Category: business transformation

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Direct-to-Consumer Causing Manufacturing Logistics Issues

Manufacturers have traditionally been positioned as a link in the long chain of supply. Somewhere between raw materials and finished products is where the manufacturer exists, transforming the materials into products that can be resold via distributors and wholesalers.

The supply chain was linear and relatively predictable, but that is all changing. With the introduction of broad internet connectivity, web-based services, large e-commerce platforms and increasingly innovative and competitive new logistics players, the supply chain is becoming a spiderweb of connectivity and communication, with linear approaches out the window and, to some extent, predictability along with it.

The economy we have today is an environment where customers demand more direct and personal approaches, and producers are being forced to find ways to accommodate. With the huge e-commerce platforms like Amazon and Alibaba, along with more direct-to-consumer channels, manufacturers are being turned into direct-to-consumer suppliers. Acting as drop shippers for the seller, the manufacturer isn’t shipping bulk or volume to distributors or wholesalers but smaller shipments direct to the consumer.

Many retail stores have now become more fulfillment locations than the place where the customer buys. This is causing tremendous change in logistics tools and approaches because the size of shipments is becoming smaller while the number of deliveries – and delivery locations – is only increasing.

Customers can go right to the brand’s website and buy direct, driving increased focus on building brand value and improving the overall customer experience. With the demand from consumers for flexibility in how and where they buy, retailers have shifted their approaches to bring e-commerce into the brick-and-mortar stores. This is where online and offline sales channels come together, creating pressure in ordering and fulfillment systems to offer the flexibility and experience consumers want.

While this converged channel model requires businesses to make new and continued investments in e-commerce and digital solutions to enable the flow of orders and information, it also delivers several potential benefits to the business, including the ability to better manage growing customer expectations, better compete in the digital marketplace, and address disruptions in the supply chain by having alternative options.

Delivering the goods has always been an operational challenge, with success often measured in performance and cost. Today’s marketplace requires more agility and flexibility, which means the role of supply chain managers is more strategic than ever. Simple logistics now has a direct impact on the customer’s decision to buy now, as well as buying again later.

jm bunny feetMake Sense?

J

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Considering Cybersecurity as Cloud Work Expands

When the pandemic forced many business users to move to remote work, it also forced the network security “boundary” to expand greatly and with great speed. Companies quickly adapted their tools and work so that it could be done somewhat effectively even as the employee working environment changed.  But new security models to match with new working models have not as quickly been adopted.

Business cloud workloads grew, by some estimates, as much as 20% just in the first 6 months of 2020. Yet many of those businesses electing to bring cloud working models to their business also made of the mistake of not expanding their security as they expanded the cloud network. This leaves systems and information vulnerable. Phishing, ransomware, credential theft and web app attacks have increased, catching businesses in their vulnerable states.

“In April to June of 2020 alone, security incidents increased by 188%.”

Even more than on-premises systems, it was the external cloud-based data and applications that were under attack because so many companies expanded their use of cloud services without enhanced security as part of the plan. Any expansion to include the cloud as network also significantly increases security risks. One report found that 35% of businesses made their cloud storage openly accessible to the public, allowing anyone to access it via the internet.

Don’t let your critical information be exposed or put at risk. When you begin using a cloud service, make sure to also address security for the new working mode or it could lead to lost or leaked information or a system breach.

Mendelson Consulting and NOOBEH cloud services take security very seriously. We help our clients keep their applications and data working properly and have a focus on methods to keep information safe regardless of what cloud you work on.

jm bunny feetMake Sense?

J

1 ( https://duo.com/blog/growing-security-safely-in-canada )

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Finance Department Participation in Supply Chain Management

When most businesses approach Supply Chain Management, the focus is on the item or product – the physical thing that ultimately gets delivered somewhere, somehow. What many businesses do not consider is that the orchestration and timing of “supply chain” activities can have significant impacts on financial performance, reporting and cash flow. The current processes could just be working just “okay”, and not delivering the financial benefit that might be obtained through modernization of technologies and transformations in approaches. The key is to get the right people involved.

One big aspect of seeking to integrate electronic commerce and collaboration with customers, suppliers and payment services is the recognition that supply chain activities involving orders, invoices, payments, and remittances are directly related to finances, revenue recognition and cash management.

For any project to be successful, it should include execs from both the supply chain and finance areas so that all concerns relating to event timing may be addressed to allow proper treatment in the financial statements. After all, the same things that trigger supply chain activities (orders etc) are the same documents which drive finance. When the information is accurate and timely, and when the inefficient manual processes can be replaced with electronic workflows, the business is best positioned to improve cash flow and overall financial performance as well as business value.

Unfortunately, few business owners have a real understanding of the costs associated with manual entry activities and how the direct financial impacts they have. The speed and accuracy of processing orders and invoicing customers means faster cash in, and leveraging the speed of electronic data interchange with suppliers so that “just in time” orders may be placed and logistics processes more fully enabled means cash out when necessary and not ahead of time.

“… using a digital transaction for payments allowed [businesses] to hold on to cash longer and better control the timing of the release of funds, something more difficult to control when mailing a physical check. Check fraud remains rampant across many industries. According to an AFP payment fraud and control survey, 70% of U.S. organizations reported check fraud in 2019, responsible for more than $18 billion in losses.” –

source: What Every CFO Needs to Know About Supply Chains; Study published by DiCentral and Lehigh University; 2012

For example, there are many studies which show that purchase orders that are not sent digitally are most often manually processed, and that this manual processing may be done by any number of departments in the company – but most often the job falls to finance. Rather than looking to eliminate the manual entry of data and the errors and delays that come along with it, businesses execs first looked to where the lowest labor cost rests and had them handle the extra data input.

A digital strategy that transforms inefficient manual process into efficient electronic workflows is the better solution. While many companies have approached streamlining of activities by exchanging manual entry operations for data file formatting and imports, they still have not solved the problem as would be with an integration that takes even less human time and effort.

The real goal of any business improvement effort is to improve overall business value. By bringing in finance along with supply chain execs to the “digital transformation” discussion, the business is much better positioned to make real progress in areas that directly impact cash performance as well as long-term business value. It comes down to having all the information and being able to weigh the risks against the potential rewards to be gained from the contemplated changes.

jm bunny feetMake Sense?

J