Exercise:

General procurement:

Make a general diagram documenting the process of an item, from manufacturing to sales, in a typical hardware company like ABC organization. What are the different steps? Where do some controls need to be operated to make sure the process runs smoothly and efficiently? What are the KPIs that you want to measure?

Cost management and purchase:

Think of a company like ABC organization. Were a hardware + software company, and we sell our solution to real estate owners. We have different cost centres because we spend money on salaries, on manufacturing our devices, on software development, R&D, shipping the devices ... lots of different costs associated with running the business.

On top of that we go on trade shows, have a sales force and spend money on marketing. (This list is not exhaustive; you might find other things that make sense to add for a typical SaaS business). I would like you to enumerate a list of cost centers and tell me how you would structure our different costs to have a view on the main dynamics of the company.

Also, from a budgeting perspective, what are the drivers that you would use, for these cost centers, to define how much you can spend (or not). In order to prepare a budget, for example.

Please use google-spreadsheet for this exercise.

Also include an example of how the result would look like.

My goal as a result would be to have a clear view on where the money goes and why, in order to learn from that data and make accurate predictions on cash flows.