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Financial Plan for Logistics Department

A tool for efficient preparation of financial plans, such as annual operational plan.

We have been managing financial planning in logistics for one of our clients since 2006. As part of our services we created a tool for preparation of financial plan. This tool enables to create financial plans which take into account all practical needs of the logistics department and at the same time remain transparent and comprehensible fro finance department, which is responsible for the overall budget of the company.

Why Financial Planning Tool

The basis of the client’s financial planning is the annual operational plan (AOP). Costs for the upcoming year are planned by the client from the middle of the previous year. The plan is being prepared in several phases, with varying predictions based on how far in time we are from the upcoming year.

For logistics department it is essential that all the factors influencing logistics are taken into account in the plan. For example, when sales grow by 10 %, logistics costs rarely grow by the same percentage. There are many factors associated with capacity, as well as general market factors such as fuel prices, the current market of 3PL and so on.

For finance department, on the other hand, it is essential that all planned costs have their rationale and are based on proper calculations. Also the plan needs to have a particular form which is unified for all departments of the company. Our Financial Planning Tool meets all these criteria and has been used for many years now.

How does it work

The Financial Planning Tool divides the planned costs to client´s predefined cost centers. There is a group of accounts related purely to costs of delivery of goods and a group of accounts related to other logistics costs.

The planning itself is preceded by a data analysis of the past period. Its results affect the indexes that enter the financial plan. The indexes identified by the analysis are inserted into the tool´s calculation module, along with market indexes. The module also allows the user to modify the indexes by absolute values. The results from the calculation module then enter the prediction module, which calculates the costs for the entire next calendar year. The instrument also includes a module for planned cost-saving activities and projects.

The plan serves as a basis for budget negotiations with the finance department. Thanks to the transparent layout of the plan and the traceability of all the indexes and the factors taken into account, it is possible for logistics department to defend its financial needs for the upcoming period.

Other uses and related services

The Financial Planning Tool works for the preparation of the annual plan as in the case above but it can also be used for monthly planning. For every client we prepare the modules for indexes and prediction according to the particular client´s needs.

The examples of our other solutions in financial planning in supply chain include Accrualing Tool or DC Fee Management Tool.

We have been managing our clients´financial plans in logistics for

14 let

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