Borealis (the Danish based international plastics business) split their management requirements into four distinct agendas. They had a need to forecast, set direction, manage costs and control capital expenditure. They then set up four distinct systems to deliver each of these requirements. Forecasting was done centrally using a financial model that collected basic data from key points within and outside the company. As a result accurate reforecasts could be produced in one and a half days without disrupting the whole of the organisation’s management. Direction setting was delivered through a set of interlinked Balanced Scorecards, which set financial and non-financial targets right across the business. Cost control came from extensive benchmarking against competitors in the industry and best in class companies for the support functions such as HR and financial management. This resulted in targets being set by comparison with others, rather than on the previous year’s performance. As a consequence, the company focused the cost reduction efforts on achieving competitive advantage. Finally capital expenditure planning was managed by a central committee, who met monthly and juggled priorities with income flows.
Source: “Six Steps to Improving your Planning and Budgeting System”
Original Publication: Think: Cranfield