The power of automating financial processes in the manufacturing industry

The manufacturing industry is one of the most automated sectors in the world, one that simultaneously amasses and manages exorbitant amounts of data. According to a Deloitte survey, the industry generates nearly two petabytes of new data every year, more than any other individual sector. In terms of production, advancements in automation have led to non-stop workflow processes, making it is a multibillion-dollar enterprise. According to a recent report from Statista, the automation industry is estimated to generate nearly 214 billion U.S. dollars globally while the process automation segment will exceed 83 billion U.S. dollars this year. Industrial software is expected to be worth 43 billion dollars.

While workflow processes have been the central focus in automation, most manufacturing companies still rely on whiteboards and Excel spreadsheets to manage much of the data they generate. The bad news is that spreadsheets are unable to provide real-time insights. The good news is adopting automated processes such as planning, budgeting and forecasting can.

While automation is rising, only those businesses that upgrade their finance processes will be able to keep pace with the rapid developments in the global market. Automation in the manufacturing industry is not only critical for production, but for financial data management too. Executives are indeed beginning to realize the urgency. According to a 2021 Trintech survey, 51% of the CFO respondents cited time pressures as their biggest challenge in the close process this past year with ineffective processes and lack of automation as the two key reasons.

The popularity of Artificial intelligence (AI) has risen in the past few years as manufacturers face increasing complexity around decision-making and data management issues. It is most commonly used for overall equipment efficiency (OEE) and first-pass yield in production cycles. While AI can greatly mitigate human error, many managers shy away from the concept for lack of knowledge about its ease of use in other areas. They often erroneously believe it requires detailed IT support and time-consuming investment to build complex infrastructures. The truth is that AI is nothing more than a set of algorithms designed to forecast future behaviors based on identified patterns. In the case of the finance function, AI can be a life-saver for managers looking for efficient, user-friendly access to real-time data.

The Case of Nöllen + Nordhorn

Nölle + Nordhorn is a leading technical wholesaler with advanced technologies for pneumatics, hydraulics, drive technology, standard tool manufacturing, industrial technology and maintenance. Its services range from a large product portfolio to small-scale production, product installation and maintenance, which goes well beyond the standards of most traditional wholesale companies. By way of example, Nölle + Nordhorn produces small batches of custom-made parts for customers and provides installation and maintenance services. The company’s tailored approach requires a detailed understanding of data and deeper insights into its revenue breakdown for its wholesale, project and manufacturing industry divisions. The standard analyses from its existing SAP system did not deliver the necessary detail and building them in Excel was complex, time-consuming and prone to human error.

After some consideration, the finance team decided to extend its existing system with an EPM solution. The main intention behind selecting the EPM software solution resided in the finance department’s need to manage the entire reporting process. The finance team required easy web and mobile access to key data points outside the existing system in order to provide that information to various report recipients. For this purpose, the project team implemented a cloud-based solution for sales controlling, which is supplied with the required data from the existing system. The internal system now runs separately from the sales controlling system, thereby allowing users access via the web according to centrally controlled rights regulations without burdening the company-wide production system.

Accelerated, unified planning with Artificial Intelligence in manufacturing industry

After the final decision to implement new EPM software, the project team partially automated the extensive sales planning processes with the help of an AI-based planning solution. The cloud application uses machine learning algorithms to generate default values based on historical SAP values. The sales representatives were then able to either adopt these plan values or adjust them manually. With around 400 customers per sales employee planned in detail in various segments, this approach has saved the company a great deal of time and effort, while reducing the planners’ workload. As a result, the company could extend its limited focus on a detailed overview of only a handful of top customers to the broader customer base.

With an ability to embrace efficient, detailed planning and precise reporting, the company now has an accurate basis for company-wide decision-making for different target groups. The increased quality of the reporting content reaches beyond the finance function to also influence sales meetings, making them more efficient by having consistent numbers from a single data source – the so-called single source of truth – so that everyone is working off the same consistent, current data.

Courtesy: Jedox

The system maintenance outsourced through cloud operation optimizes the use of internal human resources: instead of IT routines, the finance team at Nölle + Nordhorn can now concentrate on more value-added tasks and long-term thinking. And with increasing data volumes and new requirements, the cloud solution can be further scaled and tailored according to needs. That way the company can keep its eye on custom-made solutions for its client base while accelerating its data management practice.

The Case of Magna

Headquartered in Canada, Magna is a leading global automotive supplier with 348 manufacturing facilities and 91 product development, engineering and sales centers in 28 countries. Along with its North American locations, it has 31 additional factories and 10 R&D centers in China. With more than 158,000 employees worldwide, the company is deeply embedded in the field of automotive parts, from the front-end of technology to the back-end of operations. With the rapid increase in data volume and in order to improve the usage of data resources, many manufacturing companies have quickly evolved from on-premise to virtual and cloud computing environments. Magna was subjected to this everchanging landscape, and their team knew it was time to begin their journey toward innovation through digital transformation. In partnership with EFS, Magna selected an EPM solution that would allow for unified planning and collaboration.

Nearly all enterprises in the manufacturing industry are faced with the need to quickly analyze large data sets at high speed and rapidly transform them into usable insights. Magna was no exception. Plagued with labor-intensive work while preparing and managing the budget process, the manual approach caused enormous confusion during long budgeting cycles. With its modern EPM solution, Magna was able to design a more innovative approach to planning, budgeting and forecasting based on Excel, the Web and mobile devices.

Manufacturing companies that embrace AI technology and other automated solutions beyond the production line to include end-to-end processes such as record-to-report, order-to-cash will hold a competitive advantage with more agility to scale quickly and efficiently than those companies feverishly sticking to their whiteboards and spreadsheets.

Do you have experience and expertise with the topics mentioned in this content? You should consider contributing to our WTWH Media editorial team and getting the recognition you and your company deserve. Click here to start this process.