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Getting started in Decision Critical

I. About

Decision Critical is a zero-based budgeting software that adds value to companies through clearer, better planning. You can input the assumptions driving your budget or strategic plan into the program and immediately measure the impact on operational and financial outcomes.

Decision Critical is driven by user assumptions, which are often approximated according to the best information available. "Sensitive" assumptions (those with a big impact on results) can later be backed up with more research as necessary.

COMPANIES and SCENARIOS

Models ("SCENARIOS") loaded in the program are organized into "COMPANIES". The combined company / scenario list is normally the first page you will see after logging into the system.

A "COMPANY" is simply a group of scenarios, created to streamline scenario creation and comparative analysis within the group.

A "SCENARIO" is one manifestation of the company, representing a specific group of decisions under a specific set of circumstances. Scenarios in the same company are compared to one another to determine the merits and weaknesses of any given strategy.

Scenarios can be copied and deleted from this screen using the command buttons in the relevant scenario bar.

Proceed to the scenario loader by clicking on the scenario name or the circled icon on the left side of the scenario bar.

After clicking on the scenario name or upon creating a new scenario, you will proceed to the landing screen for that scenario.
Assumptions: On the left-hand side of the landing screen are the assumptions that you will input when building out your scenario. These are treated individually in the sections below, but, in short, they are:
Organizational structure Addition of departments; batch settings for multiple resources in a department to expedite inputs
Products Products for sale and semi-finished products for use in other products are loaded here
Staffing Settings for different types of employee
Equipment Settings for different types of equipment
Land and buildings Management of space and the real estate assets which provide space. Simplified functionality is available for rental, purchase or new site construction
Raw materials All materials that are purchased for use in a manufactured product are loaded here
Financing Debt and equity financing are accessible here
Tax Simple income tax, VAT, sales tax and payroll tax settings
Utilities Utilities (electricity, water, steam, etc.) purchased from utility providers, consumed according to equipment usage
Reports: On the right-hand side of the landing screen are a series of reports and charts for use in business analysis. Reports and charts are:
Operational report For understanding production, throughput and sales
Balance sheet, Income statement, Cash flow statement Standard financial reports
Cash balance chart A fast way to see whether the company has enough cash to execute the contemplated strategy - a cash balance of less than zero indicates insolvency
Unit sales Shows unit sales as the lesser of demand and availability (or, in the case of a service product, as the lesser of demand and capacity)
Units produced Shows production as the lesser of the production target and capacity
Headcount Number of employees, by period
Footprint Shows total space requirements, graphed against total space available

II. Quick start

Assumptions are input using the navigation buttons on the left side of the landing screen. You can enter your assumptions in any order, but for beginners, we recommend the following:
Step 1. Create departments: Create your departments and assign an activity group to each using the Organizational Structure chart (Note: choosing an activity group tells the program how to classify the expenses associated with a given item). You can also load your tax settings at this time (via button marked tax) or you can save this for later.
Step 2. POPULATE RAW MATERIAL AND UTILITIES DIRECTORIES (If you are modeling a service company or trading company, skip this step): If you are a manufacturing company, load the raw materials and utilities directories.
STEP 3. Add direct resources (If you are modeling a trading company, skip this step): Add direct labor (via the button marked Staffing) and direct machines (via the button marked Equipment). Settings for labor and equipment are in the respective resource cards, accessed through the Position list / Equipment list. Actual employee head count and machine count are added through the plus sign (there is one in each row of each list).

Resources are added manually unless their load settings are changed to automatic (in resource card 'settings' for employees, in the capacity section of the resource card for equipment).
Main employee-specific settings:
  1. Salary;
  2. Other tasks (other tasks reduce the amount of time available for direct production tasks);
  3. Work station (minor equipment such as computers, desks, chairs that is purchased per-employee);
  4. Other expenses (per-employee expenses).
Main equipment-specific settings:
  1. Purchase price;
  2. Useful life;
  3. Maximum usage hours / week (under "shift type" in "capacity");
  4. Operators (specifies workers needed for proper use);
  5. Utilities (specifies utility use per machine hour);
  6. Materials / expenses (specifies other expenses incurred by the equipment).
For any equipment or work station that occupies space, it is recommended that the space requirements are also filled out in the resource card.
Step 4. Add products: Create one or more products. Products are either goods that are sold to customers via a channel (manufactured goods, traded goods, simple service) or parts that are used in other products (semi-finished products).
Semi-finished products require:
  1. 1+ precedents (raw materials or other semi-finished products, added through the bill of materials);
  2. a production process (entered in the production section of the product card).
Manufactured products require:
  1. 1+ precedents (raw materials or semi-finished products, added through the bill of materials);
  2. a production process (entered in the production section of the product card);
  3. a sale price (entered in the unit economics section of the product card);
  4. demand assumptions for at least 1 channel (entered in the demand section of the product card).
Traded products require:
  1. a sale price (entered in the unit economics section of the product card);
  2. a purchase price (entered in the unit economics section of the product card);
  3. demand assumptions for at least 1 channel (entered in the demand section of the product card).
Simple services require:
  1. a production process (entered in the production section of the product card);
  2. a sale price (entered in the unit economics section of the product card);
  3. demand assumptions for at least 1 channel (entered in the demand section of the product card).
For any physical product, it is recommended that the storage settings are filled out. Payable and receivable assumptions can be managed through channel settings or directly in the product card.
Step 5. Land / Buildings: Land and buildings can be added (rental, purchase and construction are all supported) – in addition to representing your assets correctly, calculations as to whether you have sufficient space to house your operation are dependent on values loaded for land and building.
Step 6. Expenses: You may already have added some expenses in the relevant sections of the product card or resource cards.
Now is the time you can round out your expenses by adding:
  1. fixed expenses (added directly to a department via the expense icon in the organizational structure chart);
  2. resource-driven expenses (per-employee or per-equipment expenses can be added in 'batches' via the tool accessible in the department settings, accessed via the organizational structure chart).
Step 7. Other items:
Other items include:
  1. Whether you pay your salaries immediately or in arrears (Settings -> General settings);
  2. Beginning balances (Settings -> Beginning balances; for existing companies you may enter your starting balances here);
  3. Growth assumptions beyond the forecast horizon (Settings -> Terminal growth assumptions; depending on inventory and payment settings, this can influence the final periods of your model);
  4. Tax (if you have not yet entered taxation assumptions, you should do so now via the tax button on the left side of your landing screen).
Step 8. Financing: Now you should be able to see how much additional financing your company needs, if any. Open the cash balance graph (accessible through the reporting buttons on the righthand side of the landing screen) and, if there is a negative value anywhere in the model, that means that the scenario is insolvent. You may remedy this by setting up investment or debt (both accessible via the financing button on the left side of your landing screen).

III. Helpful hints

Bottlenecks You can restrict capacity in your scenario by setting up bottlenecks. For example, limitations in quantities of direct labor, direct equipment and materials will all restrict throughput and, ultimately, sales.
Direct labor To set up bottlenecks, ensure that the relevant position is set to manual loading (via settings in the position card – manual loading is the default setting).
Direct equipment For an equipment bottleneck, ensure that the equipment is set to manual loading (via the capacity section of the equipment card – manual loading is the default setting).
Purchasing For a purchasing bottleneck, load a purchasing plan by choosing manual purchasing in the purchasing section of the product card (automatic purchasing is the default setting).
Non-standard employee settings Employees may have settings that are different from the standard settings for their positions and that may differ from period to period. These may be managed through the individual employee cards (accessible only for manually-loaded employees).
Manual production plans The default setting for production is automatic (i.e. the system tries to produce enough to fulfill demand and inventory goals). Production plans may be loaded manually by changing this session in the product card (under 'production').
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