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In recent years, logistics companies have gradually been implementing comprehensive budget management systems. Through the scientific planning, analysis, and control of logistics costs, they aim to reduce expenses and enhance the competitiveness of logistics enterprises. With the development of global economic integration, the logistics industry has continuously grown and expanded. Against the backdrop of the Belt and Road Initiative, logistics enterprises have encountered a favorable development environment, but also face significant competitive pressures. The surge in the number of new logistics companies has created a situation where there are many enterprises, large in scale, but with very limited customer resources. Logistics enterprises need to change their traditional extensive budget management methods, implement comprehensive budget management, enhance internal strength, and ultimately achieve their development strategies.
▌ Project Research: Budget System Urgently Needs Improvement
Company S is a large logistics enterprise. Through preliminary research on the company's headquarters and its subsidiaries, the Intcube team concluded that although the client has a foundation for compiling and reporting annual budgets and relatively strong budget execution, the overall budget system is still not perfect. The company currently lacks a systematic budget management standard; budget compilation is relatively simple and often becomes a mere formality, unable to effectively guide operations, support management, and decision-making. Additionally, there is no unified understanding of budget management across units, making it difficult to prioritize budgets. The budget organization system has not been effectively established, leading to difficulties in organizing budget work, inefficiencies in some management links, and unclear responsibilities. Furthermore, budget execution lacks process control, operational processes are not organically connected with the budget, and budget appraisal cannot be effectively implemented.
Moreover, Intcube found that the client's current management reforms also need refinement through management methods like budgeting. In response to the imperfect internal management mechanism, the headquarters plans to further improve management levels gradually from aspects such as management methods, management tools, and informatization levels. Addressing the demands of management reform, Company S regards budget management as an important management method and needs to effectively connect it with other management approaches. Simultaneously, by sorting out and improving budget management, the duty positioning, systems, and processes at all levels of budget management can be straightened out, thereby promoting the optimization of other management areas. Furthermore, the functional positioning of the headquarters has been clarified. Based on the determined hierarchical management model and the duty positioning of various functional departments at the headquarters, it is necessary to rationalize the working mechanisms, hierarchical approach, and related processes of various management areas, including budget management. Through the optimization and execution of the budget management system, various foundations, including accounting and execution analysis, can be gradually improved. Finally, as the company's market environment changes, its profit model needs corresponding adjustments. The depth of business management and the degree of refined management will also continuously improve, requiring the use of budget management means to provide leaders with accurate business operation analysis data, offering basis and support for decision-making adjustments.
Regarding budget compilation and reporting, Company S faces the following key issues:
● Unclear Budget Compilation Responsibilities: Budget compilation is led by finance, but the compiled data lacks unified basis and is inconsistent.
● Incomplete or Duplicate Budget Reports: The design of the budget form set did not integrate and analyze needs from different calibers, leading to duplicate reporting or omissions, and inconsistent, non-standard calibers for duplicate data.
● Budget Account Calibers Not Unified: Budget accounts are inconsistent, and subordinate units have different understandings of them; budget accounts and accounting accounts are not unified.
● Budget Compilation Process Not Rigorous: During budget compilation, there is no established reporting process as required; the budget organization lacks efficiency and effectiveness.
● Insufficient Budget Participation: Previously, the annual budget was relatively urgent, lacking unity and standardization. At both the headquarters and subordinate unit levels, the participation of various operational and related departments needs further improvement.
● Budget Reasonableness and Accuracy: The results of budget compilation lack overall reasonable deduction and arrangement, leading to insufficient data reasonableness and accuracy, affecting leaders' decisions regarding operational strategies.
▌ Project Solution: Comprehensive Budgeting is an Important Tool for Achieving Group Strategy
Based on the research results of Company S, Intcube believes that the positioning of its comprehensive budget management system should be considered in different stages: At the current stage, initially formulate a comprehensive budget management mechanism, establish comprehensive budget management regulations according to its requirements, while cultivating employees' awareness of comprehensive budget management, formulating comprehensive budget compilation methods that reflect business characteristics, and conducting process control according to comprehensive budget management requirements. Subsequently, gradually form a complete comprehensive budget management system, use effective informatization means to solidify management, improve control, and effectively achieve the implementation of strategic goals. Furthermore, the overall comprehensive budget management solution should start from building an integrated closed-loop management solution for top-level design, while focusing on achieving current stage tasks.
Budget management is one of the few management control methods that can integrate all key issues of an organization into one system. Based on the characteristics and control functions of comprehensive budget management, Intcube assists Company S in improving its budget system, making it an important tool for achieving corporate strategic goals. Intcube helps clients build a comprehensive budget management system that measures from all perspectives, controls the entire process, and involves all employees, from five aspects: budget goals, budget compilation and review, execution monitoring, analysis and adjustment, and appraisal summary:
● Goals Undertake Strategy: Phase group strategic goals through strategic planning, then decompose and guide budget goals to achieve support from subordinate units for group goals.
● Business Drives Budget: Operational results are only generated through strategic arrangements and operational execution. Only budgets that flow from the business end to the financial end are scientific budgets that can effectively guide production and operations.
● Budget Controls Operations: The purpose of the budget is control, not reporting. Only when the budget is applied to operational control does it truly become a management tool.
● Budget Emphasizes Analysis: The external environment is constantly changing; the budget must pay attention to environmental changes and continuously adjust strategies to avoid rigidity.
● Appraisal Guides Execution: The purpose of appraisal incentives is to guide behavior. Only by implementing budget appraisal can the authority of the budget and the effectiveness of control be guaranteed.
▌ Project Focus: Optimize the Comprehensive Budget Compilation System, Formulate Comprehensive Budget Management Regulations
According to the general principles of this project, with the assistance of Intcube, Company S based itself on the overall strategic management requirements of the company, considered future management needs, designed the overall comprehensive budget management framework, and promoted it phase by phase. During the implementation of the solution, firstly promote the concept of comprehensive budgeting to improve employee recognition, and simultaneously form unified requirements through the standardization of regulations. The project focus is to standardize budget compilation, enhancing budget rigidity through the refinement of the annual budget compilation plan and accuracy requirements. Additionally, budget management needs to be effectively connected with other related management functions, and the integration requirements for future overall management informatization should be moderately considered.
Optimize the Budget Compilation Model
● Build an overall budget compilation framework system, achieving an overall framework including budget goal guidance, budget assumption explanations, operational and special plan arrangements, and financial budget results.
● Improve the budget compilation model, formulated the headquarters summary form set and the subsidiary company compilation form set.
● Add links between budget accounts, budget compilation reminders, and verification functions to provide preliminary review for budget compilation.
● Increase business budget content, promote the integration of business and finance.
● Sort out and initially build a budget indicator system reflecting the management focus of budget management.
● Standardized and unified the budget accounts, proposed optimization suggestions connecting to the accounting accounts.
Budget Compilation Framework and Budget Compilation Model
● Re-optimized and sorted out budget filling forms, highlighting the focus of budget management.
Increase Business Budget and Operational Plan Content
● Highlight the importance of plan arrangements, forming financial budget results from operational plans, special investments, labor, funds, and other plan arrangements.
● Sort out business classifications, achieve unification of standard business types, corresponding protocol management requirements, and corresponding accounting calibers.
● Increase business volume budgeting to provide a basis for business volume changes and gross profit analysis.
Optimize Budget Indicators
● Form an overall indicator table.
● Besides financial indicators, focus on resource management and market management needs, add management perspective indicators such as labor efficiency, market share, share of social output value, etc.
● Suggest connecting to future operational management systems, including equipment management, to strengthen classified, full-cycle, and phased follow-up management of assets, such as profit comparison between new and old vehicles.
● Provide more effective references for operational decisions by strengthening the statistics, comparison, analysis, and prediction of process indicators.
▌ Project Results: Building a Scientific and Complete Comprehensive Budget Management System
The overall project started from research work and gradually established a set of complete comprehensive budget upgrade solutions. The Intcube team formed interview summaries based on the interview results and, during the on-site research period, conducted concept training for the enterprise's employees, forming budget management diagnoses and corresponding solutions and work content summaries. To advance the comprehensive budget management solution, the company's preliminary budget regulations and the company's budget organization system were optimized. During this process, the project team optimized and improved the current budget forms based on interviews, research, communication, and discussion.
In this project, Intcube actively cooperated with Company S to jointly face the complex crises faced by the logistics industry and initially established a scientific and complete comprehensive budget management system. The completion of this project is not the end of Company S's budget management construction, but the beginning. This project mainly involved an overall optimization of Company S's annual budget compilation and assisted in its budget compilation. However, according to the overall budget management system plan, subsequently Company S still needs to continuously refine and execute content including rolling budgets, budget execution and analysis, budget appraisal, etc., to promote the company's budget management work and effectively realize the budget's guiding, controlling, and decision-supporting functions. The successful completion of this project is the first step for Company S, as a logistics company, towards digitalization. It enhances and strengthens the enterprise's endogenous strength, strongly supports and guarantees the implementation of the enterprise's development strategy, and opens a new chapter for Company S's future enterprise digital management.
