Annual Business Plan and Operating Budget
- Objective
a) To ensure that each business unit and operating unit including Profit Center and Cost Center, follow the below guidelines to prepare annual business plan and operating budget with Vision and Mission.
b) The business plan should be prepared in line with Corporate direction and strategy and along with local business development strategy to cope with local market practices and/or changes.
c) Operating Budget and/or Capital Expenditure Budget shall be realistically corresponding to the business plan, which should be measurable and adjustable.
d) The annual approved business plan and operating budget shall be taken as one of the major evaluation criteria in terms of its plan execution and performance results for annual management performance appraisal.
2. Deviation
Upon mid-year review, if there is major variance by actual performance versus the approved operating budget, a revised budgeting should be conducted based on the following principle guidelines.
If actual sales revenue is higher than budget for more than 30%, the operation expense budget is allowed to increase 15%.
If actual sales revenue is lower than budget for more than 10%, the operation expense budget should be reduced by 10%.
If there is a 50% deviation from original business plan and operating budget, the operating unit is required to re-submit the revised plan and budget.
3. Profit Center
Each profit center should follow the below guidelines to submit the annual business plan and operating budget and should follow the principle of management - Planning, Execution, Monitoring and Evaluation to conduct the approved business plan and operating budget on annual basis.
Preparation of Annual Business Plan - Each Profit Center should gather market statistics and market information based on Segmentation, Targeting and Positioning to define his local strategies including Products, Pricing, Promotion and/or local marketing and service outlet/s expansion for business developments with target to achieve in a set time frame.
1)Annual Business Plan
Annual business plan should include
- Marketing and Sales
- Customer Service and Operation
- Finance and Accounting
- Organization set-up with organization chart and Human Resources developments
- Air and Ocean carriers arrangement
- Information Technology maintenance, usage and application
Consisting of :
- Major tasks
- Action Team
- Action Schedule
- Target to achieve
As the nature of business in Int'l Transportation and Logistics Services, a crossing business development plan jointly programmed with overseas Dimerco offices, J.V and strategic partner agents should be vitally critical to the success of the business plan.
Appendix A to N are general guideline for your reference, please use updated excel file, which announced by Corporate Finance for preparation business plan and operation budget.
Two worksheets of "Annual Business Plan" (Appendix A) for current year review and (Appendix B) for the following year must be submitted.
As business developments to/from any of Dimerco or our joint venture locations is important,communication with the other party concerned to make sure a proper crossing development program should be planned jointly by both parties. A worksheet of cross development( Appendix C) should be submitted.
2)Operating Budget
Operating budget should be prepared as to reflect the results of executing its business plan. The following should be prepared and submitted within the time frame as set by the CRP office for review and approval by the Budget Review Board.
A)Profit & Loss
A1) Headcount – Year End/Month End
Headcount – Average
A2) Tonnage –Air : Export & Import
A3) Volume – Sea : Export & Import / FCL & LCL
A4) Number of Shipment – Air & Sea / Export & Import / FCL & LCL
A5) Summary of Export Cargo Revenue (Appendix D)
A6) Summary Tonnage Analysis Customer (Appendix E)
A7) Revenue & Costs / Gross Profit / Gross Profit %
-Air Export
-Air Import
-Sea Export
-Sea Import
-Customs Clearance
-Warehousing
-Distribution
-Others
A8) Operating Expense
-Manning Costs
-Other Operating Expense
A9) Operating profit
A10) Non-Operating items
A11) Net Income Before Income tax
The following worksheets should be submitted:
-Current Year Actual – Profit & Loss – By month (Appendix F)
The actual should be input to most updated month (October) and the remaining months should be for current forecast, instead of original budget.
-Following Year Budget – Profit & Loss – By month (Appendix G)
-Tonnage, Sales, Costs, & GP - Prior Year's Actual vs. Budget and Following Year's Budget (Appendix H)
-Profit & Loss Summary - Prior Year's Actual vs. Budget and Following Year's Budget (Appendix I)
-Operating Expense Details - Prior Year's Actual vs. Budget and Following Year's Budget (Appendix J)
-Operating Expense Details –Following Year Budget by Month (Appendix K)
-Non-Operating Items - Following Year Budget by Month (Appendix L)
-Traveling Expense Budget (Appendix M)
-Other Supporting Schedule
B) Capital Expenditure
The guideline isestablished in the manual "Essentials of Capital Expenditure Acquisition Evaluation" should be followed for preparation of capital expenditure budget. The following worksheet should be submitted.
-Capital Expenditure - Prior Year's Actual vs. Budget and Following Year's Budget (Appendix N)
4. Cost Center including Corporate Office and all Regional Offices
1) Annual Business Plan
Above offices should complete his business plan based on Supply Chain Management concept in adjustable, extendable and measurable manner.
-Network Expansion
-Material Flow Integration
-Financial Flow Integration
-Information Flow Integration
-External Promotion
-Internal Promotion & Efficiency
-World Class Work Force
-Profit Maximization
2) Operating Budget
Details of operating expense and capital expenditure should be submitted together with supporting documents. (Appendix J & N)
DIMERCO Manual1/3Version3.1
Chapter 3-Section 5October 2011