Schneider Electric

Schneider Electric

Schneider Electric

Introduction

Nowadays, Schneider Electric is the world leader of electrical distribution, industrial control, and automation -at both product and service levels. Worldwide, Schneider consists of 105.000 employees in 190 countries, 25 research and development centers, 207 production plants, 60 logistic centers, 15.000 sales outlets and consolidated revenues of € 14 billion.

In 2003, Schneider Electric Argentina ceased to use the budget as a control tool

- A cornerstone foreseen in the Managerial Performance Project (MAP). This Project promoted by headquarters and implemented in the whole company, implied the joint use of three tools: rolling forecast, consolidated accounting and balanced scorecard instead of the traditional budgeting and local profitability concepts.

- I.e. financial cushions- and thus each country certainly know its role and responsibility. We make clear which is our contribution to the consolidated profitability, top-down objectives are pointed out, we try to accomplish them and anticipate deviations by designing the necessary action plan to achieve goals."

Company's Background

Schneider Electric, pioneer in mining and steel industry, heavy machinery, electrical contracting and transportation equipment in France, came up during the European industrialization process.

Since its foundation in 1836, the name Schneider in its different legal forms stands as a symbol of the Group over time.

In the 20th century, Schneider focused on the electrical sector and developed a strategy of acquisitions in reply to the increasingly competitive market.

Consistent with this policy, four leader companies in their respective segments were bought between 1988 and 1996: Merlin Gerin, Modicon, Square D, and Telemecanique.

Nowadays, Schneider Electric is a consequence of the synergy generated by the acquisition of these worldwide known producers. The company has become the world leader of electrical distribution, industrial control, and automation -at both product and service levels (Exhibit 1).

Worldwide, Schneider consists of:

- 105.000 employees in 190 countries

- 25 research and development centers

- 207 production plants

- 60 logistic centers

- 15.000 sales outlets

MAP Project - Management System

2003 will be remembered as the year in which Schneider Electric Argentina ceased to use the budget as control tool2; this milestone was foreseen in the MAP. This project impelled by headquarters and gradually implemented, implied the joint use of three tools: rolling forecast, consolidated accounting and balanced scorecard, instead of budget and local profitability concepts. Major characteristics of each one are detailed below.

Rolling Forecast

The rolling forecast implemented in 2003 was considered a dynamic planning tool.

The profit and loss statement of Halifax company projected to five quarters following the quarter closed was based on estimated orders of each product line during each one of the fifteen months. Demand is defined by the Markets & Products Director, Solutions and Services

Director as well as Sales Director. Then, Markets & Products Division defines price variation in order to assess orders. During the Business Review, the Division devotes much time to estimate orders, analyzing in detail variations according to volume and price. In Argentina, behind these estimations there are 120 salesmen -who Emmanuel called "killers" making allusion to their effort and commitment.

In order to calculate the gross margin, industrial production costs and variable costs are estimated ...