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March 25, 2016
Timing is everything: Real-time variance analysis for decision making
By: Gary Hecht

The business world is a tough place—by the time you resolve one problem, another arrives. Not only that, but issues seem to be moving targets. Before you can fully address a problem, it seems to change. Good managers use tools that allow them to master the art of hitting the moving target—real-time variance analysis is one of those tools.

Bloomington Industries, a chemicals manufacturer, has implemented real-time variance analysis to deal with its fast-paced, ever-changing product market, production process, and employee labor pool. The company uses real-time variance analysis to calculate anticipated or current variances and to better manage materials and labor, as well as determine how products are bundled when offered and sold to customers.

One manager commented, “Variance analysis is a cornerstone of our information environment. But we found that by the time we ran the numbers and figured out what to do, the big issue seemed to move on us. We were just chasing around problems with out-of-date information. Then we used a more real-time version of our analyses. It seems like we caught up to the world and could actually catch a problem or issue before it was too late.”

Traditional variance analysis is often criticized for being too reactive, as variances are calculated at the end of an accounting period. While problems can often be addressed at that time, managers often look at the past accounting period as a lost opportunity. Further, identifying trends and patterns in variances often takes too long under traditional variance analysis. Real-time variance analysis allows managers to react promptly and decisively to business changes and promotes timely decision making.

Do you know how your organization can enhance performance through real-time variance analysis? The Accenture Academy course Managing Costs and Revenues via Real-Time Variance Analysis uses a real-world, case-based scenario to introduce the fundamentals of real-time variance analysis, as well as how it can be applied to make materials mix, labor mix, and sales revenue decisions. From these applications, you should be able to recognize how real-time variance analysis can improve decision making in your firm.

About Accenture Academy

Accenture Academy offers proven, cost-effective learning solutions for a more versatile workforce and a more agile organization. We provide a flexible learning approach that helps your people be more versatile and your entire organization be more agile in the marketplace. Curriculum includes Supply Chain Management, Finance, Procurement, Analytics, Leadership & Management and Specialty Skills.

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