The sceptical CFO
With Paulo Almeida, CFO. About 5 minutes, spoken.
The brief
You run supply chain and planning at Northgate Components, an automotive components maker with five plants and about $110 million of revenue. You are asking Paulo Almeida, the CFO, for $250,000 for a demand-planning platform.
Your business case asks for $250,000 in year one and shows payback in about fifteen months. You wrote it, and the 14% carrying-cost rate in it is the one you chose. Today you pay about $70,000 a year for a workaround: expedite freight and contract planners. The vendor wants a decision this quarter. It has also quoted $70,000 for a first-year, two-plant start at Eastfield, which holds $2.2 million of the $5.8 million of inventory across the five plants.
Paulo has turned down two similar asks this year. The 2023 warehouse system ran over budget; you do not know the details. He answers to Folake Bello, the MD, and to the board.
Yours to decide
- The content of your case and any re-cut of it
- How the ask is staged: which plants first, in what order
- The gate metric, date and stop number you propose
- Your planning team's time, including cleaning master data
- The inventory number you put your name to
Not yours to decide
- Whether money is released (Paulo decides)
- Anything above Paulo's own release limit (the board decides)
- The carrying-cost rate finance uses
- The vendor's price for any scope other than the quotes you hold
| Line | $k |
|---|---|
| Implementation (vendor and integrator) | 150 |
| Licence, year one | 40 |
| Internal backfill for the planning team during rollout | 60 |
| Investment, year one | 250 |
| Licence from year two, each year | 40 |
| Workaround avoided: expedite freight | 45 |
| Workaround avoided: contract planners | 25 |
| Inventory carrying cost saved: $1.0m less inventory at 14% | 140 |
| Annual benefit | 210 |
| Payback | about 15 months |
| Today | After the platform (case) | |
|---|---|---|
| Inventory across five plants | $5.8m | $4.8m |
| Forecast accuracy (SKU, monthly) | 61% | 75% |
| SKUs | 6,200 | 6,200 |
| SKUs whose lead time was last reviewed before 2022 | 31% | not in the case |
| Inventory at the two Eastfield plants | $2.2m | — |
About 5 minutes. Talk as you would in the room. You can pause to think; say “let me think” and the counterpart will wait.
Paulo Almeida
CFO
05:00
Read the brief, then allow your microphone.
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