Author: Lee, Kwok-wah
Title: A dynamic financial planning system for business performance improvement
Degree: M.Sc.
Year: 2005
Subject: Hong Kong Polytechnic University -- Dissertations
Strategic planning
Business enterprises -- Finance
Financial planners
Department: Department of Industrial and Systems Engineering
Pages: x, 96 leaves : ill. ; 30 cm
Language: English
Abstract: Textile manufacturing is an intricate collection of production processes with cost components that are very difficult to systematically quantify or allocate. Each individual process may form parts of many different production processes where there are thousands of material inputs as well as output combinations. Historically, the textile manufacturing business is less automated and relies heavily on human judgment and experience. The subjectivity and reliance on human factors add complexity to the process of standardizing the performance measures. The determination of relevant Key Performance Indicators relies heavily on the experience and knowledge of the planners. Very often the Key Performance Indicators cannot provide a meaningful or complete linkage to the financial results. Identifying key drivers is therefore complex and important. Apparel production is a collection of processes with specialized terminologies for interpretation. These specialized terms may not be comprehensible to people in the organization that are unfamiliar with operations. However, these are the people who often evaluate operational efficiency with respect to corporate targets. As a result, a dynamic financial planning system is proposed to decipher the complicated production process and enable performance enhancement. Hence, with a predefined language, measurements can be devised to measure the efficiency of the drivers. Corporate taxonomy is the predefined language created to bridge the gap by breaking down corporate goals into different components that literally describe and relate to each functional level of the corporation. The development of key operational drivers can solve challenges in measuring and benchmarking performance, but the development of taxonomy builds the infrastructure of the corporation. After the model is constructed, it will be shared and opened up for participants to revise and modify for continuous improvements. The model leverages the corporation's existing information technology infrastructure in order to maximize the impact, shorten the implementation lead-time and minimize cost. The planning model provides an analysis tool for operation and corporate to plan for their business. It also provides a platform for inexperience staff to understand their business quickly. New comers are able to understand the key levers and the consequences of selecting them as well as other alternatives and scenarios. With clearer goals, better communication, measurable objectives and cooperation among operating units, substantial operational efficiency improvement has been achieved, which results in a 50 per cent savings in planning time and millions of US dollar cost reduction. The knowledge is not limited to the operation level. Other areas of the business can leverage the knowledge to make other business decisions. The cost drivers approach can be applied to other business simulations such as merger and acquisition (M & A) in similar industries, conducting competitive analysis, evaluating new set ups, and in preparing the annual business plan. The result shown that the construction of an M & A model takes about a week to complete where previously may need several weeks. The due diligence process can be shortened and allow improvement in key decision process. The long-term implication for the corporation is on improving and fine-tuning the organization knowledge, encouraging the information sharing and improving the transparency. Eventually, this leads to the improvement of the corporate overall competitiveness and the return on assets.
Access: restricted access

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