Tag: supply chain management

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Data Gets Lonely When It’s Isolated

EDI Helps Manufacturers Increase Efficiency and Improve Profitability

More efficient processes yield more revenue, it’s that simple. Imagine being able to seamlessly integrate data across the entire supply chain and then imagine how that integration could increase the efficiency and deliver more revenue to each link in the chain.

Every manufacturing CEO wants to increase operational efficiency and lower costs, helping to boost revenues and improve profitability. Yet there is an area which has often been overlooked by businesses, and this is the area of B2B integration. While some methods have delivered degrees of success, broad-based solutions remain elusive to many.

The problem is in the number and types of data sources a manufacturer deals with on a regular basis. With a network of partners and suppliers, each using their own data formats and transfer methods, the volume and variety of information flowing can be overwhelming. The result is siloed data, increased pressure on information technology and management resources, disconnected workflows and slower processes.

IDC’s Manufacturing Insights’ webcast IDC FutureScape: Worldwide Manufacturing Predictions once suggested that nearly 30% of manufacturers would make significant investments toward increasing visibility and analysis of information exchange and business processes, within the company and with partners. That was in 2015. Today, data integration and process improvements continue at a fevered pace as technology is helping businesses gain new data that brings new insight and sparks change.

The integration of Electronic Data Interchange (EDI) is a fundamental first step in improving how a business works with trading partners as well as internally. EDI has been around for many years and refers to the transfer of structured data between two organizations or “trading partners” using a set of standards that define common information formats to facilitate the exchange. By adhering to the same standards, two different organizations can electronically exchange documents (POs, invoices, shipping notices etc), seamlessly and regardless of geographic location.

Simplifying business processes, reducing operating costs, increasing end-to-end visibility, reducing errors, and speeding up operations and responsiveness… these are the many benefits to be experienced when EDI and non-EDI information streams are processed in the same manner when it comes visibility, exception-handling, notifications, role-based access etc.

Unfortunately, not all trading partners use EDI (or implement it in the same manner). To get their documents into a usable format, manufacturers find themselves using manual processes or writing custom scripts. Either way, it means that documents are flowing through entirely different processes for EDI and non-EDI business partners, which significantly complicates matters and adds unexpected costs and complications. Addressing this is one of the reasons why modern manufacturers are finding an increased need for connecting with organizations like Mendelson Consulting who can help identify and address situations that out-of-the-box EDI does not.

The pressure is mounting for manufacturers to produce more with less resources. Mendelson Consulting understands what makes EDI complicated and has the experience and expertise to help growing enterprises overcome challenges in design and implementation, making broader integration possible and greater improvement achievable.

jm bunny feetMake Sense?

J

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Is Your Business IT Ready for Industry 4.0?

Over the past several hundred years there have been trends which revolutionized industry and manufacturing around the world… steps taken in an industrial revolution which advanced the evolution of civilization and life as we know it. The first revolutionary phase was combining mechanization with steam and waterpower, and the second was the combination of mass production with electricity. The third was the rise of electronics, IT systems and automation. We are now at the start of the fourth phase of industrial revolution.

PwC’s Insights suggests that Industry 4.0 “refers to the fourth industrial revolution, which connections machines, people and physical assets into an integrated digital ecosystem that seamlessly generates, analyzes and communicates data, and sometimes takes action on that data without the need for human intervention.”

This next phase advances on concepts introduced through digitization and connected frameworks, tying in the industrial IoT (Internet of Things) and smart manufacturing. This meshed model relies on interconnectivity of systems, lots of automation at high levels, machine learning and AI… all collecting and generating data in real-time.

Where physical operations and production join with smart digital technologies, big data, and machine learning, businesses can forge systems which focus directly on manufacturing and supply chain management, gaining new insights and getting actionable data at all levels.

Virtualizing physical resources and digitization of analog data is now coupled with improved access to and management of the platforms. Rather than building out on-prem physical servers and systems, businesses are finding that the agility, scalability, and fault-tolerance of the cloud is necessary when designing an operation that connects, communicates and collects data, performs intelligent analyses, and potentially acts without people getting directly involved.

Every company is different, but all face a common challenge — the need for connection and access to real-time insights across processes, products, and people.

The consulting team at Mendelson Consulting and our NOOBEH cloud services group know how to get businesses in the best position to implement the tools and services that will propel the operation forward. From the most popular and powerful small business financial software to cloud platforms which enable connectivity in applications and workflows, we understand what it takes to help small businesses transform.

jm bunny feetMake Sense?

J

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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