Company
VIMEC SERVOSCALE S.p.A., which is based in Luzzara (RE), represents a typical example of Italian entrepreneurial ability to create in a few years an appreciated reality, recognized all over the world.
Founded in 1980 as manufacturers of special elevating cabins on behalf of other firms, in 1983 VIMEC S.p.A. started planning and producing the first backstairs and ladders and elevating platforms for the Italian market and became, in just a year's time, a leader in the domestic market. In the next years this company continually expanded: in fact, in 1993, they got the leadership in the European market for the production of ladders, which is still undisputed.
Business Challenges
Competence and needs of the Company's Administration, Finance and Control, together with SDG's experience, have brought to the realization of a system of Management Control, in order to realize the firm's main goal: i.e. a more dynamic control system.
BOARD Solution
This scheme represents a synthesis of intervention areas and of the single forms which have been realized: the theme of this case-study:
- analysis of internal needs;
- understanding of organization processes;
- individualization of the necessary information
- sources;
- modelling of an analysis system;
This project started with a predisposition of the necessary information and of a reporting, in order to supply the commercial structure with an analysis of business performance. Therefore, the first step of an analysis process is to supply synthesis indicators enabling to explore data in their most important dimensions:
- the groups of products (curved moving stairs, curved platforms, rectilinear platforms, elevating platforms and armchairs) and their relative models (some of which realized by Giugiaro Design);
- the sales network, composed by agents operating both in Italy and abroad, by orthopedics, concessionaires and direct sales;
- the sales place, destined to inspectors responsible for the sales results in their own area;
- the portfolio of customers.
Commercial, Economic and Production Planning
The formalization of a process of commercial and economic planning has been carried out through the realization of:
- a process of Business Plan, in its economic aspect and therefore its determination of an Economic Account for 35 years;
- a process of commercial and economic Budgeting;
- a process of constant revision in the course of a year (commercial and economic Forecasting).
As a natural evolution of the programmatic and executive phase, a reporting environment has been shared and built in order to favor a control and correspondence between expected and realized operations. Therefore, a form for the analysis of variances has been realized in order to get a monitoring of the main commercial levers and an analysis of efficiency of production elements (raw materials and manpower), and a system of comparison between budget and final economic accounts.
Commercial and economic planning has been followed by an analysis of production process. VIMEC production normally follows orders (except a few models produced in stock): analysis had pointed out that there was a need to find a precise method to foresee needs in resources, in order to optimize the possible production in the course of a year.
For this reason, planning process has been widened even within its production phase, by formalizing a production budget which is obtained through a simulation phase considering both the commercial plan and the real production possibility in a factory.
Through acquisition of sales estimation, to be opportunely integrated with the orders portfolio, this model offers a first simulation of production, which is followed by a second simulation based on a real calendar.
Following standards, there will be a determination of the need of production resources for each model within every department. The final output of this simulation process consists of the predisposition of a Production Main Plan, in order to supply every department Head with an estimation of the quantity to be produced and of the hours to be spent (human resources), subdivided per month and per model.
Planning and Control of Production
Together with the realization of what has been explained, there's a need to realize an environment for the operative planning and for a constant monitoring on production.
Therefore, every department head has been granted a reporting system in order to constantly control the state of advancement of production and the actual load of work in the different departments, deciding their future tasks.
In particular, an important scheduling operative instrument has been created in order to optimize the production capacity and to improve services to customers, as the commercial department can verify, in real time, the actual capacity of a firm to deliver their products in due time. Such environment needs a further analysis concerning the control of efficiencies of departments and single phases in the production process, following single orders. Therefore, once a month factory and department heads can constantly monitor the production process and compare consumption and actual times with process standards: in this way they can also identify the reasons of variances and anticipate future events.
As regards human resources, it is possible to get every information useful to verify the actual use of resources destined to production process. For every human resource, subdivided into direct and indirect manpower, it is possible to compare the actual hours of work within the different phases of the process and the hours estimated in a staff budget, defined within a Budget Economic Account.
Finance
The Finance model has been subdivided into 3 main macro-areas:
- monthly survey on accountancy, reclassification of the Economic Account and Statement of Assets and Liabilities, and analysis of the main budget indexes;
- managing commercial credits and debts;
- control of cash flows and Financial Planning process, both in the short (budget) and in the very short period, at highly operative level.
As per the first area: the reporting system can rely not only on structures of reclassification of Economic Account and Statement of Assets and Liabilities duly compared with budget prospectuses and consequent analysis of Ratios but also on a calculation of the margin coefficient applied to sales: on the basis of accounting balance, rectified in order to find the actual monthly cognizance, it is possible to constantly monitor this coefficient in order to verify the actual alignment of sales policies with profitability goals. This is completed with an analysis of the Break Even Point, both as final balance and budget, for the attainment of a balance point, also in terms of time.
The area destined to credit management needs an analysis of both expired and expiring items. The aim is dividing credits into delay typologies, in order to recognize delaying customers and to supply at the same time the Commercial Department with an operative schedule to easily arrange for solicitations of payment. Moreover, by means of the DSO technique (Days of Sales Outstanding), this analysis can determine the actual exposure days, with a punctual analysis of customers and sales areas and a comparison with theoretical exposure days. The same operative level of analysis has been determined even for commercial debts.
The management of credits and debts engenders an operative planning of cash flows. A year's period has been considered, with an estimation of financial income and expense, thanks to an appropriate mix between data resulting from customers-suppliers register, and Budget or Forecast data. On the basis of special drivers, estimations of income and expense are also subdivided into different ways of collection or payment.
Profitability for every order Demands arisen during this project have brought to the development of a model of analysis of profitability for every order. For every order and product group, an Order Economic Account is duly determined, in order to underline the contribution to business results, considering three main results: Industrial Margin, Commercial Margin and Net Margin.