EXPLORING BUDGETING PROCESSES AND FORECAST PRECISION AT SCHAEFFLER INDIA LTD

 

Sakshi Prakash Dange ¹, Dr. Priya Satsangi ²

 

¹ MBA (Banking and Finance) Student, Amity Business School, Amity University Mumbai, Mumbai, Maharashtra, India

² Assistant Professor, Amity Business School, Mumbai, Maharashtra, India

 

1. INTRODUCTION

In manufacturing firms like Schaeffler India Ltd, which is an important player in Schaeffler's global network budgeting and forecasting anchor financial stability by mapping costs to production realities and market shifts. At the Pune facility, where I interned, these tools help navigate volatile demand from OEMs while keeping costs in check through SAP-driven insights. 

My observations align with studies showing budgets boost team alignment Ekholm and Wallin (2011) and forecasts sharpen responses to trends King (2021). 

Study Aims 

1)     Map out Schaeffler's budgeting workflow from my direct experience. 

2)     Gauge how well forecasts hold up against actuals. 

3)     Pinpoint hurdles like market flux and internal delays. 

4)     Suggest tweaks drawn from plant-level realities.

 

2. Literature Insights 

Manufacturing budgets typically cover operations, capital spends, and cash flows, with modern twists like flexible plans gaining ground in shaky markets Bhimani and Sivabalan (2008). Forecasts blend data crunching—think trends or regressions—with gut checks from experts, directly shaping buys and builds. 

SAP ERP ties it all together, pulling live feeds from shops to ledgers for sharper views Srinivasan and Arunasalam (2019). Variance digs reveal why plans miss, often due to steel prices or labor spikes Sartorius and Kamala (2020), Tuan (2020). Digital shifts further speed up reactions to disruptions (OECD) (2020). 

 

3.  Approach and Data 

Study Setup 

A hands-on case study from my internship stint, blending description with critique—no hypotheses, just real process breakdowns. 

What I Gathered Firsthand 

·        Joined budget prep sessions and monthly closes 

·        Scrutinized PCRs for cost breakdowns 

·        Watched SAP FI/CO, MM, PP in action daily 

·        Chatted with controllers about pain points 

Supporting Materials 

·        Schaeffler India 2023-24 Annual Report 

·        Plant PCR samples and SAP guides 

·        PwC/OECD sector scans 

Analysis Methods 

Excel for spotting trends/variances; SAP queries for raw numbers; metrics like MAPE to quantify forecast gaps. Focused solely on Pune Finance/Controlling.

 

4. Schaeffler's Budgeting in Action 

The Pune plant runs budgets yearly with quarterly tweaks and monthly rolls, syncing shop floor needs with HQ goals—a hybrid bottom-up/top-down flow I saw firsthand. 

 

4.1. Step-by-Step Cycle 

1)     Dig into prior year's costs/volumes. 

2)     Spot drivers (e.g., machine hours). 

3)     Build PCRs per cost center. 

4)     Load into SAP for allocations. 

5)     Review across production/procurement. 

6)     Get plant/HQ sign-off. 

 

4.2. PCRs as Planning Backbone 

These reports unpack: 

·        Material spends and usage 

·        Labor/overheads 

·        Power and machine costs 

·        Volume drivers/variances 

They fueled my daily reviews, guiding tweaks in real time.  

 

4.3. SAP's Central Role 

FI/CO handles centers/profits; MM/PP links inventory/production—slashing spreadsheet risks for cleaner data Haddara and Elragal (2013). 

 

5. Forecasting Realities and Gaps 

5.1. Tools in Play 

·        Past data trends 

·        Driver links (output, materials) 

·        Stats models + what-if scenarios 

These kept plans tied to ops levers, per my budget runs. 

 

5.2. Tracking Hits/Misses 

Variances hit steel (up 8-12%), power tariffs, overtime. Used % devs and trends to measure solid but volatile. 

 

5.3. Stubborn Hurdles 

·        Commodity/energy jumps 

·        Supplier delays 

·        Team data silos 

·        Manual cleanups 

·        OEM order whims 

Echoes (PwC) (2022).

 

6. Real Business Stakes 

Spot-on forecasts trim inventory bloat, ease cash crunches, and hone pricing. Weak ones spark shortages or gluts, hitting profits. Strong systems build nimbleness (OECD) (2020). 

 

7. Core Takeaways 

7.1. What Stood Out 

·        Tight, documented budgets with team buy-in. 

·        SAP powers precise tracking. 

·        Varied forecast methods work well. 

·        PCR variances flag issues fast. 

·        Volatility/data lags drag precision. 

 

7.2. Reflections 

Systems match best practices, but history-heavy approaches lag in chaos. Analytics + team syncs would sharpen edges.  

 

8. Value Added 

Offers a shop-floor view of ERP budgeting; spotlights PCR power; flags live challenges for peers. 

 

9. Boundaries 

Pune-only, six weeks, no deep confidentials—solid signals, not universals. 

 

10. Actionable Fixes 

1)     Roll forecasts monthly. 

2)     Add SAP dashboards. 

3)     ML for price preds. 

4)     Cut data silos. 

5)     Upskill on analytics. 

 

11. Wrapping Up 

Schaeffler's SAP/PCRs deliver control amid chaos, but agility needs rolling tools and data flow fixes for top-tier performance.

 

CONFLICT OF INTERESTS

None . 

 

ACKNOWLEDGMENTS

None.

 

REFERENCES

Bhimani, A., and Sivabalan, P. (2008). How Companies Use Rolling Forecasts. CIMA Research Report.  

Ekholm, B., and Wallin, J. (2011). The Impact of Uncertainty on the Usefulness of Fixed and Flexible Budgets. Journal of Business Finance and Accounting, 38(1–2), 145–164. https://doi.org/10.1111/j.1468-5957.2010.02228.x  

Haddara, M., and Elragal, A. (2013). ERP Systems: Problems and Benefits in Manufacturing. Procedia Technology, 9, 518–526. https://doi.org/10.1016/j.protcy.2013.12.059

Henttu-Aho, T. (2016). Enabling Characteristics of New Budgeting Practices. Qualitative Research in Accounting and Management, 13(1), 31–56. https://doi.org/10.1108/QRAM-09-2014-0058 

King, J. (2021). Forecasting  Uracy and its Impact on Financial Decision-Making. International Journal of Finance and Banking Studies, 10(1), 1–12.  

Organisation for Economic Co-operation and Development (OECD). (2020). Digital Transformation in Finance. OECD Publishing. 

PricewaterhouseCoopers (PwC). (2022). Global Manufacturing Financial Insights. PwC. 

Sartorius, K., and Kamala, P. (2020). Cost and Performance Efficiency. South African Journal of Economic and Management Sciences, 23(1), 1–9. 

Schaeffler India Ltd. (2024). Annual Report 2023–24. Schaeffler India Ltd. 

Srinivasan, V., and Arunasalam, B. (2019). ERP Systems for Financial Control. International Journal of Business Information Systems, 30(4), 456–472. 

Tuan, P. N. (2020). Cost Management in Manufacturing. Journal of Asian Finance, Economics and Business, 7(3), 285–294.