. Inefficiency associated with these issues can cause the company non-competitiveness in the long run. To deal with this problem effectively, concerned managers should consider employing a practical approach to track and tackle it on a regular manner, for example:

  • Having a ‘follow-up’ agenda on departmental meeting on a regular basis.
  • Coming up with an action plan for every item on the list.
  • Setting up clearly the responsible person with the committed deadline.
  • Asking from responsible person for more frequent update for items with slow or no progress.

  Normally December is the yearend financial closing for most businesses, accounting and finance department needs to ensure the balance sheet of the company is clean after the account close. It is important to ensure that long aging items have been cleared and proper adjustment made to the book to reflect the correct figures. For some companies, the balance sheet may contain non-reconcilable items which last from one year and over.
  If the company has instituted the effective process of follow-up during the year, the annual closing would be easy. On the contrary, lacking of such mentality can cause a work load at the end of the year. The accounting people may have to stay late every yearend to ensure the complete closing. Cooperation from all departments is extremely important for financial people to carry out this task.