Made to Order Manufacturing - 10 Year Forecasting Model

Description
This financial model started out as a unique project for a client and after finishing it, I decided to convert it into a sellable template. It turned out to be an awesome tool for literally any type of manufacturing business, but has the granularity to plan large, low volume production or high-volume sales of up to 10 categories of products.

I love the elegance of the assumptions. The user starts out by entering the number of orders received by month for up to 120 months (10 years). All other logic is then based of the order month reference point to figure out customer payment collections, receivables, unearned revenue, inventory purchases for materials (all of that is if you have accrual basis selected). If cash basis is selected, then the month cash is received is when the revenue is recognized and when expenses are paid is when expenses are recognized.

There is a configuration to define the percentage of the total sales price that is collected from the customer in relation to the order month. Depending on if that is before, during, or after the product shipment month will define how that cash is recognized in the financial statements.

I included all the bells and whistles so you can perform a DCF Analysis, include the terminal value if desired, see all kinds of manufacturing KPI visuals, and have monthly/annual income statement, balance sheet, and cash flow statement integrated logic. It is easy to define how long you want the forecast to last for as well (for up to a maximum of 10 years) with the flip of a dropdown switch.

Here are some best practices for the management of made to order manufacturing businesses:

Streamline the order process: Develop a well-defined and efficient order management system. Ensure clear communication channels between sales, production, and customers to minimize errors and delays.

Detailed customer requirements: Gather comprehensive specifications from customers to ensure accurate production. Invest time in understanding their needs, preferences, and any customization requests. Maintain detailed records of customer preferences for future reference.

Robust production planning: Implement effective production planning to optimize resources, minimize lead times, and meet customer deadlines. Consider factors like production capacity, material availability, labor skills, and machine availability when creating production schedules.

Efficient inventory management: Maintain a well-organized inventory system that allows you to track raw materials, components, and finished goods. Implement just-in-time practices to minimize excess inventory and associated costs.

Collaborative supplier relationships: Build strong relationships with reliable suppliers who can provide quality materials and components on time. Negotiate favorable terms, such as bulk discounts and flexible delivery schedules, to ensure a smooth supply chain.

Flexibility and agility: Develop a flexible manufacturing process that can adapt to changing customer demands. Invest in versatile equipment and cross-train employees to handle multiple tasks. Agile manufacturing practices can help you respond quickly to customer requests and market trends.

Quality control and testing: Establish stringent quality control procedures to ensure consistent production of high-quality products. Implement regular testing, inspections, and quality assurance measures throughout the manufacturing process to identify and rectify any defects early on.

Effective communication: Maintain open lines of communication with customers, suppliers, and employees. Provide regular updates on order status, delivery timelines, and any potential delays or issues. Promptly address customer inquiries and concerns to build trust and satisfaction.

Continuous improvement: Foster a culture of continuous improvement within your organization. Encourage employees to provide suggestions for process enhancements, cost savings, and quality improvements. Regularly review and analyze production data to identify areas for optimization.

Scalability and growth: Plan for scalability from the outset. As your business grows, invest in technology, automation, and training to increase production capacity while maintaining quality and efficiency.

The download includes a blank version and a version with assumptijons filled out.

This template is also included in two bundles:
- All Models Bundle: https://www.eloquens.com/tool/P8Y4TX4v/finance/financial-forecasting-models/financial-models-120-useful-and-usable-logic
- Industry-Specific: https://www.eloquens.com/tool/lrNGt2jL/strategy/business-plans/business-sector-bundle-35-bottom-up-financial-models