Being able to make a single adjustment in the system and immediately see the impact across the whole company was what convinced us.
- Business planning
Business planning with sound effects
Sennheiser has found the answer to the “What if…?” question. With detailed scenario planning, the specialist for audio systems has brought its worldwide activities well under control.
The professional audio systems manufacturer produces and distributes its products across all five continents. Creating a group-wide plan and a detailed budget involves a lot of communication and a great deal of information and data transfer. An internationally active enterprise is constantly exposed to exchange rate fluctuations.
In order to create scenarios such as, for instance, the impact of exchange rate fluctuations, Sennheiser electronic GmbH & Co. KG in Wenneborstel near Hanover was looking for a simple solution. The software was to show at a glance how changes in individual planning parameters affect the group as a whole.
Until then, the company had been using Microsoft Excel alongside another management information system and an ERP system for its corporate performance management. The enormous, interlinked tabular constructs in Excel did not lend themselves at all to obtaining quick and clear results. The management information system was mainly for product costing and for the calculation and management of cost centres and statistics. The existing ERP system did not deliver the desired information either. On the contrary, the existing systems showed weaknesses in precisely the area which is so important for the global planning, simulation and control of distribution and production activities.
“We urgently needed a professional solution for enterprise planning which offered us the necessary flexibility and speed,” Carmen Kutzner, Management Accountant at Sennheiser, explains. When she found out about the variety of planning tools available in Corporate Planner, the decision was soon made. “Being able to make a single adjustment in the system and immediately see the impact across the whole company was what convinced us.” With the add-on module CP-Web, the perfect solution was also found for the international subsidiaries.
A presentation of the procedure and results of a scenario plan was required at a Supervisory Board meeting which was to take place shortly. Without further ado, the Management Accounting team got down to the task of depicting a model of the group, subdivided into countries and business areas. Questions along the lines of: “How would the overall result change if the dollar exchange rate rose by x cents?” would at last be answered by a single mouse-click. Forecasts and future scenarios, too, would be flexible and quick to model.
Corporate Planner having initially been introduced in the Management Accounting department at the Head Office, the management accountants in the international subsidiaries were now to be integrated into the planning process as well. By means of CP-Web, the web client, all the management accountants in charge of the global branch offices were given access to the enterprise plan. Carmen Kutzner and Torsten Grenz, Management Accountant for Processes and Projects at Sennheiser, had already attended the product training sessions at Corporate Planning and were thus now able to pass on their knowledge to the management accountants in the various countries.
During the introductory period, a support team was available for questions and suggestions. After two months of testing and experimentation, the system officially came into use.
Involving subsidiaries worldwide
Since then, all subsidiaries worldwide are obliged to do their planning in CP-Web. No other data or data transmissions are accepted any more. “We have to be so strict in order to make sure that all areas and countries really are covered in our business planning,” explains Torsten Grenz to justify this practice. This approach is also intended to persuade even former dyed-in-the-wool Excel users to go along with the changeover to CP-Web. In the meantime, the use of CP-Web for business planning has been accepted very well. Some subsidiaries use the system extensively in order to draw up and run through alternative planning scenarios. Before they finally transmit the data to their headquarters, the Management Accountant, Sales Manager and General Manager sit in front of their screen to see how their result would change if, say, two new members of staff were employed. They have at times been known to include two alternative planning scenarios in the overall plan.
These form a perfect basis for the budget discussion between the Market Managers and their assigned subsidiaries. Working online means that, for instance, values can be revised collectively during a conference call. All those involved will always be equally informed. Confusion and misunderstanding due to different file versions is ruled out. Everybody has the same planning figures at hand.
All plan values originally produced by the subsidiaries are saved in the “budget input” data stream and serve as a basis for budget negotiations. The agreed adjustments in the plan must be made by the individual companies themselves and saved in the “plan” data stream. Compared with the original plan, it is much easier to check whether the targets, such as a price increase on a particular date, were actually adhered to.
The plans of all 15 subsidiaries converge in the overall plan at Central Management Accounting. Although data transmission may take a little longer from some countries than from others, the executive management will nevertheless soon have a complete overview at its disposal which consolidates into a group view. The alternative planning scenarios of the individual subsidiaries are included here as well.
Like the subsidiaries, Management Accounting at Head Office makes use of the simulation functions for planning. Different assumptions are made, values are revised accordingly and the impacts on the overall result are retained or discarded. In addition to exchange rate fluctuations, these variable factors could be different sales figures, shifts in production capacity or customs duty increases. If important decisions are to be made, different growth and investment scenarios are drawn up and saved in a data stream. The alternative plans offer sound guidance to the management.
With Corporate Planner and CP-Web used for group-wide business planning, the corporate performance management processes at Sennheiser have become much clearer and simpler. All those involved are able to rely on consistent plan values. For Central Management Accounting, it is immediately obvious which divisions and companies have already entered their plan. For additional transparency, various interim plans are saved so that changes can be traced more easily.
“It would be marvellous if everyone had the chance to comment on their planning data. With the time differences between the various countries, it is sometimes difficult for us all to talk to each other. Being able to add direct comments would make communication a lot easier,” Torsten Grenz ponders. Luckily, he need not wait much longer because the changeover to Corporate Planner 3.0 at Sennheiser has already been planned.