Management Is Prediction –Dickeson

Remember Last Week

If we know what happened last week, in the context of the last 13 weeks, we’ve got a much better shot at figuring what’s ahead for the upcoming week, haven’t we? Why shouldn’t we utilize this capability of our computers to make more reliable decisions and be better managers? On a week-by-week basis? Let’s just do it!

Recognize that we’re not proposing to supplant general ledger financial statements that announce a “profit opinion” for the past month or quarter. We’re simply asking for timely, credible, understandable managerial accounting—current accounting—numbers close to cash flow. If we knew the earnings or losses of last week, could we improve our outlook of the week ahead? Yes, we could. We’d still be short of perfect, but we’d improve.

Here’s what I believe top management needs to know at 9 a.m. every Monday for the preceding week on a rolling 13-week basis. Why for the immediately preceding 13 weeks? That’s one-fourth of a 52-week year. It’s current and provides needed context for converting weekly information into knowledge.

a) Sales invoiced

b) Materials consumed

c) Contribution

d) Summary of period expenses paid

e) Earnings before depreciation and amortization

f) Summary of cash collections

g) Week ending cash position

h) Inventory summary

i) Days materials on hand (turnover)

j) Accounts receivable summary

k) Days sales on hand (turnover)

That’s a spreadsheet with 11 columns and 13 data rows, plus some totals, weekly averages and a 52-week projection. Is it possible to have this weekly? Of course it is. And can we have simple graphs that picture the ups, downs and trends of the numbers?

If our system can’t do this, we’ll chuck it and get one that can. We’re talking survival stuff here. Would this current information improve our predictions and make us better managers? What do you think?

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