Entering The Era Of Lean Finance
2012-08-11 | by CusiGO
Looking back on the development history of China’s surging new enterprises over 30 years of reform and opening up, it is not hard to see that when multiple factors such as system dividend, population dividend and market dividend are intertwined, the best strategic choice of local enterprises at that time is to open up new markets, expand scale and enter more industries, etc., which can be regarded as “attack strategy” without exception, for the whole Body in
In this period, Chinese enterprises’ behavior style looks like the so-called “tangshou” in wuxuezhong. Tangshou is a kind of unarmed fighting martial art in ancient Japan, and it is also the prototype of karate today. The initial rumor of tangshou was originated from the introduction of martial arts from Tang Dynasty into Japan. Tangshou is a very domineering martial art. It pays great attention to speed, simplicity and the lethality of attack. It is often said that one attack must be killed.
However, in the world’s second-largest economy with an economic scale of 47 trillion yuan, “fast, accurate and ruthless” is obviously not the main style of action in the next “conservative” stage.
To understand the management ideology of lean finance, we need to trace back to lean production (LP), which is popular in the global manufacturing industry. Generally accepted in the industry, the so-called lean production refers to the new production mode represented by Toyota Motor Company. Its main characteristics are rapid response to market changes, the same assembly line can produce different products, timely supply, multi skilled and team spirit of labor, and the power and ability to constantly improve the production process.
In fact, lean production is the praise of Toyota’s just in time production mode rising to the spiritual level in the results of a large-scale special research of MIT. Fine, that is to say, little but fine, no extra production factors are put into production, but only produce the necessary amount of products urgently needed in the market (or products urgently needed in the next process) at the right time; benefit, that is, all business activities should be beneficial and effective, with economic benefits. Since the late 1960s, the emergence of Toyota has rapidly changed the global automotive industry. In this shock, MIT organized experts and scholars from 17 countries in the world to spend five years and five million dollars. Starting from the case of Toyota, it finally put forward a set of theoretical framework system of lean production.
If we trace back to the origin of lean production, it is not difficult to see the importance of the “lean financial” management system based on it in the current Chinese economy. Lean production is the product of the “scarcity of resources” and “multi variety, small batch” market constraints on the Japanese automobile industry after the war. It started from Toyota, with the joint efforts of Koichiro Toyoda and naiichi Ono, and was gradually perfected in the 1960s.
Coincidentally, China’s economy is also facing the “scarcity of resources” and the disappearance of the single product mass market. Through our long-term observation and Research on the current situation of financial management of local enterprises, the first thing for local enterprises to face is the overall transformation of the world view of financial management in terms of how to achieve lean financial management itself. According to the current situation of the financial management system of local enterprises, we believe that the three spiritual elements of “patience, balance and improvement” constitute the basic world outlook to guide local enterprises to build a lean financial management system.
Plato, a famous Greek thinker, once said, “patience is the foundation of all wisdom.” In other words, patience is becoming a rare quality in the local entrepreneurship.
A recent announcement by Weiyuan biochemical, a listed company, exposed Lenovo’s latest equity structure, with a particular focus on
In the same way, it is impossible to achieve lean financial management system overnight. CFO must have the courage to eliminate the expectations of the board of directors and management for improving financial management, such as comprehensive budget management, strategic cost management, group capital management, internal control system and financial informatization as the basic framework, which are not short, flat and fast projects The construction and promotion are three or five years long or one or two years short cycle, so it is possible to play the expected lean effect.
As we all know, any kind of defense system is judged by the number of shortcomings. Therefore, it is not suitable for the lean financial management system. For example, for export-oriented export-oriented enterprises with relatively simple structure, the challenges brought by foreign exchange risk management ability, credit management ability and financing optimization management ability are enough to make a large number of trade enterprises struggling in the single digit of gross profit rate at any time in the life and death line.
As early as in the second half of 2008, before the subprime mortgage crisis broke out in the United States, the Research Institute of the Ministry of Commerce had made corresponding estimates. The overseas receivables owed by Chinese enterprises have exceeded 100 billion US dollars, and are increasing at the rate of 15 billion US dollars per year. Considering the deterioration of the export situation in recent years, we can believe that this figure will be further improved. Another sample survey conducted by the Research Institute of the Ministry of Commerce shows that the overall bad debt rate in China’s foreign trade sector is about 5%. Considering that the gross profit rate of the whole foreign trade industry is less than 10%, such a bad debt rate is really a matter of life and death.
Therefore, when promoting the construction of lean financial management system, the local CFO may refer to the technical thinking of “security vulnerability patch” of various anti-virus software upgrades, starting from the most lethal defense vulnerabilities, and its construction keynote is first to ensure the relative balance of the whole system.
Compared with the radical revolutionary theory, which has played a leading role in the Chinese historical stage in the past 100 years, the reformism thought advocated by Liang Qichao and Hu Shi has been paid more and more attention in the ideological circle recently.
According to Baidu’s entry, “improvement originally refers to removing individual shortcomings of things to make them more suitable for the meaning of requirements, implying modification on the basis of existing ones, excluding overturning and repeating.”
From the perspective of CFO, under the condition of maintaining the normal operation continuity of the enterprise, it is seriously lack of material basis to carry out the revolutionary and sports financial management reengineering, and it is impossible to get the long-term support of the board of directors and management. Therefore, gradual financial improvement will be the only way for CFO to lead local enterprises to realize lean financial reconstruction. And this improvement process must be accompanied by periodic results, in order to encourage the company to steadily improve the lean financial management.
After the formation of the above lean financial world view within the organization, CFOs are bound to gradually form a lean financial management system in local enterprises through practical and specific operation and implementation. Again, we return to lean production theory knowledge base to seek nutrition support.
In terms of the core idea of lean production, it mainly has the following supporting module components: pursuit of zero inventory; rapid response process; high quality system under standardization; lean expansion to supply chain; team harmony humanism, etc. From the perspective of CFO, we can look at the specific forms of lean production. We might as well take the three principles of “highly intensive resources”, “reshaping the process of both safety and efficiency” and “lean team and tools” as the core methodology of Realizing Lean financial management system within the organization.
The idea of lean finance focuses on solving problems at the source, so there is a financial management module about improving the efficiency of resource allocation, which will be the first choice for CFO to introduce lean financial management system. Among them, comprehensive budget management and group fund management are undoubtedly the most direct management tools to solve the efficiency of resource allocation.
However, it is different from the previous one that both comprehensive budget management and group capital management need to quickly complete the layout and deployment of existing functions under the lean financial management system. For example, in today’s high-frequency, wide and volatile market environment, the budget management system with long process, rigid structure and incessant quarrel between business department and financial department can’t adapt to the flexible business system of “small batch, multi variety” in lean production. How to ensure sufficient constraints and improve the budget flexibility of business departments is the essence of the new generation of comprehensive budget management. With the support of excellent third-party consulting agencies and system tool providers, local CFOs can find the best combination of constraint and flexibility in “highly intensive resources”.
“Employees are only responsible for 15% of the problems, and the other 85% are due to the system and process,” said Dai Ming, a management master almost deified by Japanese enterprises So the most powerful part of Toyota’s production mode is its super efficient process, which is quick response and no waste.
As far as CFO is concerned, it is the biggest achievement that can make the lean financial management system long-term by helping enterprises reshape the operation process based on safety and efficiency. Among them, strategic cost management and internal control system can basically be called the two core hands to achieve this goal. In CFO’s long-term CFO case interview, we noticed that CFOs of high-tech enterprises such as Yulong communication (famous for producing Kupai mobile phones) CFO Jiang Chao and Datang Telecom Group CFO Gao Yonggang tried their best to embed the internal control system into the R & D link with high risk of failure, and also observed that CFO Zhang Kehui of Shenhua China moved strategic cost management even forward to coal mine exploration Explore the case of the link. It can be seen that expanding the width, density and depth of lean financial thinking in the overall business process is the main focus of the daily work of the current excellent CFOs.
In particular, CFO should be reminded that the ultimate goal of reshaping and optimizing the process is always to improve the overall efficiency, rather than to improve the partial departmental efficiency. Sometimes it is inevitable to sacrifice the partial departmental efficiency for the overall efficiency of the enterprise.
Any work is done by people, and anyone who completes the work must use tools.
Therefore, in the local CFO to promote lean financial management system is bound to be inseparable from the two core issues of people and tools. With the turnover of CFO after IPO, many listed companies have to continue to seek the help of headhunters to recruit CFO again. It is not difficult to see the long-term demand for the cultivation of excellent financial management team within the organization. In this respect, it is not competent to rely solely on the CFO’s own power. More and more overseas accounting associations and four major accounting firms have provided new ways to a certain extent. However, the long-term training plan for the financial team within the local enterprise organization is generally weak and needs to be improved.
In addition, the financial informatization that once acted as the source of Chinese enterprise informatization, with the deepening of enterprise informatization application and the rapid penetration and application of cloud technology in a broader field (such as mobile Internet), a more focused and effective financial informatization application will become an indispensable lean financial management tool for CFO.