Original Date: 07/23/1996
Revision Date: 01/18/2007
Best Practice : Business Plan System
Nascote follows a structured methodology to develop its five-year business plan by using full cross-functional participation and upward communication throughout the company. This annually-prepared business plan is realistic and customer driven, both externally and internally.
Initially, Nascote’s corporate-level financial input drove its five-year plan. Requirements were driven down through the company. Nascote’s business plan reacted to the forecasted sales volume, profit margins, capital investments, operating cost, facility capacity, and manpower requirements for the company. The plan typically focused more on generating sufficient revenue for capital equipment acquisition and achieving specific price reductions than satisfying customer needs and supporting continuous improvement.
In 1994, Nascote Industries implemented a system, based on its management philosophy, that developed a Business Plan based less on financial input and more on the customer. The system included cross-functional participation and upward communication throughout the company. Conix corporate officers and Conix companies first conducted a strategic review approximately 11 months in advance of the budget year. This review included examining external factors, industry and external trends, general strategic direction, and the business plan timetable and schedule. Specific objectives were to determine customer needs, agree on broad-based assumptions, and assess business opportunities over the plan period. The next step was a business plan development meeting between Conix corporate officers and Conix companies to discuss and agree on specific market, volume, and program assumptions. Next, the Nascote General Manager chaired a department manager meeting to review strategic direction defined in the Conix review sessions, to assess the plan assumptions, and to generate a list of issues and challenges facing Nascote over the plan period. At approximately eight months prior to the affected period, the Nascote controller chaired another department manager meeting to review capital funding status, carry-over funding, capital utilization, and capacity utilization. A detailed estimate of the first year’s funding was established with a broad brush estimate of the succeeding four years. Using this information, each department, through active involvement of its members, identified challenges for the plan year, developed a list of priorities to be achieved, and identified capital funding to achieve priorities such as cost reduction initiatives, capacity, safety, working conditions, environmental, and repair and maintenance. Next, a priorities review session established the content of the business plan. At this session, each department manager presented the department challenges and proposed priorities. Through a consensus process, the management team determined the cross-functional priorities to be pursued during the planned year and identified a champion for each. Each department manager agreed on the final composition of priorities for his department, and each department developed action plans to achieve these priorities. The financial department then produced documentation highlighting the implications on profits and cash flow.
The general manager prepared an overview with the previous year’s synopsis and upcoming year’s expectations, a summary list of specific accomplishments from the previous planned year, a summary list of challenges facing the company in the planned year, and a summary list of cross-functional and uni-functional priorities. The general manager next conducted an internal review of the business plan followed by the Conix corporate review. Upon approval from the Conix board of directors, plant meetings communicated the general plan to Nascote employees. The department managers conducted these meetings to ensure all personnel had a good understanding of the department’s objectives and actions. Review of the plan, held quarterly, identified any needed changes with approval by Conix corporate.
This business plan system accomplished a realistic and effective demeanor, incorporated the Nascote philosophy, and included employee buy-in. Since 1994, Nascote and Conix corporate recognized the value of this highly successful system. By following this method, Nascote produced an effective, customer-driven business plan.
For more information see the
Point of Contact for this survey.