Why modern manufacturers are ditching spreadsheets for financial modelling

Is your financial model future-ready?

In 2026, the biggest threat to many Australian manufacturers isn't the supply chain: it’s the spreadsheet they used to plan it.

If your financial models could be described as inherited, rather than designed, this should give you pause for concern. 

Legacy models are a type of digital debt that were never meant to handle the complexity of today’s volatility. The inherited system you use today may have begun its life as a simple spreadsheet designed to answer one question. But, over time they mutate. New owners add new tabs, different authors layer in conflicting logic, and eventually, the tool is stretched so thin it’s expected to serve everyone from the shop floor to the boardroom. 

This lack of defined purpose is the first sign of a model that has become a liability. When a tool tries to be everything to everyone, it becomes a black box: a complex, unwieldy system that hides risk exactly where you need to see it most.

When spreadsheets stop being your friend

Excel is widely used because it is a fantastic tool with a lot of flexibility. Teams can quickly build, adjust and interrogate forecasts, and easily share outputs with stakeholders. You can do a lot with it.

Unfortunately, it is that same flexibility that makes Excel a double-edged sword. It makes it easy for risk to creep in. You start to get errors, inconsistencies and undocumented logic. 

The danger point arrives when a spreadsheet stops being a forecasting tool and starts trying to be a pseudo-ERP system. We see this often in businesses with sprawling supply chains: a model begins to groan under the weight of tracking inventory movements and operational minutiae it was never designed to handle.

In a business environment increasingly shaped by global volatility, static forecasts won’t cut it.

Manufacturers need financial models that can explore a range of outcomes, from best-case to worst-case, and help decision-makers understand how sensitive the business is to change. That is why you need to have a clear separation between your historical data and your forecasts.

• ERP = ‘Source of truth’: It tracks what is known and what has happened.
• Financial model = ‘crystal ball’: It extracts data from the ERP to test ‘what if’ scenarios.

Scenario planning allows businesses to test assumptions against uncertainty, whether that uncertainty comes from supply chain disruption, geopolitical instability, regulatory shifts or sudden changes in demand. The value lies not in predicting the future perfectly, but in being prepared for multiple versions of it.

Effective scenario modelling starts with reliable historical data, typically drawn from an ERP or core system of record. From there, forecasting tools can overlay assumptions and test how outcomes shift across different scenarios, providing management with confidence and clarity.

You take information out of your system of truth and then overlay the crystal ball, the ‘what if’ scenarios. That’s where modelling really shines. You can look at bookends – upside, downside, worst case, best case – and then think about what a more conservative base case looks like. It’s built on historical information, so there’s confidence in what you’re testing.

Bridging the gap between finance and the factory floor

One of the most common reasons financial models fail to influence decision-making is culture. When models are built in isolation by finance teams, without input from operations, they risk becoming disconnected from the reality on the factory floor.

If operational teams do not recognise their own experience reflected in the numbers, confidence in the model quickly evaporates. At best, the output is ignored; at worst, it undermines trust between teams. For a model to succeed, it must reflect how the business works, not just how it appears on a spreadsheet.

To close the credibility gap:

• Invite the rubber to the road: Get operations into the room early. Finance brings the numbers; operations bring the context.
• Build for acceptance: A model’s success is measured by its adoption. If the people making the products don't trust the tool, the tool is broken.

Technology, automation and the human factor

As manufacturers invest in automation, AI and advanced analytics, financial modelling must evolve alongside them. These technologies offer opportunities to improve efficiency, reduce manual processes and generate richer insights – but they are not a substitute for human judgment.

Modelling is a critical bridge between operational change and financial outcomes, helping businesses understand not just what technology costs, but what value it creates. The goal is not to replace people, but to free them from repetitive tasks so they can focus on higher-value, more human-centred work.

While tools continue to evolve, Excel remains central for many use cases, supported by more advanced platforms where appropriate. The key is selecting the right tool for the task, balancing functionality, cost and user experience rather than pursuing technology for its own sake.

The question isn’t how to replace people. We look at what technology can do better, automate that piece, and then let people focus on more complex, more human-centric tasks that actually add value.

A practical self-check for future readiness

For small- and medium-sized manufacturers with limited resources, becoming future-ready does not require a total digital overhaul. Instead, take an iterative 80/20 approach.

Instead of trying to model every corner of the business with granular detail, focus on the 20% of operations that drive 80% of your risk or volatility. By doubling down on these critical areas, you build confidence incrementally without getting lost in the weeds of a monolithic build.

Ultimately, a future-ready model is one that decision-makers trust – because they understand how it works, what assumptions underpin it, and how it responds to change.

The real self-check is whether the business is comfortable with the end-to-end logic. Do people understand how the model works, or is it something that’s just evolved over time?

The whole purpose of a model is to enable critical decisions. A truly future-ready model is one that allows you to pivot before the wind turns, rather than playing catch-up after the storm hits.

Building models that support better decisions

At its best, financial modelling provides clarity. Clear purpose, aligned stakeholders, disciplined assumptions and the ability to adapt are what separate future-ready models from legacy tools that constrain growth.

RSM Australia approaches financial modelling as part of a broader, end-to-end advisory offering, supporting manufacturers through accounting, audit, funding, grants and capital structuring, while helping modernise historical approaches in line with a rapidly changing landscape.

This article was first published in the Manufacturers' Monthly