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Handling Different Types of Purchase Orders in Microsoft Dynamics 365
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Handling Different Types of Purchase Orders in the Microsoft Dynamics 365
Handling Different Types of Purchase Orders in the Microsoft Dynamics 365 700 500 Xcelpros Team

By the Numbers

  • $35.88: The minimum cost of a PO according to APCQ.
  • $506.52: The estimated maximum cost of a manual purchase order according to APCQ.
  • $53-$741: The average cost range of POs according to CAPS Research.
  • $60,000: APCQ’s estimated annual cost associated with manually producing purchase orders.

POs and the departments that approve them

  • 8%: No approval required
  • 21%: Finance
  • 52%: Budget owners
  • 84%: Supply management

Introduction

Today, purchase orders (POs) are the lifeblood of all companies, especially manufacturers. Being able to use POs properly helps in several different ways, including:

  1. 1.Simplifying the ordering process, making it easy to find approved items and place orders.
  2. 2.Aiding in budgeting by helping you determine how much you need to spend and how much you need to sell.
  3. 3.Enabling accurate planning by providing insights into company performance.
  4. 4.Warning of unexpected expenses when a PO is submitted, providing time to research it.
  5. 5.Confirming the quantity and price of goods bought or sold, eliminating miscommunication.
  6. 6.Providing legal protection against errors in quantities or unexpected price increases.
  7. 7.Controlling spending by limiting who can place and approve POs.
  8. 8.Tracking spending by providing details into where your money goes.
  9. 9.Helping manage vendors by seeing who delivers on time at the agreed price and who is late or constantly complaining.
  10. 10.Improving inventory management by telling you what should be arriving compared to what actually arrives.

Types of Purchase Orders

Most POs used today typically fall into one of four types. An automated purchase order system helps manage each of these types of POs.

1.Standard Used for one-time orders such as office furniture.

2.Planned purchase orders (PPOs)Typically lacking a delivery date and location, they are used for restocking items at irregular intervals.

3.Blanket purchase orders (BPOs), also known as “standing orders.”While similar to PPOs, they lack the known quantity and have uncertain delivery dates. Vendors may place limits on amounts so they can deliver.

4.Contract purchase ordersThey are used to set the terms and conditions for future purchase orders. Their primary function is ensuring a smooth ordering process.

The Disadvantage of Manual Purchase Order Systems

The job of a purchase order automation system is to send each PO to the appropriate staff member for review and approval. These systems leverage existing purchasing processes and rules to perform their jobs while protecting your business at the same time.

Modern automated systems often counter significant issues associated with older manual PO processes.

Figure: 1Disadvantages of an Manual PO System

Disadvantages of an Manual PO System

Compared to modern, automated systems, manually created POs tend to suffer from a number of drawbacks, including the following:

  1. 1.They’re less efficient
  2. 2.They’re paper heavy
  3. 3.They lack accountability
  4. 4.They open the company to security risks
  5. 5.They lack process regulation
  6. 6.They’re often time intensive

Using an automated system for POs in place of any older, manual processes results in a number of benefits, regardless of a company’s size:

  • Increased cost savings
  • Reduced human input error
  • More visibility into the PO process
  • Increased flexibility and control

Most importantly:

  • Improved process efficiency

Improving process efficiency is usually overlooked in a businesses day-to-day affairs, but this boost to efficiency is huge and provides a number of key benefits, including:

  • Significantly reducing the time between orders being placed and shipped.

And

  • Providing a verifiable audit trail so a manager wanting to know the status of a requested item can get a real-time view of the order. If a discrepancy occurs, the PO provides a written record.

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Benefits of a Modern PO Management System

According to a recent Altametrics blog, purchase order management “is an in-house procurement process implemented by businesses to ensure that every purchase is required, accounted for, and augmented for costs. The purpose is to ensure workers follow all policies and procedures before fulfilling a purchase order.”

Using a modern automated PO management system ensures that all orders are created, approved, and dispatched according to current policies and procedures set in place by the organization. These systems exist to ensure that your company has complete control of its purchasing and can make quick adjustments in the event of an emergency.

Once generated, these purchase orders are considered a binding contract

  • Company A agrees to pay the stated price for the listed items upon delivery from Company B.
  • Company B agrees to provide the goods on time, and at the agreed-upon price, terms and conditions.

If any mistakes are realized, a modern PO management system provides a streamlined way to quickly resolve any discrepancies.

Properly managed POs:

  • Eliminate overpayments
  • Reduce damaged goods
  • Save time
  • Eliminate inefficiencies

Modern PO management systems start by examining a company’s current methods to identify bottlenecks and ways to improve efficiency. These systems can strictly adhere to existing procurement policies and procedures using simple guidelines. This enables shop floor workers to make requests converted into accurate POs.

PO management systems also help to organize existing information. For example, they can create a real-time vendor management database showing which companies are approved. This lets buyers know who they can deal with to get what they need and when.

Another tangible benefit is the ability for workers to track the status of any current POs directly. Instead of having someone else take time away from their duties to provide an update, workers can quickly log into the system and find out themselves.

The best PO management systems make it easy to create and track POs and share the information seamlessly with other departments when included as part of an overall Enterprise Resource Planning (ERP) solution.

Procurement and Dynamics 365 Supply Chain Management

One of our favorite ERP solutions is Microsoft’s Dynamics 365, a modular ERP system that includes asset management and procurement functions in its Supply Chain Management module.

Located in the Asset Management > Common > Procurement > Work order purchase requisition section, this software shows a list of purchase orders related to work orders. It also shows how the purchased goods are used for assets, maintenance jobs, spare parts, and work orders.

This module can be configured to indicate any potential delays. The system can generate notifications giving management teams different options to resolve the issue

  • Wait out the delay or
  • Find an alternate supplier.

As well, work orders, job orders and purchase orders can all be tied to each other through the Supply Chain Management module. The end result is visibility:

  • Purchasing knows what items are in the pipeline,
  • The warehouse knows what is coming,
  • Production knows when the materials it needs will arrive, and
  • Sales knows when customers can expect delivery of their finished goods.

Note: Click here to see how to create a purchase order in Dynamics 365 Supply Chain Management.

Dynamics 365’s Supply Chain Management module also lets you control other aspects of the purchase order process. It provides a number of critical business functions, including creating purchasing policies, product receipts and invoices, and more. More than just a PO management program, Supply Chain Management also has direct ties to rebates, production controls, service management, transportation, warehousing plus sales and marketing.

By providing everything from an overhead view of your entire supply chain to the status of an individual PO, Supply Chain management provides companies of any size with the information they need to control their inventory.

The Bottom Line

Purchase orders continue to be an integral part of all businesses. Continuing to enter this data manually—and trying to keep track of it all on paper—makes the process cumbersome and prone to mistakes and expensive errors.

An automated PO management system, like that included in Microsoft’s Dynamics 365 solutions, helps reduce the number of manual inputs, ensures only permitted vendors are used, and simplifies the approval process, even automatically approving smaller purchases, debiting them to a department’s budget, or forwarding them to the correct department for approval.

Connecting this PO management system to your overall inventory control system is one of the best ways to ensure you always have the right materials on hand to meet your production and sales goals.

Best techniques for tracking and managing raw materials
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Best techniques for tracking and managing raw materials
Best techniques for tracking and managing raw materials 700 500 Xcelpros Team

At a Glance

  • 18% – The hike in the Raw Material Price Index from 2020-2021 with at least another 10% hike expected.
  • 60% – The increased amount of raw materials extracted, harvested and consumed since 1980.
  • 117% – The increase in raw materials costs for non-food agricultural materials since 2000.
  • 359% – The cost increase in rubber since 2000.
  • 62 billion metric tons – The amount of raw materials used per year in 2008, an 8-fold increase since the early 1900s.

Introduction

Today, manufacturing relies heavily on the ability to acquire raw materials, both directly and indirectly. Examples of direct raw materials are the chemicals, textiles, minerals and other components that become finished products. Indirect raw materials are components added to other parts that together make a finished product. Accurate tracking of these materials is a good way to determine if a company flourishes or fails. Both of these material types are listed as current assets.

Tracking raw materials typically starts when they enter a warehouse. Their value is calculated from the start of a given time and adding costs such as storage, shipping, processing and labor to determine total value. Before you can build, mix or blend your products though, you have be sure to acquire them. Obtaining the essential materials you need to create your products is the end result of an involved process.

Obtaining Raw Materials

One of the first things to do before you start acquiring raw materials for your products is sufficient planning. Raw material planning can be used to determine how quickly you use each item, but only once you understand your inventory turnover rate – the number of times you use your raw materials.

In a previous post, we stated that “Materials planning is the method used to determine the requirements and quantities of raw materials to implement production.” If you don’t have enough raw materials on hand, you can add delays to your production schedule, or even lose orders altogether. If you keep too many materials on hand, there may not be enough budget available for other projects, like capital improvements.

A critical part of materials planning is understanding lead time: how far in advance do you need to place orders with your suppliers to get what you need in order to satisfy your customers?

Being sure you can order what you need requires a procurement management plan that, “defines requirements for a particular project and lays down the steps required to get into the final contract,” including raw materials.

This plan sets and defines everything you need to manufacture your products: what to buy, who to buy it from and how much you’ll pay. This includes determining purchase costs plus delivery and storage costs, also referred to as inventory costs. Placing an order, or receiving one from a customer, often uses an order management plan.

If your departments are unable to report how much of a given product, or the raw materials required in the process, are on hand, entire orders can be lost. When production tells sales one thing, but inventory says something else, the end result can be chaos. This is where accurate, frequent, communication that tracks the flow of raw materials through the entire acquisition process becomes critical.

Inventory Management

“Inventory management is important to small businesses because it helps them prevent stockouts, manage multiple locations and ensure accurate recordkeeping. An inventory solution makes these processes easier than trying to do them all manually.”

A chef can make a large salad using a full head of lettuce but only a teaspoon of spices. Managing inventory is often similar: A manufacturer is likely to have some items they use in large quantities, such as active pharmaceutical ingredients (APIs). Equally important are the catalysts and other chemicals bought in much smaller lots. Like a chef making a salad, without their ingredients, they don’t have a product.

Inventory management not only tracks what you have on hand, it also looks at your supply chain: making sure you have options for getting what you need when you need it. One part of inventory management is getting your basic supplies: making sure your customers receive their finished products when they need them is another. Having viable shipping options to ensure your merchandise arrives on time means gathering even more information and constantly updating your options. A common option used by a large number of companies, especially retailers, is vendor managed inventory.

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Vendor Managed Inventory

Commonly referred to as VMI, vendor managed inventory is when a company lets its suppliers determine the amount of product a company has in stock. If you walk into a grocery store you might see people who are not market employees stocking shelves. These are vendors – these employees track inventories, place orders, monitor shipments and stock shelves.

According to American Express, benefits of a VMI include:

Figure: 1Benefits of Vendor Management Inventory

Example of a Barcode

  • Improved efficiency You have the right quantities on hand to meet your needs without going overboard and having too much or too little.
  • Cost reduction Having accurate inventories means few if any disruptions to sales, thereby providing better customer service.
  • Reduced complexity Depending on your products, you may be able to reduce the number of vendors. The result is a predictable and reliable inventory schedule.
  • Data insights Your supplier can anticipate demand, helping you prepare for seasonal and market-driven trends.

Working with a single VMI has some negatives as well as positives. Three of the biggest challenges, according to AmEx, include:

  • Loss of control Someone else determines what products you have and therefore what you’re able to sell. Using a VMI also means an outside company has access to your private data. Data security can be a major issue, especially when you first start working with a vendor.
  • Limited options It’s tough to make a fruit salad when the only fruit available is an orange. Your product choices may be limited and you might become dissatisfied if your vendor fails to deliver at the best price.
  • Market agility Working with a single vendor reduces your ability to pivot when markets change. For example, some whiskey manufacturers were having problems selling their goods when the Covid-19 pandemic took hold. A few of the more enterprising companies were able to switch from making whiskey to producing alcohol-based hand sanitizer. Using a VMI might eliminate this flexibility to quickly change in response to market conditions.

Looking at your options and picking the best ones often comes down to software. Managing your raw materials and inventory accurately, especially when your company is growing and has distant suppliers, generates a lot of data. Managing this vast amount of data requires capable software.

Software Options

Depending on your needs, two types of software can help with your raw materials management, inventory management, order management, procurement management, stock management and resource planning needs:

  1. 1.Customized products designed to perform a specific function for a single industry with a company at a particular size. If your company is unlikely to grow, one or more of these products might be perfect for your needs. Using this type of software, you will likely need one product for each requirement. This is likely to mean using several different providers, potentially creating data exchange roadblocks. A second option offers greater flexibility, the option to handle many of these needs in a single package while also growing with you.
  2. 2. A modular Enterprise Resource Planning (ERP) product such as Microsoft Dynamics 365 Supply Chain Management is a large, versatile product capable of helping you track inventories from far-flung suppliers into, through and out of your warehouse. Microsoft Dynamics products are based in the cloud and offer added data security since they’re built on Microsoft’s Azure platform. Modular systems let you add sections when needed while maintaining constant communication between the modules. Using a system from the same company also ensures constant data flows, reducing inventory data errors.

The Bottom Line

Especially today, managing raw materials accurately requires a lot of work and attention to detail. Errors at any stage of the process – from ordering to shipping, storing or using – can result in expensive repercussions.

Finding the right software solution means evaluating your current and future inventory needs. What do you need now? Will solving today’s problem also work in 1-5 years or will it require an expensive overhaul?

The bottom line is that you should consider an investment in a modular product that can grow with your company over time, and not one that becomes obsolete the minute you expand.

streamlining-the-label-management-process
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Streamlining the Label Management Process
Streamlining the Label Management Process 700 500 Xcelpros Team

At a Glance

  • $10 million: The average cost of recalls to food companies that can are caused in part by inaccurate labels.
  • $65,000: The average cost of incorrect labeling based on a 2020 survey. Of that group, 61 percent said mislabeling costs exceeded $50,000.
  • 10-26%: The number of products mislabeled every year according to a survey of 300 IT directors in the U.S., UK, France and Germany.

Introduction

Labels serve three primary purposes in a consumer’s eyes. Labels help to:

  1. 1.Identify the contents of a product
  2. 2.Identify the product name
  3. 3.Promote the brand image

In combination with well-designed packaging, certain label parts could be considered one component of an effective marketing campaign. From a business perspective, though, labels need to do much more than tell consumers what is inside. Efficiently labeling and tracking is the best way to monitor a product’s performance, along with ensuring customer safety is the best it can be. This is especially true when it comes to certain industries like pharmaceuticals.

Packaging and Labeling

There are many key points to note when it comes to packaging and labeling, including the following:

Definition:

Labeling refers to the text, design, symbol, logo, instructions and use suggestions printed on the product package. Labels are designed to inform and attract customers by providing information.

Objective:

Labeling provides all information required by the governments in the geographical location where the product is marketed, sold and used.

Focus:

While exterior packaging is about appearance, labeling focuses on what’s inside. For example, products are required to accurately list the primary ingredients and their nutritional value when it comes to food. Labels on medicines must include active and inactive ingredients, allergic reactions, and harmful side effects.

Label designs are usually simple and formal. They may follow a government or company template. These can require a set list of data fields such as country of manufacture and expiration or “use by” date. Hazard information is typically posted where a customer can see it before making a purchase.

Effective label designs also include inventory tracking options while also meeting government requirements.

Inventory Tag Controls

“When paired with a competent asset or warehouse management system, inventory tags can be scanned to inform your supply chain of changes in your current inventory. This practice helps build end-to-end visibility among all parties, from supplier to customer, as your inventory moves through your warehouse,” according to a blog post by CamCode.

Inventory tags can be integrated into a product’s label design. The most common inventory labels we see doing this are bar codes. Barcode are a series of vertical lines—generally black—of varying widths interspersed with white gaps. QR (i.e., quick response) codes are a form of bar code generally in a square or rectangular format with black blocks and white spaces.

Speed is the main advantage of using a barcode or QR code label. Handheld and machine scanners can read the barcode information, sending it to inventory tracking software. That software can then automatically update inventory counts, eliminating the need for manual checks. The result is a fast, more accurate inventory update. A critical part of inventory tagging with barcodes is using the right type. Before creating any labels, companies should ensure they understand any regulatory or equipment-based requirements for the barcode type, label size, and label material type.

Figure: 1Components of a Barcode

Example of a Barcode

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Different Types of Barcodes

Barcodes primarily come in three different types:

  • Numeric only with a row of numbers beneath the bars
  • Alpha-numeric with a row of letters and numbers
  • Two-dimensional (QR is one example) using a series of small dots arranged in a unique pattern

The type of barcode a company chooses often depends on its industry and how the product will be used. For example, the Postnet format encodes destination information using long and short lines. Retail items often use the Universal Product Code (UPC).

The U.S. Food and Drug Administration (FDA) has several requirements for barcodes. While the FDA does not require a specific code format, it mandates the barcode include the drug’s national drug code (NDC) number. Machine-readable information on blood and blood components must be on those labels.

“This new system is intended to help reduce the number of medication errors that occur in hospitals and health care settings,” according to the FDA.

These FDA rules apply to manufacturers, repackers, labelers, and private label distributors of human prescription drug products, biological products, and over-the-counter (OTC) drug products to protect consumers from dangerous side effects or worse.

Labels alone are not enough. However, companies need to be able to accurately track their inventory as well as safely manage any recalls or other issues with products. This only works when you have the right software in place.

Inventory Tracking Software

Software like Microsoft Dynamics 365’s Supply Chain Management includes several powerful inventory management features helping these businesses thrive today. For example, Supply Chain Management can automatically assign serial numbers based on manually entered (or scanned) batch numbers.

Dynamics 365 Supply Chain Management also makes creating and tracking barcodes for released products easy. This modern inventory management software also works with the GS1 bar code and QR formats for use on shipping labels.

Microsoft says, “Unlike older bar codes, GS1 bar codes can have multiple data elements. Therefore, a single bar code scan can capture several types of product information, such as the batch and the expiration date.”

With a system like Microsoft’s Dynamics 365 Supply Chain Management, you can use a predefined list of application identifiers to define the meaning of your data and connect it with GS1 codes. Microsoft suggests, “The setup of the application identifiers defines how the system should interpret a bar code and save it as a value in the system.”

The Bottom Line

With today’s focus on consumer safety, proper labeling and tracking of products, especially when it comes to pharmaceuticals and medicine, will continue to be of utmost importance, including efficiently dealing with government regulations. Today’s businesses need to ensure they’re taking advantage of inventory tracking software that lets them easily create labels that help track the flow of raw materials, from work in progress to finished goods.

Programs like Microsoft Dynamics 365 Supply Chain Management can create unique QR codes that contain a list of ingredients, allergy information, serial and batch numbers, hazardous warnings, and safety data sheets. Solutions like these let your warehouse staff scan products and send information wirelessly to any device on the network more efficiently than ever before. Is your labeling solution up to speed?

Resources: Packaging vd Labeling

Effectively-Tracking-and-Controlling-Inventory
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Effectively Tracking and Controlling Inventory
Effectively Tracking and Controlling Inventory 700 500 Xcelpros Team

Introduction to effective inventory management

Especially today, manufacturers, wholesalers and retail businesses from several different industries share several standard business practices, with inventory management at the top of the list.

An efficient, capable inventory management system can distinguish between struggle and success. Any boost to the efficiency of managing your inventory can result in a significant return on investment. To drive the effectiveness of your inventory management, especially when if you’re just getting started, it helps to pay attention to 10 popular techniques:

1.Fine-tune your forecasting Accurate forecasting is a must unless you want to either tie up precious capital in product stuck on warehouse shelves or be unable to meet your customers’ orders.

2.Identify low-turn stock Have a flexible ordering approach that, combined with accurate forecasting, lets to adjust inventory based on customer priorities.

3.Regularly audit your inventory Knowing—not guessing—what you have at any given moment lets you adjust ordering to ensure a balanced inventory.

4.Track stock levels You want to track all inventory from the moment you purchase raw materials or components to when you deliver finished goods to your customer’s door.

5.Keep track of your equipment Especially in a production plant – Knowing what you have, how quickly it wears and when to schedule repairs for optimal life ensures uninterrupted production runs.

6.Verify Quality Ensure all items in your inventory meet your quality control standards, ideally from the moment they arrive.

7.Categorize inventory based on customers needs Ensure you have the most sought-after products in stock at all times, working your way down the line to the least popular products.

8.Consider drop shipping This is much quicker especially for any items you don’t make yourself, especially when it becomes part of your product. An example is a Siemens ® controller for industrial machinery.

9.Rotate your stockTurn your stock so the oldest items are sold first This is especially true for pharmaceutical products with comparatively short shelf lives.

10. Use good inventory management software A viable program that meshes with your financial and sales software helps keep everyone informed, making for happier customers.

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Figure 1:Common inventory management challenges

Common inventory management challenges

Common Inventory Management Challenges

Among the most common inventory management challenges that can affect a number of different businesses are the following:

  • Inconsistent tracking Working with older software that relies on manual data entry opens a company to data entry errors. Mistakes are bound to happen when different departments use different spreadsheets to input the same information.
  • Inaccurate data Companies need to know how much of everything they have on hand and in the pipeline. Without accurate information, you won’t be able to track your production. This can be a massive problem if you’re still manually entering data.
  • Order management Manufacturers often live on the edge of logistics, struggling to make sure deliveries are going out just in time – right before their customers need them.
  • Juggling a complex supply chain Manufacturers need alternate ways of obtaining raw materials and shipping finished products. For example, your primary port is running behind because dock workers are sick. How do you get what you need when you need it?
  • Communications and planning Intercompany communication is critical, especially in a world where companies often have business units in different countries, keeping everyone focused on the same task can be difficult.
  • Robust competition In every industry, competition is ready and willing to grab your customers when you make a mistake or find yourself unable to deliver on time and within budget.

These are a few examples of the challenges faced by modern manufacturers. Thankfully, the good news is that modern ERP solutions can be a huge help when it comes to addressing these issues.

Inventory Management Software As a Solution

Several inventory managements programs available on the market today that focus not only on addressing these challenges, but also by identifying potential issues before they can impact your operations. Some of the best solutions available, like Microsoft Dynamics 365 Supply Chain Management, can seamlessly integrate with your existing software, reducing data silos, allowing different departments to share more information. Instead of requiring three departments to input the same information into a database, each group is able to provide material unique to their specialty.

Effective inventory management programs like Microsoft can print barcodes and QR labels. When these codes are scanned with a hand-held reader or cellphone, users can be rewarded with a wealth of information. The most critical data to track are precisely how much of any product you have, where it’s being stored, and what it will be used for.

For example, you need to produce 20,000 doses of a Covid-19 treatment. Your customer needs them yesterday but will settle for next week. Do you have enough raw materials on hand to meet your customer’s deadline? If not, what can you do to obtain what you need?

Using this information wisely lets management develop complex plans, like the ability to track everything from small lots to pallet loads. A company can learn by checking an item’s progress at different points—its arrival at the warehouse, use in production, loading onto a truck or ship, and delivery to the customer. By examining reports, you can identify potential delays or roadblocks and find ways to speed up delivery.

Supply chain management software on a secure cloud computing platform like Microsoft’s Azure let’s you communicate securely and safely with other researchers, salespeople and vendors. With Azure, you’ll know that your intellectual property and contracts are safe from competitors.

Boost Decision Accuracy with Power BI

With today’s supply chains – seemingly constantly in a state of upheaval – effective inventory management that goes beyond tracking stock on hand is critical to operations. Effectively managing your inventory and raw materials ensures you’ll have the materials you need when you need them. It means having more than one source of supplies and materials. It also means constantly checking with vendors to ensure you have the goods to meet your own delivery deadlines. This is where an integrated business intelligence solution comes into play.

Microsoft Power BI let’s you connect to hundreds of data sources, preparing reports you can easily share. You can confidently deliver interactive messages to customers using information from inside and outside your company. Inventory planners can be warned of potential shortages in time to find alternate supplies. Salespeople can be told of possible delivery delays caused by outside forces, giving them time to ask the customer if they want to use a different shipping method.

Accurate business intelligence at your fingertips puts you ahead of competitors stuck using their “tried and true” methods that are becoming increasingly worthless every day.

Final Thoughts

Effective inventory management comes down to data: knowing what you have and where it is.

A modern inventory control system that supports labels and barcodes lets you track raw materials, work-in-progress and finished goods simultaneously, with high accuracy.

An inventory system with business intelligence helps you find faster and alternate ways of obtaining raw materials and pre-made products, mainly when shipping delays occur. That information can help you get your products to your customers when needed, balancing everyone’s inventory.

Manufacturing metrics and KPIs that matter the most banner
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Manufacturing Metrics and KPIs That Matter the Most
Manufacturing Metrics and KPIs That Matter the Most 700 500 Xcelpros Team

At a Glance

  • The manufacturing industry operates best by integrating people, tools, processes, and information.
  • The data generated from each of these facets needs to be quantified and analyzed.
  • In the manufacturing world, organizations that know their metrics tend to understand the tricks of the game.
  • It’s critical to focus on the metrics that matter the most; the ones that help your entire organization gain essential insights regarding different functionalities and business areas to continuously improve the manufacturing process.
  • One key that comes from knowing and managing your manufacturing metrics is the ability to systematically optimize your operations based on results.

In any industry, it’s essential to know exactly what your numbers are and what they mean to your business. While this sounds like it should be simple enough, we all know how difficult this can be in practice. When you’re able to gather numbers and metrics they still need to be collated, classified, quantified, and analyzed to add value to the business, especially for a multi-pronged industry like manufacturing. Manufacturing metrics can be diverse, and each metric has a different value throughout the manufacturing value chain. A cumulative study of a group of these metrics is a good way for manufacturing companies to gauge their performance and form strategies for continuous improvements.

Figure 1:Cycle of Continuous Improvement Methodology

Cycle of Continuous Improvement Methodology

As a manufacturing company, you always want to aim for a higher ROI which can mean a thorough analysis of manufacturing metrics and alignment of short-term and long-term business goals. Each of these metrics serves as a source of truth, representing a precise measurement of your manufacturing processes either in terms of quality or quantity (and sometimes, both). Let’s take a look at the manufacturing metrics that matter the most and how you can fortify your IT infrastructure to study and derive insights from these metrics.

1.Demand Forecasting Market research helps companies gain ideas to make estimates about demand forecasting. A manufacturer’s objective is to gauge the amount and type of raw material they will need for their upcoming business cycle. Planning, supply chain management, and operational alignment can benefit significantly from this metric’s help. It’s essential to remember that demand foreshadowing is dependent on external factors and, as such, subject to sudden changes. Take, for example, the ongoing Covid-19 pandemic. Many manufacturers found that much of their yearly estimates had taken a hit (especially sectors like automotive and luxury consumer goods). On the other hand, the demand for things like medical equipment and hygiene products increased by several fold, the world over. In this scenario, manufacturing companies can benefit from a robust enterprise resource planning system such as the Microsoft Dynamics 365 Finance and Operations that seamlessly enables change management, demand analysis, and order management.

2.Throughput & Yield of Units Produced A manufacturing company’s operational efficiency is directly proportional to its yield. Throughput is a metric that measures the average number of units produced in a particular amount of time (other coefficients being per machine, per production line, or facility). Access to the correct yield information helps manufacturers gauge their performances accurately, address bottlenecks, and develop plans for improvements.

63%

of manufacturing executives plan to get more out of what they already have invested within their manufacturing and supply chain network.

Source: Accenture

3.Inventory Turnover Properly managed inventory is a strong indicator of a manufacturing companies’ performance- after all, knowing how often inventory is sold or used in a particular timeframe is the measure of knowing its success in the market. This is precisely why decision-makers in the manufacturing industry focus on analyzing the turnover data of their inventories. To expedite the analysis and avoid data mismanagement, manufacturers still using legacy systems need to strongly consider investing in an automated ERP system that can track inventory data in real-time and facilitate seamless coordination between multiple stakeholders.

4.Quality Analysis The final quality of your product is one of the best indicators of production performance. A successful product is the best way to build your customer base, making it essential to understand applicable quality metrics- including monitoring and documenting raw material quality, incoming supplier quality, random quality checks at manufacturing plants, packaging quality, and more.

5.Overall Equipment Effectiveness (OEE) Whether it’s a single piece of equipment or an entire production line, knowing how effective every piece of equipment is, has become essential to a timely yield that matches quality and quantity requirements. This metric is recognized by the manufacturing industry worldwide as one the most important to assess agility, downtime, and overall production quality.

Book a demo today to learn how Microsoft Dynamics 365 helps you achieve manufacturing KPIs.

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The metrics above are just a few in manufacturing that often generate mountains of data through multiple sources that are constantly subject to changes. The answer to managing all this information is a data pool – a single source of truth for multiple manufacturing metrics that can help companies track, manage, and analyze the data against their KPIs.

Figure 2:Role of Sophisticated ERP in Managing Manufacturing

Role of Sophisticated ERP in Managing Manufacturing

Implementing Microsoft Dynamics 365 ERP and Power BI lets you optimize your IT infrastructure to systematically allow real-time data access, multi-level visibility, and artificial intelligence-backed insight generation. This allows you to visualize and track the progress of your manufacturing metrics, along with a cumulative awareness of your production line.

Final Thoughts

For every manufacturing company operating today, metrics and KPIs have become among some of the most important things to understand and track. How you view these metrics moving forward, how accurate the information is, and how you’re able to leverage it will be the deciding factor in your success.

  • Every company needs to reinvent its best practices with the help of manufacturing metrics for a profitable business.
  • Investing in a fortified IT infrastructure to track and manage manufacturing metrics is the need of the hour for manufacturing companies.

Serialization in the pharmaceutical supply chain improving track and trace banner
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Gen-Next Serialization in the Pharmaceutical Supply Chain: Improving Track & Trace
Gen-Next Serialization in the Pharmaceutical Supply Chain: Improving Track & Trace 700 500 Xcelpros Team

At a Glance

  • Worldwide pharmaceutical companies are dealing with drug counterfeiting, adulterations, supply chain thefts and packaging glitches.
  • Serialization is much more than just applying barcodes to personalized medicines.
  • This modern age of fast-paced digitization calls for modifications and improvements in serialization techniques.
  • To better strengthen the supply chain, loopholes need to be identified and closed.
  • Transparency needs to be maintained for every drug dose.
  • Pharmaceutical companies and their supply chain vendors should use of advanced analytics, cloud computing and the Internet of Things (IoT) to get a grip on modern serialization techniques.

Introduction

Traceability in pharmaceuticals is now very much seen as a global mandate. With laws differing from country to country, major pharmaceutical companies are looking for ways to improve how they track and trace their products in the supply chain to always remain in compliance.

Struggling to meet those requirements continuously is causing pharmaceutical companies to develop and implement new serialization techniques. Supply chain security, battling counterfeit and altered drugs, better product traceability, and overall cost-savings are chief among the motivations.

Reports suggest that by 2023, more than 90% of the global drug supply will be scrutinized under track and trace regulations. The program will enhance patient safety measures by combating drug counterfeiting.

Serialization is no longer restricted to global compliance mandates either. It’s helping more and more pharmaceutical companies add transparency, accountability and integrity to their supply chains.

Serialization is proving to be more effective at reducing shrinkage (i.e., errors and theft) than other solutions such as sturdy packaging and traceable 3D hologram models.

Figure: 1Common Loopholes in the Pharmaceutical Supply Chain

Common Loopholes in the Pharmaceutical Supply Chain

Innovation is the key to improving trace and track in any supply chain model, including the frequently complex pharmaceutical supply chain.

Companies worldwide are investing millions of dollars in maintaining product integrity.

Assigning unique identification numbers or barcodes to individual items (such as a strip of tablets or a bottle of medicine) for computerized serialization and tracking is becoming among the best ways to maintain product integrity.

Among newer innovations and latest trends in serialization in the pharmaceutical supply chain.

Data Encryption and Data Security

The ultimate aim of pharmaceutical supply chain serialization is to ensure consumers get the right drugs at the right price and quality. At the same time, companies that trace and track their products end up knowing where each shipment is at any given moment.

Verification for this requires very strict data management and security. One way to get it done is through computerized encryption that lets only designated people read the data.

The pharmaceutical industry loses on average 4.5% of its potential revenue because of supply chain inefficiencies.Source: Interactive Data Corporation

Recalling Individual Products

The pharmaceutical industry is highly susceptible to recalls caused by poor packaging, leading to contaminated products that could harm patients.

Previously, these recalls were made at batch-levels, causing massive revenue loss as well as disrupting the supply chain. Narrowing defective medicines to individual units makes it possible for companies to limit recalls to specific products. The same serialization can then be used to determine when and where the product was altered or contaminated.

Figure: 2 Serialization to Improve Track and Trace

Serialization to Improve Track and Trace

Use of Advanced Analytics

By studying buying trends, life sciences organizations and their research groups constantly work to understand what consumers need and want. Using advanced analytics applications like Microsoft Power BI to create in-depth business intelligence reports is becoming the best way to help realize and act on these patterns. Power BI’s dashboards take advantage of interactive visualizations to help users make informed decisions about if and when they need to alter their production schedules to keep up with market demand.

Enhanced Visibility at Every Level of Supply Chain

Serialization is a good way for companies to provide accountability regarding compliance with government regulations. It’s also an excellent way to enhance visibility and improve monitoring at every level of the pharmaceutical supply chain. Knowing how much you have and where to reduce stock-outs improves the overall distribution and ensures your products are available when and where the consumers want them.

Barcoding and Labeling

Barcodes can provide a lot more information than just a serial number alone. You can include electronic links to product information sheets, safety data sheets, ingredients, storage requirements, shipping requirements, dosage levels, and other information. All a worker needs to scan a code made with advanced label-making capabilities using a barcode reader or cellphone to access this data on the spot.

$200 billion (10%): that is the global monetary cost of counterfeit drugs according to the World Health Organization.
One million: That is the annual cost in human lives each year from fake and altered medicines according to Interpol.

Serialization’s Impact on Companies

In the United States, the serialization of all drugs at the sealable unit and case level became a requirement with the passage of the Drug Supply Chain Security Act (DSCSA) in November, 2017. This requirement had an impact on pharmaceutical companies and their supply chain vendors that had to ensure serialization of all drugs at an individual container or dose level with barcodes for better tracking and tracing.

Ultimately however, this has led to a number of benefits including:

  • Better market visibility down to individual drug demand. This helps by allowing for more efficient drug distribution.
  • Warehouses and inventories need to be equipped with a fortified drug distribution plan.
  • Better understanding and communication among cross-functional teams. Since serialization provides an inflow and outflow of different information, life sciences researchers, packaging personnel, IT experts, and distributors alike can share any data available for a particular drug.

Challenges in Serialization

Like any other change across the supply chain, serialization has its own set of challenges, including:

  • Hardware Setup and Updates
    Companies need to ensure they have the right equipment and supplies on hand at all times to print the labels, barcodes and seals required for serialization.
  • Steady Flow of the Production Line
    Introducing serialization and the training required to understand the process might have an impact on the production line early on as labeling each and every product may initially slow down the process.
  • Higher Costs
    Adding serialization to an existing process often means adding costs in terms of hardware, software, and people. These costs can be reduced by using pooled investments and sustainable hardware and software applications.
  • Skilled Personnel Shortage
    Newer, digital methods of serialization require a workforce that understands what needs to be done. Companies are facing a lack of a skilled, technically sound employee base to implement their serialization strategies.
  • Technical Glitches
    Serialization should ultimately require minimal human intervention, aiming to significantly reduce manual errors. With anything else so integrated, you will need to make sure any technical issues can be identified and addressed in a timely manner to avoid any major disruptions to production.

XcelPros’ Microsoft Dynamics 365 solutions enable pharmaceutical companies to seamlessly implement serialization for better compliance and enhanced track and trace.

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Key Benefits of Serialization in Operations

Pharmaceutical companies able to take advantage of advanced digital serialization processes for their supply chain operations often realize a number of benefits, including

  • Easy end-to-end implementation across the supply chain
  • Efficient sealing of supply chain loopholes to combat drug counterfeiting and packaging mistakes
  • Minimal human intervention required, making serialization a fool-proof, effective way to ensure brand authenticity and reduce batch recalls
  • Full compliance with government traceability regulations
  • Reduction of counterfeit drugs and compromised quality.

Final Thoughts

Overall, serialization in the pharmaceutical supply chain plays a significant role in avoiding drug theft, counterfeiting, batch recalls, and other potential hazards. Every pharmaceutical company needs to have a unique serialization process to meet its requirements. Newer serialization software uses advanced analytics for better drug distribution and fewer stock-outs.

With government mandates requiring pharmaceutical companies and their supply chain vendors to understand and master the technical details of implementing serialization at batch and case levels in an effort to fortify their supply chain and enhance visibility, these companies need to be prepared to overcome any challenges that arise. Is your track and trace solution ready?

Ways to Strengthen your Supply Chain Processes
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Ways to Strengthen your Supply Chain Processes
Ways to Strengthen your Supply Chain Processes 700 500 Xcelpros Team

Supply Chain Woes

Over the past two decades, many manufacturing operations have moved offshore to lower operating costs. No one could have foreseen the recent COVID-19 pandemic that brought the world’s economy to a grinding halt. Pandemic-related problems exposed gaps in various supply chains across the globe. Pharmaceutical companies that had pivoted operations found themselves scrambling to get their hands on raw materials and pre-fabricated components when their suppliers worked out how to operate safely.

Transportation problems, safety concerns, government-imposed quarantines and other barriers threaten supply chains worldwide.

While all industries—and most companies—were severely impacted, business sectors considered critical were the hardest hit.

What is a Critical Industry?

“There are 16 critical infrastructure sectors whose assets, systems, and networks, whether physical or virtual, are considered so vital to the United States that their incapacitation or destruction would have a debilitating effect on security, national economic security, national public health or safety, or any combination thereof,” according to the U.S. Cybersecurity & Infrastructure Security Agency.

Critical Infrastructure is identified as functions that are essential for the functioning of a society and economy. Since 2001, the National Infrastructure Protection Plan (NIPP) lists 16 Critical Infrastructure Industries as essential to keep our country and economy moving. These industries are:

  • Chemical
  • Commercial facilities
  • Communications
  • Critical manufacturing
  • Dams
  • Defense industrial bases
  • Emergency services
  • Energy
  • Financial services
  • Food and agriculture
  • Government facilities
  • Healthcare and public health
  • Information technology
  • Nuclear reactors, materials, waste
  • Transportation systems
  • Water and wastewater systems

Understanding your Supply Chain

A robust supply chain is the foundation of any successful company. A supply chain’s importance is magnified when critical operations rely on getting raw materials in the door and finished products to customers on time. An efficient supply chain is essential for daily operations.

The impact that COVID has had on supply chains around the world has taught businesses that:

  • Raw material supplier relationships are essential
  • There are still massive transportation industry constraints
  • Security issues in the supply chain can lead to unexpected challenges

According to the Information and Communications Technology’s (ICT) Supply Chain Risk Management program, knowing your immediate supply chain and an extended one that may not have direct access to third-party suppliers is essential.

Materials once considered abundant can quickly become scarce when multiple businesses compete for them. This is where a good supplier relationship makes a difference between getting access to a product or waiting until more materials are produced.

Another part of existing supply chain woes is that while companies focus on getting goods flowing, data breaches and other security problems are rising. According to the Risk Ledger Report, third-party app developers, payment processors and remote worker infrastructure are among the top security threats.

Figure: 1Functions enabling modern supply chain management

Functions enabling modern supply chain management

Ways to Stay Ahead

Thankfully, there are a number of solutions out there to help companies stay competitive. The latest version of Microsoft Dynamics 365 for Supply Chain Management not only includes several features for building strong supplier relationships and minimizing risks, but also retains a familiar look and feel to other Microsoft Office products. This familiar interface helps with change management and reducing training needed to get up and running.

Some of D365 Supply Chain Management’s more powerful features include:

  • A Role-based Vendor Collaboration Portal
    Members of the procurement team can post and respond to Requests for Quotations (RFQ) and edit company information. Companies and suppliers can confirm, maintain, reject and accept purchase orders.
  • Purchase Inquiry Options
    This option is available outside of the portal. It provides an alternative to the RFQ process when immediate material pricing and delivery need to be met with your existing supply base.
  • Vendor Performance Analysis
    Includes a dashboard to real-time Spend Analysis and Vendor Performance insights into on-time delivery.

Talk with us today to learn more about enhancing your supply chain capabilities.

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As a way to further help the manufacturing industry, Microsoft debuted its Dynamics 365 Manufacturing Accelerator on May 14, 2020. The Manufacturing Accelerator is a Power App offering an enhanced Supplier Relationship Management experience. It runs within Dynamics 365 Supply Chain Management.

Primary features include processes to:

  • Qualify new suppliers
  • Onboard a supplier for data integration
  • Manage and track Supplier Relationship Health Data

While the accelerator was being developed before the recent pandemic, it’s become a great asset to procurement teams looking to strengthen their supplier sourcing capabilities.

Final Thoughts

Companies today are still struggling with two competing priorities: maintaining a healthy workforce, and delivering goods to their customers. The latter means having a strong, versatile supply chain. A robust, secure platform like Microsoft Dynamics 365 Supply Chain Management helps businesses make this a reality by enhancing every process, from supplier onboarding to monitoring vendor performance.

Freight Visibility in the Chemical Supply Chain
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The Importance of Freight Visibility in the Chemical Supply Chain
The Importance of Freight Visibility in the Chemical Supply Chain 700 500 Xcelpros Team

Introduction

Having a complete view of inbound shipments is critical for chemical manufacturers. Maintaining accurate product counts, ensuring on-time delivery, monitoring rising transportation costs and complying with the Department of Transportation’s (DOT) regulations are some of the reasons.

As a highly regulated industry, chemical manufacturers are under constant compliance pressure at several levels, not just federal. A clear view of end-to-end supply chain visibility helps mitigate supply chain challenges.

For example, a single federal hazardous materials violation can cost your company anywhere from nearly $80,000 to $500,000.

Failing quality controls and product recalls come with steep costs. Adding competition, transportation, supply chain challenges, and growing customer expectations means chemical manufacturers can’t afford to make any mistakes.

One of the more manageable costs is freight. It can be expensive and daunting to manage when your organization makes hundreds of shipments daily.

Accurate labeling becomes critical in terms of understanding what is in each shipment. Labeling is also vital when planning the classification and storage of the materials, plus determining workforce requirements. Without a straightforward labeling method that all workers can use, ensuring end-to-end supply chain visibility becomes a nightmare.

Consequences of Poor Freight Management

Poor freight management can lead to several different problems, such as:

  • Damaged, lost, or late deliveries
  • Processing delays causing customer complaints
  • Delays in downstream work orders
  • Greater freight costs caused by carrier policies
  • Wasted raw materials and space due to unaccounted inventory
  • Decreased productivity due to poor scheduling

This list doesn’t account for accidents, either. What if hazardous materials get mixed up with another order? How will you know? Mistakes like this can be disastrous and even fatal.

One report states that unreported delays lead to an increase in inventory carrying costs, as high as 30-40% of total inventory costs.

Every stage of the chemical supply chain, from raw materials to end-user delivery, requires a significant amount of planning, tracking and implementation. Companies today need a centralized and secured solution that offers flexibility with the ability to integrate, automate, and be optimized regardless of location.

Enterprise labeling solutions boost efficiency, accuracy, and reliability, plus significant cost savings in these highly regulated environments.

Book a consultation to get a comprehensive freight visibility management solution.

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Managing Hazardous Freight – Responsibility of the Manufacturer and Carrier

Penalties for Violation of Federal Hazardous Materials

It’s the manufacturer’s responsibility for identifying hazardous materials, not the freight carrier’s. Whenever chemicals are being shipped, it’s up to the manufacturer to ensure its documentation, labeling and packaging all meet government standards.

Among the most common items on a hazardous materials manufacturer’s shipping checklist are ensuring all of the following items are current:

Hazardous Materials Manufacturer’s Shipping checklist

  • Contents meet the federal definition of “Hazardous Material”
  • Employees are properly trained
  • Correct packaging is used
  • Blocking and bracing requirements are outlined
  • Shipping manifest is complete and accurate
  • Emergency response information is included
  • Emergency response contact information
  • Certifications are complete
  • Security plans and processes are in place
  • Incident reporting procedures are being used
  • Product Compatibility is accounted for when shipping multiple chemicals together

Among the correct documentation requirements are:

  • Shipping name
  • Classification/ Division
  • Identification Number
  • Hazard warning labels and markings

Freight carriers have their responsibilities, too. These include validating the following:

  • Accuracy of the manufacturer’s packing lists.
  • Products are accurately described and adequately packaged.
  • Vehicle is suitable for shipping chemical products and is in good repair.

Carriers, as well, have additional responsibilities when transporting hazardous materials. These include:

  • Documents and manifests are accurate and complete
  • Proper labels and placards are in all required positions on the vehicle and the shipment
  • Loading and unloading meets safety guidelines
  • Employee training is complete
  • Security plans and processes are up to date
  • Incident reporting procedures are up to date
  • Adequate blocking and bracing meets government guidelines
  • Product compatibility is considered when shipping multiple chemicals together

The Real Cost of Freight

The actual cost of freight can only be realized after a product reaches its final destination. The final cost of deliveries can be influenced by a number of different fees for layovers, oversized cargo, after-hour deliveries, mispacked orders, incomplete manifests and damage incurred during shipping and unloading.

Large businesses making hundreds of shipments a day are often able to absorb shipping cost fluctuations that might severely hurt small and medium businesses. Unfortunately, manufacturers shipping products don’t always know what will trigger additional fees. These issues with inbound shipments can affect all departments in a supply chain: Sales, Planning, Purchasing, Production, Accounting, and possibly more.

Understanding your transportation process inside and out is the most effective solution to address supply chain challenges in the chemical industry. Staying on top of every process, every step of the way lets you track and monitor the movement and condition of products from start to finish. Lack of visibility into shipping is the most challenging thing to correct and can significantly impact both manufacturers and shipping companies.

55%

of Third Party Logistics suppliers (3PLs) said they either lost business or didn’t know if they lost business due to lack of visibility of their offerings.

Source: American Shipper

Outdated Systems

Even today, a surprisingly large number of companies continue to run their operations on antiquated inventory tracking systems designed to manage local-only supply chains. Successful supply chains operate globally, connecting production and procurement to sales and customer service. This way, everyone knows what’s in transit and when it’s due to arrive.

Maintaining freight visibility, especially for a company spread thin, is not an easy task. Obsolete, “legacy” systems make it an even more challenging objective.

A modern, cloud-based solution provides a complete end-to-end view of a supply chain network.

Switching operations to an integrated, multifunctional transportation management system (TMS) platform brings agility to your transportation network. This kind of switch offers better support for seamless communication, allowing companies to respond proactively to unexpected issues and customer demands.

Disparate Systems

Effective coordination and collaboration should be needed across multiple sites and warehouses to manage a supply chain effectively. Running a business on many different applications is one of the biggest roadblocks to total freight visibility. If your organization’s systems can’t connect with your vendors, there’s a good chance you’re missing something.

Having an inventory control system that communicates with your suppliers’ improves inventory management, communication and freight visibility. Connecting a Transportation Management System (TMS) with warehouse operations allows shippers to find detailed insights from inbound and outbound logistics within a single unified platform.

Lack of collaboration

Tracking shipments in real-time is the core of transportation management. When loads are distributed across different carriers, getting reliable data from the entire carrier network can be a real challenge. Trying to track shipping information manually leads to inaccurate quotes and customer complaints.

Combining  business intelligence and advanced analytics offers real-time shipping and location data visibility. The data delivers accurate tracking information directly from the supplier’s carrier to the shipper. Your customer will always know when their products are due to arrive.

Finding the Right Solution

Most logistics solutions are unable to display “right now” data on incoming shipments and outgoing orders. If you’re in the process of figuring out what solution will be best for your business,there are a few questions you’ll want to be sure you ask:

  • Does their system have AI-enabled software that automatically records vehicle movement, be it truck, ship or plane?
  • Can their system generate automated email alerts in real-time?
  • Does their solution connect the vehicle and the driver, letting you know when unexpected hurdles or opportunities occur?
  • Is their system integrated with other essential business systems your company uses?
  • Are they using software as a service technology providing your company access to your data any time, any where?
  • Are upgrades done automatically through cloud computing, eliminating the need for on-premise upgrades?
  • Is their software a complete package or just a part of the delivery ecosystem?
  • Can their system communicate data easily with other TMS systems, electronic logging devices or enterprise resource planning systems?

Final Thoughts

With the anticipation of continued, long-term shipping challenges, more chemical manufacturers see the need to take a close look at their supply chain management software. Knowing exactly where incoming shipments of raw materials and pre-assemblies are and when they’ll arrive, along with the ability to track products from your facility to your customer’s door, every step of the way, is becoming more and more critical to customer retention.

Best-in-class organizations are embracing newer technology to help spot and correct problem points before they become a roadblock. The goal is to reduce expenses by lowering total shipping costs.

Reach out to us to learn more about Microsoft Business Applications that can help enhance freight visibility.

How To Enhance Your Chemical Supply Chain
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How To Enhance Your Chemical Supply Chain
How To Enhance Your Chemical Supply Chain 700 500 Xcelpros Team

At a Glance

  • Today’s chemical industry is all about enhanced visibility and accountability.
  • Dealing with varying laws and regulations for different regions, fluctuating and lack of visibility across the board requires advanced solutions.
  • Integrating advanced technologies can reduce waste, unearth new products, find new markets and enhance a company’s status.

Change in Operations

Chemical companies, especially pharmaceutical companies, are seeing an increase in the need for global reach.

Since its first discovery, the effect Covid-19 has had on supply chains has been severe, regardless of product. As with many problems, this disease has also created numerous opportunities, especially for the chemical industry. Major companies continue to expand operations, delivering their products worldwide, including former “third world” countries with a growing thirst for everything from antiviral medications and cleaning products to beauty supplies.

“The chemical industry touches nearly every good-producing sector, making an estimated $5.7 trillion contribution to world Gross Domestic Product (GDP) through direct, indirect and induced impacts, equivalent to seven percent of the world’s GDP, and supporting 120 million jobs worldwide.” Source: The Global Chemical Industry

This data from the ICCA shows a considerable market share, making it safe to say that the chemical industry is looking at a secure future. Globalization, however, requires dealing with unique challenges and roadblocks, especially regarding the movement of chemicals from supplier to producer and consumer. Today’s supply chain management won’t work in silos. That idea is no longer sustainable or feasible. Today’s global marketplace requires expanded thinking, and that means going digital.

Today, planning a chemical supply chain means using effective, profitable methods where customers, suppliers, parts vendors, shippers, sales and production facilities are connected, regardless of their physical locations. Modern software like Microsoft Dynamics 365’s suite of modular programs can help chemical companies use modern digital methods and enhance the operational efficiency of their supply chain.

In this article, we will look at some of the key supply chain challenges in the chemical industry today and how technology is playing a key role in enabling forward-thinking companies prosper.

Top Challenges in Chemical Supply Chain

Every company has its own set of challenges, such as the size of the company, the locations of its manufacturing units and the structure of its supply chain. Regardless of an individual firm’s situation, all chemical manufacturing companies face common supply chain issues.

Typical chemical industry supply chain challenges include:

  • Distributing chemicals and related raw material in different countries. Companies struggle to keep up with the laws and regulations of varying regions. What’s safe and acceptable in one country may violate worker safety laws in another. This is especially true when it comes to hazardous chemicals.
  • Existing chemical supply chain management can fall prey to manual errors and miscommunications, causing potential safety hazards and monetary loss.
  • The bottom line often depends on a company’s ability to source raw materials. When prices for essential materials fluctuate, the entire supply chain can be affected.
  • Tracking material pricing and delivery details create a lot of data. This includes information regarding the chemicals, their compositions, material pricing, safety precautions, distribution lists, and more. Managing this information is a top concern for chemical supply chain managers.

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Figure: 1 Supply Chain Challenges in Chemical Industry

Supply Chain Challenges in Chemical Industry

3 Ways Technology is Reshaping the Chemical Supply Chain

01.Technology Enables Creating a Connected System

Today’s world is much more connected than it used to be. Systems are linked with smart devices, modern sensors and powerful software running it all. With these sophisticated enterprise resource planning systems in place, it becomes much easier to organize your chemical company’s supply chain. Modern systems can generate an alert when a violation occurs. These automatic alerts reduce manual errors or oversights.

A connected ecosystem provides top-to-bottom visibility in the supply chain, giving top-level decision-makers a clear picture and greater transparency across the board. This enables better accountability and the ability to find solutions to common problems and bottlenecks.

Figure: 2 New Technologies in Supply Chain

New Technologies in Supply Chain

02.AI Helps Create a Failsafe Supply Chain

Chemical supply chain management is highly susceptible to changes in prices of raw materials. To stay ahead of the curve, companies need to stay up to date on global, as well as regional changes to predict how these changes will impact their supply chains.

Artificial intelligence(AI) enabled solutions can analyze data in real-time, letting decision makers know what is likely to happen, how it will affect them and most importantly, what they can do to avoid or reduce any impact. This software can help these companies make necessary modifications to their supply chain strategy on the fly.

03.Using Cloud Computing to Manage Supply Chain Data

Data collation, cataloging and analysis, are intricate tasks. When performed by people, they can be prone to manual errors. However, with progressive technological tools like Microsoft Dynamics 365 Supply Chain Management, companies can store unlimited data and analyze it much more efficiently. This categorized and analyzed data can be leveraged to generate insights that help fortify the company’s supply chain for smooth transitions and better efficiency.

Supply chains are the backbone of many industries. The chemical industry needs to adapt to changing times, and make use of the right technologies to harness maximum benefits.

Key Takeaways

Like any industry, the chemical industry is witnessing the need for change in its supply chain model. With the help of cutting-edge technological tools and applications, chemical supply chain management can be overhauled and optimized for enhanced efficiency. Is your supply chain ready for a change?

References: Chemical Supply Chain: Challenges and Opportunities in the Era of AI

Five Steps to Transforming Manufacturing Operations
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Five Steps to Transforming Manufacturing Operations
Five Steps to Transforming Manufacturing Operations 700 500 Xcelpros Team

Introduction

Lasting effects of the ongoing Covid-19 pandemic continue to disrupt numerous manufacturing operations as the year draws to a close. Companies not only surviving, but thriving were those already undergoing a digital transformation to their manufacturing operations.

“Digital transformation is the transformation of business, industrial products, operations, value chains and services that are enabled through the augmentation of people, knowledge and workplaces through the expanded use of digital technologies. It’s about the people in the workplaces, the processes, the technologies and services,” Janice Abel wrote in an ARC Advisory Group blog post.

Today, digital transformation is all about rethinking the way your company functions. Is it a series of departments that act like independent nations, each competing for scarce resources and seldom sharing information? Or is your company a unified operation where department names are merely labels and the data created by one is open and accessible to all?

At the end of the day, digital transformation in manufacturing is all about enhancing customer service. Taking good care of your customers leads to more sales, better growth opportunities and higher profits. Achieving that goal requires breaking down barriers and ensuring free-flowing information between all employeesF.

Sharing this data in a timely fashion requires a manufacturing execution system (MES) and a manufacturing operations management (MOM) process. MES is computer software, while MOM may be software or an overarching process. An MES helps track raw material consumption during production. A material resource planning (MRP) package helps you prepare your production inventory.

According to an ARC survey, most manufacturers deploy MES solutions to connect the information in different silos and plants. While there is some visibility, data silos remain even though artificial intelligence (AI), machine intelligence (MI) and other digital methods are being used to varying degrees.

Driving Digital Transformation

Ongoing supply chain disruptions are having a huge impact on manufacturing companies. When questioned about the resilience of their manufacturing and supply chains, the overwhelming response was “not very,” according to a recent blog by Forbes.

Forbes posted some response numbers from the Fictiv 2021 State of Manufacturing Report about existing supply chains:

  • 94% of respondents had some concerns
  • 55% worry that increasing digital operations increases security risks
  • 47% state that supply chain management overhead costs are too high
  • 42% believe that working with global markets creates intellectual property risks
  • 31% think that lack of visibility into operations creates risks and uncertainty

The Fictiv report quoted by Forbes concluded: “The way we manage supply chains and manufacture goods has been forever altered.”

Cost overruns were a key concern for 81 percent of recipients while 55 percent were worried about information technology security with their current supply chain.

“Whatever the issue, it’s clear the old way of operating is no longer optimal,” Forbes states. Using digital methods to manage manufacturing has essentially replaced the older methods, at least according to this survey.

  • 95% of respondents believe digitally transforming their manufacturing operations is essential to their company’s future
  • 91% of respondents reported an increase in digital transformation spending
  • 77% defined their digital spending boost as “dramatic” or “significant.”

A Different Perspective

Digital technology enhances productivity, reduces costs and boosts innovation. Manufacturing companies that pay careful attention to their data are able to use it more efficiently to help find and develop new revenue streams.

Figure: 1 How the Internet of Things (IoT) is integrated with Operating Technology (OT)

How the Internet of Things (IoT) is integrated with Operating Technology

At its core, the currency of automation, optimization and profound transformation can help turn new business models into an “as a service” economy, I-scoop suggests.

Many companies transform their manufacturing operations by using the internet of things (IoT) coupled with operational technology (OT) and automation on the production floor. IoT sensors in many devices let computer programs track data as each potential product makes its way through the production process.

Mechanical engineers are able to maintain equipment to more refined levels of precision. Software engineers are using the data provided to reduce waste and find new ways of boosting efficiency. Enterprise resource planning (ERP) software uses the data to ensure machines are scheduled efficiently. The ERP software helps ensure a near continuous flow of material, even when humans aren’t present.

Learn more about the impact of digital transformation on manufacturing operations.

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Roadmap to Your Digital Transformation

The first step for companies yet to embark on their digital transformation is creating a roadmap. Without understanding what direction you want your business to go and how to get there, any results are likely to be far less than desired.

At a bare minimum, formulating a plan ahead of time helps:

  • Set priorities
  • Manage change
  • Identify and allocate resources

A well thought-out roadmap can help plan your entire journey, or identify problems and new opportunities as you work towards your goal.

Major steps in creating a digital manufacturing roadmap include:

1.Clearly define and help your company’s current position and its digital strategy. Stating concrete, achievable goals and then communicating them with partners, employees and clients helps everyone understand what they need to do so that everyone benefits.

2.Defining your financial baseline. Making demands of whatever system you choose to go with, only to balk at the resulting price, is no benefit to anyone. Having a plan to only move to the next digital manufacturing transformation phase when you reach specific financial goals makes financial sense and motivates to reach those incremental goals.

3.Ensuring internal Agile processes are ready to go. Breaking your production process into smaller chunks lets you create products and services faster by having processes run concurrently instead of sequentially.

4.Assessing your technology and talent. Understanding what equipment you need, and what skills are required to operate it, lets you start training existing staff or adding new employees ahead of time. Having people who know what they are doing as you implement each phase ensures your digital transformation proceeds smoothly.

5.Choosing the right digital transformation partner. Having a partner experienced in your industry means they’re likely familiar with any problems you may face. Having seen them before, they already know what solutions work and what is a waste of your money. The right partner can also help you set short- and medium-term goals, ensuring your transformation is progressing according to plan.

Final Thoughts

Embarking on a new digital transformation pays numerous benefits in the long run. One of the biggest benefits is the ability to rapidly respond to customer requests for new or unique products, resulting in more efficient MAAS (manufacturing as a service).

The most important thing to remember when looking to complete your transformation is the need for a detailed roadmap and ensuring you have a digital transformation partner who understands your industry and can help you overcome any hurdles along the way.

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