Apollo South Africa invests in new budgeting system
Apollo Tyres South Africa, formerly known as Dunlop Tyres South Africa, has invested in a specialist budgeting solution from Synergy Business Intelligence. Urekha Venketas, associate manager business Analysis at Apollo Tyres South Africa explained why the company sought such a system and her comments also give a flavour of the now Indian-owned firm’s approach: “In a global business, of which the South African operations are a part…means being able to very closely track performance in a highly unpredictable market.”
But achieving that goal is far from simple, continued Venketas: “The tyre business is highly competitive, with low-cost imports driving down margins. In order to achieve profitability, it becomes a volume-driven game; volumes have to be moved in order to keep the factories working, and ensure that profit targets are met…In a commoditised business the ability to assess prices and strategies relative to pricing, needs to be analysed to the fifth decimal point, enabling us to maximise returns throughout all product categories.”
Spreadsheets: Time-consuming and inaccurate
“Prior to the engagement of Synergy BI and its introduction of IBM Cognos Xcelerator (TM1), we did all the preparation in spreadsheets. Financial people like spreadsheets. But given the enormous complexity of our budgeting process, it was a very time-consuming, inflexible and problematic process. For example, there were substantial rounding differences when top down unit budgets were broken down to a SKU (stock-keeping unit) and customer level, and then rounded. Sequencing was also a problem as one phase would have to be completed before another began. In a 10-phase budget, this resulted in missed deadlines, and a seven-month budgeting process. Lack of time and flexibility meant it wasn’t possible to extend budgets down to the customer level. The closest we could get to was sales rep level,” Venketas explained.
“In addition to being very onerous,” says Venketas, “a protracted budgeting cycle led to many other problems associated with deadlines, accuracy and a highly dynamic business environment.”
Since implementing the new Xcelerator system, Venketas says things couldn’t be any more different than they were before. “We’ve just completed year-end financials. Ordinarily, there would be no way I could speak to anyone at this time. Now, on the first day of the new financial year, we have complete and accurate budgets which go all the way down to the customer level. Sales representatives have their targets; more than that, these targets are accurate and realistic, providing a real boost to staff morale…On the one hand, accurate budgeting means every sales representative knows what he or she needs to do. Every dealer knows how much they are expected to move into the market in order to qualify for discounts. On the other hand, it feeds back upstream, so the factories have input into their production planning.”