Starting from considering a necessary management approach for the Cuban Economic-Financial Analysis that starts from a structuring by business functions, the need to enrich the analysis of the supply function is justified in our companies. The need to take into account the differentiation of three analytical forms is also considered: perspective, current and operational. In this sense, analytical tasks of fundamental application for the current analytical form related to the supply function are proposed in this work, some of which may also be implemented, in essence, in the other analytical forms.
Introduction:
In recent years, accumulated theoretical experiences in the international context have been introduced into Cuban economic management. In terms of economic and financial control, many innovative theoretical approaches have been put into consideration, such as the ABC method, the Balanced Scorecard, etc., whose application possibilities have been valued by some economists.
Although perhaps the most important thing is not to try to apply control and analysis criteria applied in other economies, but to create new methods and procedures of our own that are more in line with our economic and social reality. It should not be lost sight of the fact that the Cuban economy assumes a planned and centralized character, as well as that the corporate purpose of companies is defined according to the main economic law of our system, the law of satisfying the ever-growing needs of the population.
This determining factor determines that in the design of analytical methodologies, in addition to taking into account the most modern analytical criteria, methods and procedures used in the world, the particularities of our socialist economy must be taken into account.
Taking into account these conceptions of work, and starting from the analytical criteria by business functions, as well as from the definition of the analytical forms perspectives, current and operative; We propose, for the current analytical form, basically, several analysis tasks applicable to the supply function, so insufficiently analyzed in Cuba, despite its enormous impact on business management.
Development:
1. Analytical approach suggested by business functions.
A modern approach to economic-financial analysis must be structured by business functions, where the different areas of the production structure are held accountable, not only with the results, but with the most agile, objective and convenient ways to measure compliance with the goals and the best combination of parameters that show the efficiency, effectiveness and effectiveness achieved.
Starting from a structuring of the economic analysis based on the evaluation of the performance of functional areas, analysis blocks can be defined for the following main functions: Supply, Production and Technical Management, Marketing, Analysis of Work and Wages, as well as for the Analysis of Financial Economic Management in general.
The supply function has been insufficiently considered in the analytical practice of our companies in all its multiple aspects, despite the fact that the supply costs constitute such a significant cost item, especially for our companies that import an important part of their raw materials.; as well as for our agricultural companies, where the supply in the collection and transportation of materials on the perimeter of their internal structures are equally significant.
The three forms of the Financial Economic Analysis that Professor Pedro Lino considers in his points of view are: "Perspective, Current and Operational".
Perspective form: This analytical form is directly related to perspective planning, allowing the tracing of long and medium term strategies. We believe that perspective analysis should not be understood on an annual basis only, it is more convenient to consider it in a similar way to the old criterion of continuous planning. Analytical tasks can be implemented quarterly, and even monthly, based on a perspective analytical work approach for 12 months ahead.
Current form: This analytical form is the most used and has been geared more towards the analysis of Financial Statements, but it must also include analytical tasks that cover the entire system of business functions, based on accounting, productive or other information that allow control of efficiency, effectiveness and effectiveness, which includes the measurement of the corporate purpose.
The operational form: The operational analysis in the current world becomes increasingly important, due to the dynamism that characterizes current economic activity. The application of computational means in accounting, productive and commercial control enables operational knowledge, including daily, of the behavior of business management, not only knowledge about the behavior of productive and commercial indicators, but also the possibility of knowing the economic results, with the help of estimates of fixed expenses. A good operational analysis conditions, simplifying it towards the synthetic, the financial mechanisms and instruments to be applied in current and perspective analysis.
The analytical perspective and operational forms in the supply function:
In the supply function, the analytical perspective form can include the analysis of external and internal supply alternatives by fundamental inventories, where the supply front must present for approval to the executives, attached to the plan for the next period. For example, an analysis of supply alternatives can be considered that takes into account for each possible supplier the following data: Type and quantity of materials, cost price (including commercial surcharges, customs taxes, etc.), transportation costs, specific indicators of material quality, etc., so that the most convenient supply alternative can be decided with a base of multiple options and multiple selection criteria.
The operational analysis of the supply function can be carried out based on some of the analytical tasks proposed for the current analysis, described in the second section of this work, simplifying them and shortening the application period to one week or one day. For example, the fulfillment of supplies in quantity, quality and opportunity, the analysis of the quantity and quality of production and its distribution, and the analysis of transport compliance for the supply and distribution of production.
2. Current analysis in the supply function.
We will analyze in a particular way the current analytical form for the supply function, which can include the following tasks:
I. Compliance of supplies in quantity, quality and opportunity: The analysis of supplies must encompass compliance in quantity, quality and opportunity of the purchase and making available to the productive activity of the main materials, which decide compliance with the social object, giving an initial and quick vision, rather in the qualitative order. From which more specific analyzes should be derived, such as the respective economic impact on business management. For this reason, the necessary analyzes that show these affectations must be carried out, the following analysis scheme is shown as an example:
II. Loss due to non-compliance in the quantity: The evaluation of the productive damages due to the non-compliance of the “on-site” placement of the main materials from the main warehouses of the company or by direct draft of the suppliers is of special importance. To evaluate the particular, the production left in the main products by the most decisive materials could be taken into account, with the help of the following format:
III. Economic impact due to non-compliance with quality: The objective of this task is to summarize the productive impact due to non-compliance with quality parameters controlled by business management. As an example, we show the following analysis scheme applicable to a dairy product processing company:
This analysis assumes that previously the levels that should have been obtained for each of the quality indicators of fresh milk have been determined as a fundamental input (plan), according to norms or performance indicators prefixed as optimal behavior in the specific technical-economic conditions of each company, and based, of course, on the levels of supply actually received. The equivalent price of fats and non-fat solids should be established based on the price of the substitute used, which may be an average price for non-fat solids.
This analysis can be carried out with a determined periodicity for all those main materials that report a high structure in the cost of production and productive yields, such as fresh milk.
IV. Compliance with Inventory Standards: Compliance with inventory standards is a factor of analysis of extreme importance in the analysis of management regarding the detection of unnecessarily immobilized working capital, being a highly complex control element in the Cuban case, since a large part of the inputs are imported, which at the same time merits the need to maintain minimum necessary levels of immobilized currency. This analysis is the starting point to generate the search for more convenient supply alternatives, which can be carried out using the following scheme:
Control of compliance with inventory standards requires due periodic review of inventory standards, taking into account changing conditions of supply sources. This analysis does not need to be carried out for all the materials and in all the periods, but it must be established with a certain periodicity. The results of this type of analysis require the determination of the causes of the high inventory levels, and an evaluation should be established regarding: Fulfillment of orders to the external market for fundamental materials; as well as the days of storage in port, days of storage in national wholesale warehouses, days of transportation to the company, days of handling and storage, and days of reservation.This analysis should serve as a basis for the search for more agile suppliers and carriers alternatives that allow us to comply with the inventory regulations or reduce them, in such a way that unnecessary resources are eliminated as much as possible.
V. Analysis of the rotation of the selected inventories: This analysis also focuses on avoiding the immobilization of financial resources, and is a complement to compliance with inventory regulations, and should be applied to those inventories with significant and repeated overcompliance. Inventory rotation can be done as follows:
For the analysis of the rotation of the materials, we take into account the use of the PEPS method (First that comes in first that comes out) as the most correlative to the economic conditions of Cuba, and for this, batch material control is required. It is not necessary to establish batch control for all types of material, only for those that have experience losses due to deterioration or storage losses above what is expected, and that of course is handled in significant quantities.
SAW. Evaluation of the specific costs of supply: The analysis of the specific costs of supplies comprises two essential components that must be defined: Handling and storage costs and transport costs in supply. This type of analysis can provide important indicators of the effectiveness of the supply activity as a basis for making decisions about the best supply alternatives. The following table shows the parameters used.
VII. Efficiency in the use of specialized transport: When a company is supplied, to a large extent, by its own means, the evaluation of the efficiency in the use of the park of specialized equipment becomes important. This analysis can be implemented using the following scheme:
Efficiency in the use of specialized transport
VIII. Compliance with the ratios of inventory turnover: Two levels of analysis must be taken into account to calculate the financial ratios: Inventories purchased to market and inventories purchased for consumption. The following table is suggested as a calculation model.
Compliance with the Reasons for Inventory Rotation.
Conclusions and recommendations:
- Along with the introduction of internationally used analytical or control methods and procedures, sufficient adaptation must be carried out, as well as analytical criteria and procedures that take into account the peculiarities of the socialist orientation of our economy, as explained above. The analysis function required in our companies is the approach by business functions, where the supply function, so poorly taken into account in the analytical reports of our business managers, should be highlighted in an important way for Cuban reality. It is recommended to take into account the tasks analytics proposed here, conceived taking into account these general prerogatives for the Cuban Economic-Financial Analysis of the construction of socialism.
Del Pozo Álvarez, Pedro Lino. Doctoral thesis. "". University of Camagüey. Economy faculty. 2005. Page 20.
