Finance Function Transformation Flashcards
Disruptive changes in the finance industry: 6
- Globalisation
- Rapid advancements in technology
- Changes in risk and regulation, due to high profile scandals, like Enron and Worldcom.
- Consumer Empowerment, due to Reviews, social media, you tube and tick tock influencers
- Demographics and workforce changes
- Broader stakeholder considerations important, leading to Corporate Social Responsibility that reaches much further than the office walls.
The 4 Vs in Operations Management:
- Volume
- Variety
- Variation
- Visibility
External stakeholders: 8
- Shareholders
- Suppliers
- Lenders
- Customers
- Local Community
- Tax authorities
- Professional consultants
- External audit and tax providers
How does the finance role add value: 5 As
- Assemble information
- Analyse to create insights
- Advise to influence
- Apply to make an impact
- then use Acumen to assess if the desired impact was achieved, if not start process again.
Examples of KPI: 13
-Data quality
- Return on Invested Capital
- Employee Productivity
- Employee engagement
- Employee Retention
- Customer Experience
- Customer Satisfaction
- Competitor activity
- Customer Pipeline
- Customer Retention
- Talent Sourcing & Pipeline
- Brand Awareness
- Equity
5 fundamental ethical
Principles: CIMA’s code of ethics
- Integrity
- Confidentiality
- professional behaviour
- professional competence and due care
- objectivity
Characteristics of big data: 4 Vs:
- Volume
- Variety (different forms of data)
- Veracity (quality and reliability of data)
- Velocity (the importance of up-to-date and real-time data)
What needs monitoring and controlling, when managing a project:
- Cost
- Time
- Quality
- Scope
What is internal audit?
It’s internal control:
- ensuring people stick to rules of spending.
- ensuring that that there is a sign off process or approval process for purchases and expenditure.
- Internal audit should ideally be separate from the Finance Director
What is JIT
Just In Time or Lean Synchronisation.
Think of DELL example.
- Making to order.
- No or low inventory. (Low cost, but This can also be a weak spot, if the supplier runs out or has production issues)
- mainly WIP
Types of relationships with suppliers:
- Transactional - usually once-off. What’s in it for me now- type of transaction. Negotiate lowest price
- Contractual
- Value-Added (adding extra value to make it worthwhile for your customers.)
- Collaborative (working together, building up mutual dependence.)
- Partnership
Types of relationships with suppliers:
- Transactional - usually once-off. What’s in it for me now- type of transaction. Negotiate lowest price
- Contractual
- Value-Added (adding extra value to make it worthwhile for your customers.)
- Collaborative (working together, building up mutual dependence.)
- Partnership
MRP1 and MRP2:
MRP1: Materials Resource Planning
This is an information system that uses sales orders and forecasts to schedule orders, quantities and deliveries of raw materials.
MRP2:
Manufacturing Resource Planning
Includes the above, but also the time tables for labour, machines and the planning of the production.
Porter’s Value Chain Model:
At the top:
Secondary or Support Activities:
- Firm Infrastructure (accounting dept)
- Technology Development (R&D
- HR
- Procurement (ordering raw materials, premises, machinery)
Primary Activites:
From left to right:
- Inboud logistics
- Operations
- Outbound logistics
- Marketing and Sales
- Service
The red line around the arrow on the right is the profit.
Porter questioned why people would pay more for a product,
For example:
- it could be a product that people can’t make or buy themselves due to economies of scale
- or maybe people don’t want to do it.
This is where your value is. It’s the golden egg in your business. You need to know what this is in your business.
Upstream chain = the raw materials before production
Downstream chain = the chain when the product is finished and the journey after the production process
Supply chain: push or pull model:
Push model: for example in fashion. Higher inventory.
Pull model: lower inventory. Demand stimulates production (for example in furniture or cars)
