Procurement

Maintaining an Integrated Supply Chain: Key Solutions

Maintaining an Integrated Supply Chain: Key Solutions 1280 720 Xcelpros Team

At a Glance

  • Many organizations that fail to recognize supply chain as a strategic business function, tend to not move to a digital supply chain and lose out on the benefits that come with the transformation.
  • Traditionally, manufacturing companies have treated supply chain as a transactional function, a bargaining chip to reduce price and secure on-time delivery of raw materials. The modern supply chain is viewed as a strategic asset to the organization, integrated deeply with other business functions, aimed to increase customer satisfaction.
  • Companies unable to track hidden costs across the supply chain lose track of actual costs, damaging their bottom line. Proper supply chain monitoring can save anywhere from 20-30% of distribution costs.

The Supply Chain Challenge

Supply chain management is one of the most critical elements of success for any business in today’s global market. However, its application is undermined by many companies as business leaders face challenges to control the cost of a supply chain without compromising on its efficiency. Since COVID-19 we have witnessed drastic changes in methods and methodologies for streamlining supply chain operations. It, however, doesn’t take away some key fundamentals required for healthy functioning of a company’s supply chain and inventory management.

According to the Logistics Bureau, for companies running global operations, their supply chain cost could rise as high as 90% of their total expenditure.

The Supply Chain Slowdown

The problem lies in poor strategic management. Supply chain managers are focusing on cost minimization, most of them without having detailed field knowledge of how the system works, and the result is it is impacting other areas of the process such as inventory optimization, ‘on-time delivery in full (OTDIF)’ and customer satisfaction. Trying to improve one KPI is resulting in a cost spike in other areas of operations, which can have a long-term impact on revenue.

FIGURE 1 Where Business Leaders are Falling Short

A robust supply chain needs strategic alignment and planning in line with the overall business functioning. For example, in order to control cost, you need to first understand the key drivers of cost in the supply chain and most importantly how to measure the supply chain cost. While the strategy is important, establishing an integrated supply chain requires a synchronized approach to planning, execution, and application of technologies in order to create an end-to-end unified system across the entire organization.

FIGURE 2 Key Elements of an Integrated Supply Chain

In this article, we will touch upon some interesting facts that make an appealing case as to why the Supply Chain strategy needs to be digitally enhanced and properly integrated with other parts of the business.

Switching from Traditional to Next-Gen Digital Supply Chain

The rapidly evolving business landscape is disrupting the way companies function. Moreover, the advent of the latest technologies and growing competitive markets are driving companies to push their limits and redefine supply chain operations.

Is your business ready to embrace a digital supply chain as a key distinguishing factor for its competitive advantage?

Most SMBs are holding back the transformation due to the fear of possible risks that could surface. Per our industry experience, it’s due to the age-old perspective in which company leadership is analyzing their supply chain. In most of the cases, we found that they are way behind the entire purview and don’t realize the true potential of a well-integrated, technologically advanced supply chain.

Traditionally, business leaders focused on pricing and product quality, but priorities today have completely shifted. Major Objectives and Key results of organizations are geared towards optimized supply chain and operations to boost businesses forward. With Industry 4.0, advanced analytics, and robotic process automation rising, companies are realizing the need for an integrated supply chain. This has become even more true as the Covid-19 crisis continues. Demand planning and fulfillment, supplier-customer relationship, customer retention, on-time delivery are some of the major expenses of a company. An efficient supply chain not only helps with cost reduction in these segments but also ensures growth, profitability, and customer satisfaction.

Top Reasons to Upgrade Your Operations with a Next-Gen Digital Supply Chain:

Shifting from a plant-level production planning to a demand-driven focus with customer-centric mindset but not compromising with the product quality

Getting rid of outdated processes and technology to match the transforming global business landscape

Reducing cost to formulate a more efficient value chain to remain cost-competitive in the market

Ability to outsource parts of your supply chain process in order to reap economic benefits and superior supply chain network design

Achieving more efficient product lifecycle management

Collaboration with stakeholders to integrate business processes for increasing visibility throughout the value chain

The Impact of Supply Chains

An integrated supply chain influences the overall functioning and improves profitability of the business. Going digital and increasing interoperability across these functions sets a business up to accelerated growth. Let us discuss a couple of key areas that are impacted by a well designed supply chain.

FIGURE 3 Upgrading the supply chain will improve your bottom line

01. Supply Chain and its Impact on Customer-Centricity

When business leaders discuss improving their supply chain, their main focus is usually related to accelerating growth by cutting down costs, achieving better lead time, and ensuring on-time delivery; as all these factors contribute towards business development. What slips from their mind is what customers really care about. It all starts and ends with customer satisfaction. Delivering the right product at the right time improves your organization’s brand value and credibility to customers.

What the customer cares about is receiving quality products on the promised delivery date without having to spend too much time or effort. This can be seen in Amazon’s announcement of one-day delivery. Late and inaccurate deliveries bear a significant impact on customer loyalty.

70%

of industry professionals predict that their supply chain is going to be a key driver of improved customer satisfaction by the end of the year.

Source: Accenture

Your procurement division must understand the importance of cost-saving, but they need to be in line with the expectations of the customers and procure quality raw material for manufacturing the items. If expectations on raw material quality is not set, you could save money purchasing raw materials upfront, but end up spending more in the long run.

Let’s take a look at Kimberly-Clark’s journey to understand this better:

Kimberly-Clark is a manufacturing-focused organization that up to a few years ago did not have a supply chain division. Sandra MacQuillan, their first Supply Chain Officer, built a solid team to ensure the supply chain was focused on customer satisfaction. In the process, she integrated various functions such as procurement, quality (know more on quality management by clicking here), logistics, manufacturing, safety, etc. that are interconnected and delivered for one common goal – that is customer satisfaction.

Kimberly-Clark was able to achieve 25-30% cost savings by interconnecting various aspects of the Supply Chain, focused on better customer service, resulting in improved efficiency.

If you connect with the issues faced by Kimberly-Clark, or your supply chain is functioning in silos, it could be the best time to make a change. You can take this opportunity to update and integrate your supply chain with overall business functions and work towards a common goal like customer Satisfaction. A strongly integrated application will have the ability to incorporate holistic business functions including analytics, collaboration with notification, secure information sharing, control-based decision making using Artificial Intelligence, and more.

FIGURE 4 KPIs that are critical for supply chain monitoring

02. The Role of supply chain in sustaining business long term

According to the Logistics Bureau, nearly 50% of companies shut down within the first five years of operation. One critical factor contributing to these failures is an inefficient and poorly conceived supply chain. Supply chains in most organizations have evolved as a practice, rather than a well-designed process.

79%

of companies with robust and high-performing supply chains are able to outperform their average peers in terms of higher revenue growth. This fact signifies the positive implication of a connected supply chain for a business.

Source: Deloitte

5 Steps to Integrate your Supply Chain

Break down organizational silos

For an effective, integrated approach to Supply Chain Management (SCM) the organization must operate end-to-end as a unified entity.

01

Define organizational objectives

Move beyond basic business and functional unit design and metrics. Look at the organization holistically and define the objectives as a complete entity.

02

Align business processes

Take a cross-functional approach to business process design. Start at a high level and map out the supply-chain flow with the goal of creating an end-to-end mapping of the business process.

03

Design the IT architecture to support an integrated approach

Leverage a cross-functional approach to IT systems design. As much as possible, standardize the organization in terms of the applications that are used. Seek to eliminate as many disparate applications as possible in favor of a common set of applications across the business.

04

Reshape leadership and culture

For most organizations, the major roadblock in delivering an integrated approach to supply-chain management is culture change. Change of this magnitude must be driven by solid leadership. There should be strong collaboration to drive the effort to deliver an integrated supply-chain organization.

05

Final Thoughts

There is no way the importance of an integrated Supply Chain should be overstated or undermined. If you or your organization have not prioritized your supply chain efforts, it’s never too late to take the first step.

An intelligent ERP software comes with a holistic supply chain module along with advanced analytics to support the following functionality.

  • A manufacturing execution system
  • Financial and cost accounting
  • Inventory and warehouse management
  • Purchasing and planning of materials
  • Product information management
  • Sales and marketing of the products
  • Transportation and logistics management

In order to push a company forward especially post-COVID-19, a sound digital supply chain strategy would be needed.

Do not let operational inefficiencies limit
your business, long-term goals

About XcelPros

XcelPros is a Chicago-based company and delivers transformation through technology. We offer business and technology solutions with deep industry experience in Chemical, Pharma, Life Sciences (including Medical Devices, Bio-Medical & Biotech), Insurance, Discrete Manufacturing, Process Manufacturing, Distribution and Food & Beverage.

XcelPros is a Microsoft Gold Partner, Direct Cloud Solutions Provider (CSP) and a Systems Integrator (SI) offering software licensing, implementation and consulting services for Microsoft Dynamics 365, CRM, Microsoft Dynamics AX, Business Intelligence & Analytics (Power BI), SharePoint, Office 365 and Azure (Cloud, IOT, Microsoft Flow amongst many others).

Our mission is to provide integrated technology solutions that amplify impact and empower our customer’s businesses. We believe technology is the key enabler of exponential growth for us and our customers.

Contact XcelPros today to transform your business.

Call us toll-free – 1.855.411.0585 (or) visit www.xcelpros.com

How to Automate Your Corporate Purchase Order to Boost Efficiency?

How to Automate Your Corporate Purchase Order to Boost Efficiency? 1920 1280 shahid.anis

Introduction

The purchasing process of any organization has always focused on simplifying the procurement of materials as well as services, and boost supply chain efficiency. In today’s digital world, it has become more essential for companies to formulate a comprehensive strategy for running operations faster and smoother. Is your workforce still operating on manual and archaic systems to manage purchase orders? An antiquated process not only leads to mismanagement and user errors but also hurts your bottom line.

You need to take a technology-driven approach that focuses on automating the entire supply chain from cradle to grave instead of concentrating only on warehouse operations and inventory control. Automating and streamlining your purchase orders with real-time supplier collaboration saves time and cost while simultaneously increasing efficiency as well as profitability.

Figure 1 Integrating the Purchase Order Process

Your employees might be the only common link between your business systems and the suite of tools they use every day – be it for email, spreadsheet, or word processing . Using multiple tools that are disjointed very quickly leads to lack of visibility. Connected business solutions from Microsoft help streamline your internal processes and pull needed information together so that your people don’t have to.

43%

of companies agreed that there are loopholes in their PO practices.

64%

of organizations reported having plans for addressing purchase order management inefficiencies in the near future.

Source : A survey of Finance Personnel, 2017

Procurement and the Life Cycle of Purchase Order (POs)

The crux of Procurement involves negotiating terms, acquiring goods or services, from a list of approved vendors, and assessing supplier evaluation based on past transactions. The end-to-end activity starts from choosing the right vendors, establishing payment terms, then moving on to sending purchase orders, managing receipt of purchased goods, and processing invoices/ payments.

The Purchase order lifecycle, also referred to as the “Purchase to Pay” or “P2P” cycle, comprises of six core steps:

1.Vendor Selection: After receiving quotations from suppliers, the Buyer works towards shortlisting the best ones that meet the business requirement and budget. Simultaneously, the procurement team also conducts a detailed verification of the supplier taking input from all stakeholders to reach on a unified decision.

2.Negotiation & PO Dispatch: A contract negotiation takes place with the selected supplier in terms of the delivery timeline, set an On time in full (OTIF) KPI, establish a payment process, agree on quality standards, dispute resolutions, confidentiality, risks, change in requirements, and other miscellaneous details. The supplier and buyer sign contracts for a single or group of purchases, by locking in the price and other terms.

3.Purchase Order Creation: Once the procurement team receives approval on purchase requests, they create a single line or multiline purchase order containing product details, pricing, terms of the delivery, freight methods, and other relevant purchase details. For multiple line items, depending on if the system accommodates it or not, the buyer may create separate purchase orders for each item.

Figure 2 A Purchase Order Lifecycle

4.Receiving goods on a PO and Quality check: The vendor sends a ‘lot/ batch’ of material per the instructions and agreed upon terms on the PO. On receiving the product, the buyer conducts a standard quality check, validates the PO and packing slip. The receiving clerk verifies the items received through quantity counts, first-level quality check for damages, and accuracy. In case of a dispute, relevant parties are notified with details. Once done, the receiver records the receiving information accurately into the inventory management system.

5.Invoice processing on a PO for payment: The supplier sends the invoice to the buyer or the Accounts payable department. The AP clerk enters the invoice, verifies details via a 2-way or 3-way match against the PO, and posts the PO-invoice. The transaction creates an open invoice against the supplier in the system, which would now show up on an aging report.

6.Processing the payment for the purchase: As the due date approaches, the AP clerk prepares a payment proposal that goes through a workflow to be approved depending on the invoice amounts, prints checks or sends electronic payments, and finally, posts the payment to clear out the open invoice.

Due to all these elaborate steps, being detail oriented becomes one of the primary requirements; thus making automation plays a key role in reducing human error rate and improving the overall accuracy of the purchase-to-pay lifecycle.

Small retailers often don’t use purchase orders as they rely on strong relationships with only a limited number of vendors. But let’s not ignore the fact that verbal deals can at any time be breached from either side and without the knowledge of the other party leading to unnecessary legal battles for all parties involved. Automating the purchase process helps to keep everything documented and safeguards your company from potential losses.

Underlying Reasons for a Purchase Order Failure

There are plenty of reasons, including human error or process failure, why a purchase order system can fail. Some of the reasons are listed below:

  • Authorization limitation

    While only the authorized person should sign off the purchase order. Situations may arise when the person doesn’t receive the PO or even forgets to complete the sign-off. In such cases, the accounts the department may refuse to accept the invoice.

  • Wrong codes and supplier names

    The person-in-charge assigned to the role of completing the purchase may lack the details such as full supplier name, business code, and other details. Filling in the form with half details or wrong details leads to a breakdown, waste of time, and loss of money.

  • Non-completion of all essential columns and boxes

    In manual handling, no system reminds the user to fill in every mandatory piece of data. Missing data in one field can have a domino effect on other areas.

  • Failure to use the preferred suppliers’ list

    In an automated PO management system, a preferred supplier list is given preference and forces the Buyer to not deviate from the list. Choosing suppliers outside the approved list, could result in providing an explanation to the financial department/ management, even if the decision is for the benefit of the organization. Approvals should ideally trigger this step. With a manual process, it is challenging to monitor approved supplier checks.

  • Delay in delivering goods/services

    One of the apparent problems faced in manual Purchase order processing is enhanced visibility in delays of goods/ services delivery. Typically, a high volume of orders or errors will often result in the supply system slowing down, or worse completely loose track of shipments from the vendor.

Automation as the Solution

While digitizing purchase orders typically involves a more significant initial investment, it is truly a long-term solution that results in a tangible ROI. The sooner you upgrade to automated e-invoicing solutions, the faster your operations will see the benefits. Producing electronic POs in your ERP removes paper but doesn’t put an end to manual processes, as buyers still need to extract the PO from the ERP and email it to the supplier.

The simpler solution is an automated PO system that is easy enough to fit into your business requirements with features such as automatic purchase order creation, approval routing, and sending notifications to suppliers either via email or through an alert triggered via an online supplier portal. Suppliers can access an online supplier portal to receive purchase orders, make modifications, send order acknowledgments, and generate accurate invoices.

5 Steps to Creating an Automated PO System:

Integrating the purchase order system with ERP

Create an electronic PO requisition and approval process

Transmitting electronic purchase orders to suppliers

Providing suppliers with easy online access to view your POs, acknowledge orders, and send advance shipment notices (ASNs) instantly

Streamline supplier transactions, and manage your purchase-to-pay process

Key Benefits of Automating Purchase Order Process:

Suppliers get a 360-degree view of the status of orders, invoices, payments

The PO requisitions automatically route for approval

Increased invoice accuracy and reduces paperwork

Saves time + resources and make users more compliant

Minimizes inconsistencies and reduces opportunities for errors

Streamlines the entire PO process for speed and efficiency

Enhances productivity by managing multiple orders simultaneously

Reduces long-term expenses

Streamlines inventory management and improves decision-making capabilities

The Business User Story – Improving Supplier Interactions with Dynamics 365

You know how critical it is to keep your purchasing team connected in the office and on the go. Dynamics 365 and Office 365 simplifies and automates daily tasks to keep your procurement team focused on managing purchases. Your buyer receives an email from a supplier requesting additional details on a quote for some items. The system recognizes the sender, enabling him to easily pull up prospect cards within Outlook. From this dashboard, he reviews the account – including the supplier’s existing quotes, ongoing orders, and purchase history.

As he’s managing the quote, supplier and product information auto-populate, helping him get it done faster. While he was sending the purchase requisition, a note hit his inbox from a potential supplier he recently interacted at an event. The system recognizes that their email address is not in the supplier database, and prompts him to add it. Without leaving Outlook, he creates their profile in the Dynamics 365 app. This kind of automation reduces time spent on administrative tasks, allowing your purchasing team to quickly respond to received quotes and ultimately improve overall interactions.

Figure 3 Upgrading to an Automated PO System

As a business owner, imagine you receive an email from a high-priority customer who urgently needs an order delivered in a short timeframe, and fulfilling that order is heavily depentant on receiving material from your supplier. Microsoft unifies business processes and personal productivity, connecting your people, processes, and systems like never before. With Dynamics 365 Supply Chain, you can find the information you need and act on it without searching for disparate systems or coordinating with other departments. Dynamics 365 workflows help you secure processes and work on the go. Without leaving your inbox, you check inventory and discover that you don’t have enough stock on hand to fulfill the order. Your Sales team can quickly initiate a Purchase order directly that goes to the Buyer for ‘approval to proceed’.  In the same interface, you create and send both a purchase order to the vendor and a quote to your customer, moving on to your next task within minutes.

With Dynamics 365 and Office 365 working together, you can take quick action right from your email – allowing you to spend more time managing your business and connecting with customers.

Key Takeaways

  • Purchase Order Automation increases the point of revenue, makes the operational process easier, and reduces error rates.
  • The mature and robust functionality of an Automated purchase order system ensures better functioning of the Purchasing department.
  • A cloud-based procurement solution offers you greater transparency on purchase order management with ease of access.

CONTACT US and get started with your Purchase Order automation process using Power package with Microsoft Dynamics 365 Supply Chain!

About XcelPros

XcelPros is a Chicago-based company and delivers transformation through technology. We offer business and technology solutions with deep industry experience in Chemical, Pharma, Life Sciences (including Medical Devices, Bio-Medical & Biotech), Insurance, Discrete Manufacturing, Process Manufacturing, Distribution and Food & Beverage.

XcelPros is a Microsoft Gold Partner, Direct Cloud Solutions Provider (CSP) and a Systems Integrator (SI) offering software licensing, implementation and consulting services for Microsoft Dynamics 365, CRM, Microsoft Dynamics AX, Business Intelligence & Analytics (Power BI), SharePoint, Office 365 and Azure (Cloud, IOT, Microsoft Flow amongst many others).

Our mission is to provide integrated technology solutions that amplify impact and empower our customer’s businesses. We believe technology is the key enabler of exponential growth for us and our customers.

Contact XcelPros today to transform your business.

Call us toll-free – 1.855.411.0585 (or) visit www.xcelpros.com