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Ready to impact your automotive business by driving change in financial planning and reporting?

Sep. 4 2020 by Marco Van der Kooij, Managing Director - ForSight Consulting

Performance Management Budgeting & Planning

The automotive industry is moving into a new era. Almost all aspects of owning and driving a car are in transition. Think about the switch from fossil fuels to electricity and hydrogen, and the shift from ownership to sharing or pay as you use. And inside the car it’s electronics and the internet of things – even autonomous driving. This transition applies to commercial use, too, and is impacting the entire value chain in the industry. Capital expenditure for innovation must be financed and the return on investment calculated in strategic plans being made at a time of extreme uncertainty.

What is the impact for the office of finance?

Continuous multi-year planning for major investments in innovation, with scenario planning for what-if analysis, are important capabilities. Add to these detailed and multi-dimensional profitability analysis by brand, model, geography, customer segment, distribution channel, etc. to identify room for margin improvements.

Connected cars, connected data

Connected cars and trucks also provide tons of data for analytics and to predict parts replacement. One of my first assignments (in 1997) was to create a forecast model for the parts division of a Dutch truck company. This is a profitable business and for the calculations, all kind of assumptions were used by part to predict their replacement in time and to calculate production and inventory levels. With connected cars, the accuracy of data is much higher, allowing more reliable predictions and forecast. This means the integration of granular operational and financial data to support data-driven decision making has a direct positive impact on the bottom-line when done in a smart way. This information needs to be shared within the supply chain as well.

A mover? Or a bit shaky….

What bottlenecks and shortcomings do you experience with your current planning, reporting and analysis system to accommodate change in processes and information needs? What is the impact of these bottlenecks and shortcomings? The answers to these questions and many more will tell you how agile you are in providing actionable forward-looking information. The size, complexity and distributed nature of data needed for increasingly closer to real-time and optimized decision making, is needed now more than ever, meaning that rigid processes, architectures and tools are breaking down.

Uncertainty will grow in the coming years, as we migrate to a new era. Adaptability, agility and creativity are the most important characteristics for an automotive company to survive. This needs to be fed fast by reliable, accurate and actionable information with context through a modern cloud-based planning, reporting and analysis system that allows you to go beyond traditional planning.

Sumitomo Rubber did it already by moving to CCH Tagetik Budgeting and Planning. Listen to their story by watching the video here!

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