What is Supply Chain Management (SCM) in ERP?

Supply Chain Management
Reading Time: 8 minutes

Summary: Supply chain management is a crucial segment of any industry. Monitoring the entire process of the supply chain is intricate and time-consuming. Plus, the methods followed for the supply chain’s efficient function are constantly evolving. The intervention of technology has paved multiple ways for the supply chain network to function with more agility and efficiency. ERP Software has been a supportive tool for the manufacturing industries to work more effectively. Now ERP System has undergone a lot of updation so that business operations can be conducted with more integrity, transparency and accuracy, saving a lot of time.


What is Supply Chain Management (SCM)?

SCM or supply chain management is the process of monitoring the entire supply chain network, from the procurement of raw materials to delivering the finished product to the customer. The main focus of SCM is to ensure maximum quality of the goods, safe and on-time delivery, best customer experience and significant profitability. In addition, the executives must monitor the continuous flow of goods, data and finances to prevent blockage and confusion. The impact of the supply chain’s actions is reflected in the business, whether positive or negative—better supply chain management results in achieving happy customers and ROI.

Examples of Supply Chain Management

Two examples of supply chain management are explained below : 

Generic Supply Chain Management

  1. Sourcing and selection of raw materials.
  2. Raw materials are collected by the logistics provider and given to the supplier(wholesaler).
  3. Later the raw materials are supplied to a manufacturer, wherein it undergoes a manufacturing process and is converted into a finished product that the consumer can use.
  4. The product is then distributed to the wholesaler, who sells it to the retailer.
  5. The retailer sells the product to the customer completing the entire cycle. Again the same process is repeated.


Supply chain for an e-commerce company

  1. The supply chain management of e-commerce is different from the generic module. E-commerce company sell their products using online platforms.
  2. The customer places an order for the product on the website. Then the product order is processed by checkout cart or third party product such as Shopify.
  3. Then the customer uses payment processors like G pay to pay for the product. Then the function of the SCM gets into action.
  4. As soon as the order is placed, the warehouse is notified and prepares the product to be taken by the logistics provider or in-house.
  5. The logistics provider then ships it to the shipping company, who then delivers it to the customer at their doorstep.

Supply Chain Management

Components of Supply Chain Management

Supply chain management functions are based on five major components :

  • Planning 

In supply chain management, planning the entire supply chain process is essential. Plan to execute effective supply strategies to match customer demands. Create a framework to maintain continuous supply and flow of raw materials to meet manufacturing demands. Large manufacturing industries rely on ERP systems to predict future supply chain requirements and plans.

  • Sourcing

Sourcing raw materials for the manufacturing process is a complex task:

  1. The raw materials have to meet the set quality demands.
  2. The price of the raw materials should meet market value.
  3. The supplier should assure a continuous supply of raw materials even during unforeseen events.

Make sure that the vendor supplies the raw materials on time. Especially when sourcing perishable goods, the vendor must be cautious. So, choose a vendor complying with your company’s supply chain needs.

  • Manufacturing

Manufacturing is an integral part of supply chain management. In this process, the raw materials are blended and transformed by using machinery, labour or other forces into a finished product that the consumer can use. But, manufacturing the finished product is not the final step of SCM. The next step is to assemble the product, inspect its quality and features and finally pack it carefully.

  • Delivery and logistics

In this stage, products are finally packed, ready to be shipped and delivered to the customer. A company should have robust logistic capabilities and delivery channels to reflect its brand image. Always plan to have a backup in case of any temporary distribution emergency.

  • Returning

The final part of the supply chain process is receiving product returns. Customers usually return the product if it is found to be defective. If the error is on the company’s part, it reflects the brand’s image. So this return process is called reverse logistics. Companies should be prepared with a plan to collect the product and return the customer’s refund.

However, it must be noted that customer returns are not just interactions between the customer and the company. Customer returns indicate the company inspects the defective, expired and non-conforming goods. Find out how many faulty products have reached the customer. It is the company’s responsibility to recall the product to save brand image.

<<<Also read: What are the main Features of Supply Chain Management?>>>

Challenges of Supply chain Management

1. Cost Hike

Throughout the supply chain management channel, costs have been increased, and profit margins are under sheer pressure. There is a lack of visibility and accountability, which apparently increases operational costs. Also, many factors are responsible for this price hike, including an increase in fuel price and commodity prices and high labor costs from manufacturers and suppliers.

Some complicated international logistics are shifting towards high charges for quick transfer and storage of product management. Also, commodity prices are on a hike due to the increasing cost of raw materials.

2. Complexities due to Multi-Channels

Customers prefer buying products through multiple channels. As the market expands, the supply chain should adapt. Hence, supply chain managers are required to generate variations on functions to address every channel. Also, it has become mandatory for managers to manage multiple supply chains, varied organizations, and third parties. This would ensure a better customer experience irrespective of how customers receive and order products. The rising complexities in the supply chain owing to multiple channels are a significant challenge for the sectors. 

Today, eCommerce websites are selling products to customers directly, requiring local logistics and quick delivery. Also, traditional wholesalers need large storage spaces near metro areas and precise inventory control. This will ensure that the products are available in ample amounts during the supply chain process.

3. Risk Factors in Supply Chain

Environmental fluctuations, economic pressures, international complexities, and trade-related conflicts directly or indirectly pressure the supply chain sector. However, these pressures can turn into risks and issues through networks. And this causes significant problems. 

Today, customers and clients are spread across the globe, which needs keen coordination and management. However, creating additional steps to the supply chain produces high complexities for downstream and upstream members. In terms of compliance, regulations, and quality management requires rigid agreements, controls, and contracts, which is a difficult challenge to overcome. Supply chain management managers are advised to produce contingencies along with mitigation action strategies to eliminate risks and manage them efficiently. 

4. Volatile Nature

Complexities and volatile nature create problems in supply chain management while also affecting the entire infrastructure. Dealing with these issues promptly is one of the tough challenges for managers before developing bottlenecks and more. The increase in the number of internationally sourced goods is causing port congestion. It pressurizes trains, ships, and trucks that require loading, unloading, and more functionalities. 

Some political situations are responsible for making tariffs throughout trade routes. It has resulted in additional fees and increased processing time of customs. Moreover, there has been a shortage of skilled drivers in trucking capacity. Due to the increasing pressure on the drivers, they are finding less lucrative jobs. And hence, logistics are facing difficulty attracting or retaining the right persons.   

5. Accountability & Compliance

Organizations are bound to consider social compliance while doing business across the globe. But, the supply chain sector is currently facing several unethical practices, including child labor practices, low wages, and more. Over time, verifying supply chain management partners to follow the standards has become essential. 

Managing risk-related issues is one of the top concerns for managers. The problems include legal issues and brand damage that causes irreparable damage to businesses affecting profit.

6. Quality Defects & Language Restrictions

Quality defects are pretty hard to manage since there are a lot of differences in accepting the defect stages in different countries. It is necessary to check the quality level and the ratio of acceptable defects in the coming time. 

Also, various countries conduct daily operations in different languages, which is again a challenge in the industry. To resolve these issues, supply chain management businesses should hire professional interpreters having skilled knowledge. This way, the language barriers can be eliminated.

<<<Learn more: Explained: Logistics vs Supply Chain >>>

Sage X3 ERP

Sage X3 ERP for Supply Chain Management is a feature-rich ERP Software solution that adds real essence to the complete supply chain management, including inventory management, material procurement, end-to-end customer product delivery, and more. The enterprise resource planning software has the potential to coordinate and integrate significant flows, including information flows, material flows, and financial flows. Make precise execution, control, planning, and monitoring in the supply chain management with Sage X3

How does Sage X3 combat the challenges mentioned above?

Inventory Management

Easily track and manage the availability of raw materials, spare parts, and stocked goods. Get updated asset management, future inventory, barcode integration, price prediction, and more with this supply chain management feature.

Track logistics and shipping

Coordinate appropriately with transportation channels, enhance customer satisfaction, and improve delivery management with an ERP system.

The logistics and shipping feature of Sage X3 supply chain management software helps with storage optimization, labor management, labouring, and much more functions.

Precise forecasting

With the specific forecasting feature of this supply chain management software, you can easily predict customer demands while planning the procurement and production processes accurately.

Eradicates the need to buy unnecessary raw materials or to store additional finished products in warehouses. This way, it reduces the overall cost of management.

Real-Time KPI

Sage X3 offers team members instant and latest updates on customer orders, inventory levels, and additional key factors. It aids businesses in tracking and monitoring supply chain problems which would help make quick decisions.

Moreover, by integrating ERP in supply chain management, Sage X3 supply chain management software would offer you the ability to analyse real-time KPIs. This helps check opportunities and concerns to make respective process adjustments and improve results.

Full Automation

Sage X3 enterprise resource planning software offers high-tech automation with which your supply chain business can save a lot of time. Your team can work more efficaciously by automating data inputs and other business functions while dedicating more to the most crucial tasks of the supply chain business.

With the highly integrated supply chain management SCM software solution, your business can make software needs simplified while minimizing human errors.

How does Supply Chain Management Software increase productivity?

In addition to effective planning, forecasting, and simple collaboration, an ERP is a boon in boosting supply chain efficiency in business disruption. We know that market disruptor are tough to compete in every industry, and if one hits your business, you should be able to get these changes quickly to complete the job.

Critical issues such as pandemics have shown how essential it is to have proper responsiveness and preparation to stay abreast of the competition. Today, businesses have been focusing on supply chain adaptability, speed, and risk management while not considering cost savings as a significant factor. Their goal has been to respond to customers’ requirements through flexible sourcing or connected supply chain networks. 

Sage X3

Sage Software Solutions is a leading IT company with an array of advanced ERP software solutions. Our proprietary products — Sage X3 and Sage 300 will help you cut your operational expenses, improve business productivity, increase operational efficiency, forge robust customer relationships, and strengthen association with vendors, suppliers, and distributors. So, if you are looking to reinforce your business fundamentals and emerge as an industry leader, then please schedule a call with one of our sales representatives.

Top 14 benefits of ERP for Medical Device Manufacturing?

Reading Time: 5 minutes

Summary: In India, ERP for medical device manufacturing is expected to grow at 37% CAGR to USD 50 billion by 2025. India is already the 4th largest medical device sector in Asia, and the ERP growth rate will only increase in the future. The primary reasons why medical device manufacturers need an ERP are capacity planning, scheduling, inventory control, and material requirements planning (MRP). Moreover, it helps medical device manufacturers comply with regulations formulated by drug administrations worldwide like risk management, process validation, product recall systems, statutory & regulatory compliance, effective product traceability, and many more. This article will shed light on how medical ERP can help companies solve their challenges and emerge as market leaders.

ERP for medical device manufacturing

6 primary segments in Indian medical device

  • Orthopedic products: Includes devices like artificial limbs, splints, braces, etc.
  • Disposables and consumables: Adhesives, catheters, tubing, medical gloves, staples, needles, gowns, etc.
  • Equipment and instruments: ECG, centrifuge, suction pump, oxygenators, etc.
  • I-V diagnostic medical device: Required for in-vitro examination of specimens.
  • Diagnostic imaging: Includes ultrasound, MRI scans, and CT scans.
  • Dental products: Excavators, floss, waxes, and much more.

Challenges faced by medical device startups in India

Various healthcare startups have spawned in the last few years and the government is also investing a lot in improving the country’s healthcare infrastructure. But this sector is also facing multiple challenges. Some of them are mentioned below:

  • Lack of resources
  • Quality deterioration
  • Strict compliances and government regulations
  • The increasing cost of raw materials 
  • Complexities in product development

How does ERP for medical device manufacturing help companies solve challenges?

Medical ERP systems streamline critical business processes and improve the organization’s bottom line. Moreover, Enterprise Resource Planning (ERP) for the healthcare industry eliminates inefficiencies and decreases excess costs. In addition, the following list provides 8 other benefits:

1. Reduction of cost

The biggest challenges medical device manufacturers face are increasing raw material costs and R&D expenses, which puts extreme pressure on their bottom lines. Unfortunately, many manufacturers refrain from healthcare ERP systems because of the high implementation cost. They fail to realize that it’s only a one-time cost, which enhances productivity and saves dollars in the long term. 

Without an ERP for medical device manufacturing, you will use disparate systems to manage business processes. As a result, you will lose efficiency, take more time to perform updates and fix glitches, and more approvals will be required for accessing critical business data. 

Healthcare ERP solutions, on the other hand, integrate varying features and modules into a single software, allowing business stakeholders across departments to access crucial data anywhere, anytime, and on any connected device. Moreover, intuitive dashboards and interactive reports help streamline workflows and offer a simplified view of all business activities quickly and succinctly. Other practical applications include identifying wasted resources, avoiding overproduction, and maintaining a reasonable amount of resources at all times. Gradually, your ROI and profit margins will widen, and you will save more time and money.

<<<Also Read: What are the primary business benefits of an ERP system?>>>

2. Regulations & Compliance

Healthcare organizations cannot afford to dip their manufacturing quality or not comply with standard regulations and compliances formulated by the government and international institutions. In case of non-compliance, they might be levied with substantial fines and experience fewer sales. Moreover, without a cloud-based healthcare solution, updating records across multiple systems becomes challenging and increases the chance of human-induced errors. 

An ERP solution provides you the ability to meet strict compliance standards. The quality management module has advanced traceability functions that conduct product recalls and simplifies audits. Also, it safely maintains and updates electronic data required for compliance documentation and audits. 

Here’s how the compliance module in ERP for healthcare helps companies:

  • Product lifecycle management (PLM) tools enable users to manage electronic documentation quickly and efficiently.
  • Build electronic validation scripts to comply with government regulations.
  • Lot traceability feature allows for generating reports and audits.
  • Radio frequency capability in plant floors and warehouses monitors and control the manufacturing of secondary products developed alongside finished goods, inventory, and supply products.

3. Worldwide operations

The global medical device manufacturing market involves multiple currencies, sites, and regulations. Fortunately, cloud-based healthcare ERP software allows companies to overcome these challenges as it is scalable and expands with your business needs. Moreover, business data entered in one business site can be easily accessed from anywhere, anytime, and on any device. 

ERP for medical device manufacturing is specifically built to withstand the global marketplace pressures. Country-specific Functionality (CSF) and global engines enable users to track and comply with international regulations and taxes. Thanks to the multi-currency management feature of healthcare ERP, buying and selling in multiple currencies becomes easy. Users can access business-critical metrics from anywhere globally with a single login through an ERP solution. 

4. Supply Chain Supervision

Recent developments in the healthcare industry are improving people’s lives worldwide. But you require a well-developed supply chain network to ensure everyone receives its benefits. Healthcare ERP software makes the entire supply chain network agile, enhances visibility across each step, and automates various processes. It consists of scheduling tools and product configurators enabling real-time changes, allowing medical device manufacturers to fulfill customer demands on time and avoid production line interruptions. Moreover, an ERP system also streamlines manual and repetitive activities, giving more time to employees to focus on mission-critical tasks. 

10 key benefits of implementing Sage X3 for Medical Device Manufacturing 

Sage X3 Enterprise Resource Planning software for Medical Device Manufacturing allows the senior management to make data-driven decisions that are better aligned to customer needs and changing market preferences. 

You can easily manage all your business functions — from procuring raw materials, scheduling shop floor activities, managing financials, sales, and inventory, and allowing varying departments to collaborate efficiently.

1. Reduce Product Recall

Eliminate the risk of a product recall by gaining sharp insights into your product costs and getting real-time control over work order details.

2. Get 360-degree control over business data

Unlock high ROI by improving traceability, managing operations intuitively, and handling warranty, customer care, & service orders quickly.

3. Enhance organizational agility

Reduce machine breakdowns and react quickly to delayed deliveries with automated responses minimizing their impact on the manufacturing operations.

4. Improved project management

 Integrate advanced project management features into each Sage X3 process like sales, purchasing, MRP, work orders, quotes, and for ensuring effective cost management.

5. Financial management

Manage multiple companies in the same database using Sage X3 ERP for Medical Device Manufacturing. You can manage the organizational, business, and geographic needs of all subsidiary companies using the multi-site, multi-currency, multi-language, multi-legislation, and multi-ledger capabilities of Sage ERP software.

6. Quality management

Improve consumer trust and enhance trust in your products with the quality management feature of the Sage X3 ERP software. Conduct timely control tests and periodic inspections to ensure manufactured products adhere to industry specifications.

7. Supply Chain management

Sage X3 ERP system for supply chain management has advanced purchasing cost management and data models that efficiently manage stock valuations, logistics, sales management, workflow management, customer service, inventory management, and many more.

8. Traceability and lot racking

Sage X3 ERP for the healthcare industry automatically generates a complete audit trail and efficiently manages single and multi-level bills of materials.

9. 360-degree global compliance

Sage X3 healthcare ERP software will enable you to comply with currency and international laws and regulations specific to a particular region.

10. Extensive manufacturing functionality

Sage X3 ERP manages various aspects of medical device manufacturing, such as bills of materials (BoMs) to production management methods by order, job, or inventory. As a result, you can cut operational costs and maintain uniform quality levels.


Sage 300 for Financial Services

Sage 300Cloud for Financial Services
Reading Time: 3 minutes

Frustrations can easily multiply when it comes to your accounting system as your organization grows with time. You may even encounter that your accounting system is a barrier for your organization to grow and perform its account tasks efficiently. Financial Services firms must be in control if not, it can lead to spiraling overhead expenses, unnecessary risks, and functional boundaries.

ERP Solutions should be more scalable when it comes to business expansion for the company which provides financial services, also An ERP plays a vital role in analyzing existing business practices for inefficiencies and upgrading them to operate in more efficient ways.

When it comes to financial services Sage300 is one of the best solutions for handling daily accounting tasks with their accounting models which have seamless integration within.

Challenges faced by Financial services Firms:

 When your business revolves around maximizing development and profitability while minimizing costs and risks, your financial management software significantly affects your bottom line.

Some of the major challenges are faced by a Manpower Outsourcing industry

  • Financial Services firms tend to find that their finance teams’ time is bound up in admin over-analysis. This is due to time-draining manual methods such as importing and exporting data files, disconnected systems, manual data entry, and lack of integration which can lead to a loss in revenue and day-to-day operation failure.


  • The finance team spends hours and sometimes days building and producing reports, but by the time that they are produced, the information is already out-of-date. This restrains a Financial Services firm’s ability to grow and makes it hard to drive important decision-making.


  • In a heavily handled industry such as Financial Services, it is important to ensure you have a clear and evident audit trail that is easy to obtain rather than spending weeks gathering email chains and documents.


  • For many finance teams, month-end is one of the most stressful and time-consuming procedures. Time is essential for Financial Services firms and taking weeks to close the books can become unmanageable. This can be due to not enough automation, lack of procedures and complex spreadsheets and can be a drain on resources every month.


  • Handling multi-entity organizations can be challenging, made even worse if it is a manual process. Managing these manual processes is time-consuming, tending to human error, and directs to inadequate reporting.

Solution with Sage 300

 Sage 300 (formerly Sage Accpac) is an enterprise resource planning (ERP) software system that serves small and medium-sized businesses in professional services, financial services, the public sector, and other markets such as distribution and wholesale.

Sage 300 is one of the best solution when it comes to offer accounting software for financial services company.

Sage 300Cloud for Financial Services


Sage 300 gives powerful and highly detailed accounting module helps you track daily transaction, and more down to the details of many reports, so you can keep them profitable and on time. This is ideal for companies with complex financial structure.

Sage 300 Account Payable (AP) and Account Receivable (AR) modules make it easy for you to see at a glance how well your company is performing and it will also help you to know company performance. Accounts Payable module provides your business with a powerful library of accounting and reporting features that expedite the rapid entry of vendor invoices and full check reconciliation using Bank Services.

Accounts Receivable module helps you to identify customer’s sales statistics, track outstanding balances, easily apply cash to outstanding invoices, and allow you to schedule recurring charges for faster invoicing.

Sage 300Cloud for Financial Services

Sage 300 allows transactions to be entered in multiple currencies like USD, Euro, AED, etc. Reports are available in transactional and home currency.

Sage 300 also provide you one of the powerful tool for reporting know as business Intelligence reporting (BI). BI helps to generate customize report as per your requirements.

Sage 300 ERP Financial Reporter tool is one of the most powerful and user-friendly tools out there. It is a spreadsheet containing functions that read data instantly from General Ledger. Using the financial reporting tool’s drill-down feature, you can drill to the transactions and the account details. Data can be designed and viewed in Excel spreadsheets. One can develop comparison reports and derive the balances of only the parent account and optional field data by using the FR tools’ functions. It also allows for simplifying the reporting of the consolidated databases.

Why is product lifecycle management a significant component of business growth?

product lifecycle management
Reading Time: 4 minutes

SUMMARY: At its very basic level, product lifecycle management is a systematic way of managing the thorough journey of a product/ service from its initial stage till its development, service, and finally disposal. In short, product lifecycle management PLM is everything right from the start to its end. So, let us see here the importance of product lifecycle management in business growth in detail.

product lifecycle management

If your business has been introducing a product in the market, then it might need to carry out various steps in every department of the organization. There are a bunch of challenges to the path of the product’s successful launch. Though the engineering and designing department gives a finished product, the outcome might still fail. Not least, but the sales/marketing team could also skip the chance to make the product more appealing to the customers. Also, a weak link in the process can lead to the lowest profit expansion of the business.

This all might seem like a stumbling block to you! 

But do you know what could be the ever best solution to this issue? 

It is ‘Better communication’! 

It is imperative to properly send information about a product/service across all departments, which indicates the success of an organization. To achieve this, a PLM or a product lifecycle management becomes truly crucial. 

This blog post lets us learn everything about product lifecycle management and its significance.

<<Also Read: Why is Product Lifecycle Management (PLM) essential for your company?>> 

What is product lifecycle?

A lifecycle management PLM is a model for small businesses that is based on the concept that any product launched in the market needs to go through several stages, including introduction, growth,  maturity, and lastly, decline. Though the duration of these stages, as well as the scope, may vary the organizational strategies must stay constant without failing. The product lifecycle is closely connected with marketing while it can also assist small entrepreneurs in developing new products, planning costs, and learning the latest industry trends. 

A product lifecycle is a forecasting, control, and planning tool to estimate the business profit. 

If your business is in a developing stage, you must explore the way to manage the product life cycle along with its stages. 

Why you must have product lifecycle management?

PLM (Product lifecycle management) offers quick and long-lasting results to an organization. It helps enhance the communication among various departments leading to systematic services. This way, employees can get access to the most relevant information without waiting too long for the emails. With easy communication, the resources and time as well can be accurately given to increase the quality of the product. It will develop efficiency externally and internally also. Moreover, customers could also get the profits since their queries would be easily answered in the fastest way. 

product lifecycle management

What factors does PLM involve?

  • The nature of the industry and product decides on what parameters the PLM software would revolve. Some of the most crucial factors include-
  • Executing different resources including finance, people, and infrastructure 
  • Securing the business confidential decisions related to product development
  • Staying constantly updated with the market trends related to customers, technology, and industry 
  • Developing and deploying the top-notch sales/ marketing strategies 
  • Final delivery of lucrative products

<<> Also Read: What is the correlation between Supply Chain Management Software & ERP Solution? >

Significance of the Product Lifecycle Management PLM

There are a number of reasons why business professionals strictly manage a product lifecycle. Some of the prime reasons include-

Proper financial impacts 

The investment required from R&D to launch a product like a car, life-saving drugs, or even consumer durables includes billions of investments spread throughout the years. However, if you miss a single PLM process then your company faces high financial implications causing even bankruptcy. 

Staying up-to-date 

Once success is accomplished, businesses should not get lethargic. For better results, product & project managers should keep a keen watch on the competition with market-transforming products. The best product lifecycle management PLM plan must make sure that businesses keep revisiting their products for any kinds of revisions to be made as per the industry and technology trends. 

product lifecycle management

Changing customer expectations

Today, the enhanced lifestyle has increased the general expectations of customers. Let us see a small incident. If you want to purchase a mobile phone, what do you ask first? Definitely its battery or camera specifications. Coping with these informed and most demanding customer requirements makes it necessary for the managers to review product management plans keenly as a small part of the product development lifecycle process. 

Business survival

For the best class outputs, entrepreneurs should be agile and ready to bring required changes on the floor. If they become arrogant or ignorant, then this might keep companies behind the race. It is this reason why the most iconic brands such as Nokia has disappeared from the market.

So, business heads should always have a sense of their survival while ensuring that their product team is reviewing the strategies and plans regularly. 

<< Also Read: Product Expiration Management in Sage X3>>

The working of product lifecycle management PLM

PLM does not mean just emailing or preparing any proper documentation. It is way beyond that. Though emails and documentations are parts of PLM, it also includes more engaging parts. As discussed earlier a clear definition of PLM is managing a product right from its start to its disposal. It revolves all around various actions that require servicing, making, and distributing a particular product.

The most important factor of product data management PDM is the collection data of from every department and saving it into a centralized database. This way, the departments working on a specific project can share data with the workers. It is called a unified approach that all workers can fetch benefit from. 

Explained: Logistics vs Supply Chain

Logistics vs Supply Chain
Reading Time: 5 minutes

Summary- Supply chain management involves sourcing, manufacturing, processing, and delivering products/ goods to the customers. On the other hand, logistics means moving and storing the products/goods in various supply chain businesses. Let us learn what logistics vs Supply chain is in this blog post.

Logistics vs Supply Chain

Logistics and supply chain management possess several similarities, but there exist some significant differences that make them distinctive. Understanding their roles can help companies build operational improvements, develop competitive benefits, and improve customer services on a large scale. 

In this post, let us dig into detail about logistics vs supply chain and find the difference between logistics and supply chain. 

Also Read: <<10 Interesting Questions Related to Supply Chain Management>>

What is Supply Chain Logistics?

Supply chain logistics precisely track the shipping and storage of services and goods throughout the supply chain. The process initiates with raw materials, proceeds with the manufacturing and distribution, and ends with the successful delivery of the product/service to the customers. 

Salient points to consider:

  • Supply chain management revolves around competitive benefits. 
  • Supply chain management brings the accurate coordination and movements of the supply chains of an organization.
  • It is the modernized method of delivering goods/services to all types of end customers.
  • It is an extensive term that correlates the connection between the distributors/suppliers and high-end customers.
  • Supply chain management SCM is a series of internally connected activities such as moving raw materials to finished goods until it is delivered to the end-user
  • If executed properly, Supply chain management and logistics both can offer incredibly competitive benefits to the companies. 

What is Supply Chain Management?

It embraces the activities to create final goods from raw materials and then deliver them to the consumers. 

If you want to refine and optimize supply chain management in your business continuously, it is critical to have visibility throughout the supply chain. This would help organizations track every movement of services and goods through every stage of the supply chain. It makes it simple to follow whether everything is running as per the plans. Moreover, if there are any disruptions or obstacles midway through these operations, then SCM allows decision-makers to take enough time to reply back. 

Also Read: <<What is the correlation between Supply Chain Management Software & ERP Solution?>>

What are Logistics? 

Logistics embraces executing and planning the storage and shifting of goods between various points in the supply chain. It also includes coordinating people, facilities, and other resources to ensure that the products are moving and there is enough required space for them to store at the next centre. What more falls under the term logistics include transport, fleet management, material handling, demand planning, and order fulfilment. 

Logistics vs Supply Chain

Logistics vs Supply Chain In Short 

SCM is nothing but a high-standard process that involves sourcing and purchasing raw materials and then generating completely finished goods. It leverages logistics to execute the delivery of goods to the customers. It also emphasizes developing supply chain functions that can benefit not only the business partners but also the customers. 

Supply chain management SCM helps set routine logistics activities in warehouses, factories, local shipping stores, etc. 

On the other hand, logistics is one facet of the supply chain that delivers and stores final goods/products to the customer irrespective of manufacturer, consumer, and distributor. Its prime aim is to deliver goods/products on time to consumers at an affordable price. 

Also Read: <<The 4-Step Approach to Better Supply Chain Management>>

Why is Logistics so crucial for Supply chain management? 

In supply chain management, logistics looks after the proper movement and storage of services/goods, documents, and reports that files every activity across the product journey to the customer. Logistics include different transportation methods that take inventory from one level to another level. It is one of the aspects that check out where the goods can be stored and what strategies are required for efficacious supply chain management of the business. 

Logistics vs Supply Chain
What are the critical differences between logistics and supply chain management? 

Learning logistics vs supply chain is essential for businesses. So, let us have a quick look at some prime aspects of logistics that support the supply chain at its best-

  • Delivering the right goods/products at the appropriate time 
  • Retaining consumers and adding value to loyalty
  • Offering unique value for businesses
  • The decreasing cost and increasing efficiency of the process
  • Providing a proper means to deliver goods from the most feasible location for manufacturing to the consumer’s location

Supply chain management and logistics focus primarily on good product flow from the starting to end. However, these concepts need precise coordination of labour, facilities, and supply so that products move in the appropriate place and time. 

Also Read: << Top inventory management techniques SMEs must follow>>

Let’s see the significant difference between logistics and supply chain management i.e. logistics vs supply chain now.

Logistics is one of the factors of SCM. SCM includes various activities such as inventory planning, production planning, facilities & material management, labour planning, delivery of goods/services, and manufacturing.

Logistics v/s Supply Chain
One of the best points to consider about logistics vs supply chain is that logistics focus more on accomplishing customer demands and needs. While SCM functions toward enhancing processes to generate more significant benefits for the businesses.

Logistics emphasize cost-efficient product delivery to the customers, while supply chain management manipulates the overall development of raw materials in final products. These products are sent from the supplier to the manufacturer, to the warehouse, and finally to the consumers/ retailers. 

Also Read: <<Top 6 Ways to Tackle Supply Chain Complexities>>

Logistics term was introduced with the military long back when Alexander the Great was born in 356 B.C. He was considered as a logistics master. On the other hand, the advanced practice of SCM was initiated in the 20th century. He was logistician Keith Oliver who introduced the concept of supply chain management in the 1980s. 

How to Improve Customer Lifetime Value?

How to improve customer lifetime value
Reading Time: 11 minutes

Summary: Do you know it’s five times more expensive to find new customers than to retain the existing ones? Therefore, you should focus more on offering the best services to your existing customers to retain them for a longer period and ensure they don’t start buying products from your competitors. One of the best ways to keep the customer churn rate low is by measuring the Customer Lifetime Value (CLV). By doing so, you can acquire and retain highly valued customers and earn more revenues over time. 

How to improve customer lifetime value

What is Customer Lifetime Value?

Customer lifetime value is a metric that determines the revenue a business can generate from a particular customer throughout the business relationship. 

The longer a customer continues purchasing products or subscribing to your company’s services, the higher their lifetime value becomes. 

The best part is that client service agents and support teams can influence this metric during the customer’s journey by offering suitable recommendations to help customers make better buying decisions and solve any challenges they face. 

This metric will also help identify the customer segments who are most likely to subscribe to your services and purchase your products. This way, you can make decisions and brainstorm strategies for the target segment that is most valuable for your company. 

How to improve customer lifetime value


Why is Customer Lifetime Value Critical for your business?

Read the following points on why getting a comprehensive picture of Customer Lifetime Value (CLV) is crucial for your business:

1. You can boost customer retention and loyalty.

Customer lifetime value allows you to determine alarming trends like a shrinking customer base. Then, you can brainstorm effective strategies to eliminate these trends and build a robust clientele.

For example, if your CLV score is very low, you can work around your customer support strategy and devise effective customer loyalty programs. 

2. Increasing CLV can decrease customer acquisition costs.

A recent report by the European Business Review discloses that it’s five times more expensive to acquire new customers than to retain the existing ones. 

Another study by Bain & Company shows that a 5% increase in customer retention rate can help companies increase their profit between 25% to 95%.

The reports mentioned indicate why it’s essential to identify and nurture the most valuable customers and build long-lasting relationships with them. As a result, you can increase your customer lifetime value, enhance profits, and bring down customer acquisition costs. 

<<<Also Read: The Cyclonic Customer Buying Journey>>>

3. CLV is directly proportional to revenue over time.

Business revenue depends on the value a customer brings throughout the relationship. Therefore, the longer a customer’s lifecycle, the more income your business will earn. 

CLV identifies customer segments that are most likely to purchase your products. This way, you can encourage these customers to make more purchases resulting in more cash flowing into your bank account. 

A recent Hubspot research indicates that 55% of growing companies believe that investing in customer service programs is critical to their existence. 

How to calculate customer lifetime value?

Use the following formula for calculating customer lifetime value (CLV):

How to improve customer lifetime value


How to improve customer lifetime value

Customer Lifetime Value models

There are two primary models for calculating customer lifetime value. Your outcome will significantly change based on the model you select. The first one extracts valuable insights from pre-existing data that helps study customer purchase behavior in the past. The second one allows determining how customer behavior will change in the future.

a. Historical Customer Lifetime Value 

The historical model calculates lifetime value based on past customer purchase behavior without considering whether the customer will keep on purchasing products from the company or not. 

This model determines the value of a customer based on their average order value and will prove beneficial for your business if a significant percentage of your customers purchase your business products continually over a sustained period. 

However, this model has a substantial defect. For example, some of your active customers might stop interacting with your business after some time. On the other hand, inactive customers (who have stopped purchasing your products) might start interacting with your business after a brief pause. This way, your customer lifetime value (CLV) data can be skewed and will not help you make appropriate business decisions. 

How to improve customer lifetime value

b. Predicting Customer Lifetime Value

The predictive CLV model predicts the future value of a customer using machine learning and regression analysis. 

This way, you can determine:

  • Which customers have the highest buying potential?
  • Which products have the highest selling potential?
  • Ways through which you can boost customer retention

Customer lifetime Value formulas

Remember that data helps you determine what products/services your customers are searching for, helping you brainstorm effective strategies better aligned with your business vision and mission.

Now let’s delve deep into the lifetime value calculation formulas that will allow you to analyze your business needs better and calculate customers’ buying potential. 

1. Average Purchase Frequency Rate

You can easily calculate this ratio by dividing the number of products purchased by unique customers over a particular period. 

How to improve customer lifetime value

2. Average Purchase Value

This number can be easily calculated by dividing your business revenue by the total number of orders placed by customers over a particular period (mostly 1 year).

How to improve customer lifetime value

3. Average Customer Lifespan

Calculate this value by averaging the number of years a customer continues purchasing your business products. 

How to improve customer lifetime value

4. Customer Value

Start by calculating the average purchase value and the average purchase frequency rate. Then multiply both to calculate the customer value. 

How to improve customer lifetime value

5. Customer Lifetime Value (CLV)

The lifetime value formula is pretty easy and straightforward to calculate. You need to multiply the customer value with average customer lifespan. Remember the following equation:

How to improve customer lifetime value

<<<Also Read: 5 Most Important Stages of a Customer Life Cycle>>>


Benefits of CLV

Here are the benefits of improving Customer Lifetime Value (CLV):

1. CLV will allow you to strike a balance between short-term and long-term marketing goals and help you make better financial returns on your investments. 

2. CLV enables companies across industries to measure how marketing campaigns, activities, and other initiatives are helping achieve marketing goals. 

3. CLV helps marketers judiciously use the marketing budget by spending more time acquiring customers with higher value. 

4. CLV allows increasing lifetime value and building robust relationships by identifying the challenges of an existing customer. 

5. CLV allows you to identify underutilized areas that help increase focused spending and create loyalty objectives. 

How to improve customer lifetime value


How to boost Customer Lifetime Value 

Below are some valuable strategies that will help you increase your customer lifetime value:

1. Increment the average order value

You can significantly boost your CLV by increasing the average order value.  

For example, when a customer is on the checkout page, you can offer various complementary products. Amazon is the best example in this regard. 

Suppose you are buying Harry Potter — The Philosopher’s Stone on Amazon. Then while you are on the checkout page, you can see a long list of related products. For example, many customers purchase the whole set of 7 Harry Potter books instead of buying only 1 because they get a massive discount on purchasing the entire collection. 

Why this strategy works?

Considering that only a few people purchase the entire Harry Potter set. So, Amazon’s earning potential through this up-selling technique might appear insignificant. But even a tiny trickle of dollars over a sustained period turns into significant revenues and increases the total CLV.

2. Collect and analyze customer feedback

As discussed before, collecting and analyzing customer feedback allows you to determine:

  • Whether your products are serving the purpose?
  • Whether your customer service is up to the mark?
  • Where do you stand against your competitors?
  • How can you improve your products/services further?
  • Gaps in your outreach programs to better connect with customers.

When you have data about the points mentioned above, you can calculate the lifetime value of a customer better and brainstorm effective strategies to acquire and retain new and existing clients, respectively. 

Here are some ways of collecting customer feedback:

  • Automated emails
  • Focus groups
  • Customized surveys 
  • Social media channels 
  • Face-to-face or online Interviews

Why this strategy works?

When you listen more to your customers, you understand their likes, dislikes, desires, and aspirations. Using this data, you can determine what products they are most likely to purchase, allowing you to devote time and resources to developing only such products. In addition, you can identify hidden loopholes in your product that would have otherwise gone unnoticed. 

3. Build robust customer relationships

Forming long-lasting customer relationships is essential for your business to boost its CLV. If you offer the best product price and top-notch customer service, customers would like to interact more with your company and spread excellent word-of-mouth. 

Moreover, social media has become a critical channel for building robust customer relationships. Sustained digital marketing efforts take time but eventually help identify new customers and retain the existing ones. Also, remember that customers today want to cultivate personal relationships instead of dull and dry business associations.

 So, instead of only relying on posting product advertisements on social media channels, start replying to their comments. Request them to share their feedback with you. You can also send simple and small gifts that align with your target customers’ interests to show your gratitude. 

Why this strategy works?

These are a few eye-opening facts that you should remember:

So, ask yourself this question repeatedly: What is customer lifetime value? Because this way, you will realize that there isn’t any point in calculating CLV if your business fails to build a concrete customer relationship.

In short, forging smooth customer relationships is directly proportional to CLV. Therefore, the stronger your customer relationships are, the higher your CLV. 

4. Simplify the process of creating customer relations.

A recent survey reveals that 88% of customers want a response to their email within an hour. However, the same survey also tells that 62% of companies failed to reply to an email from a customer at all. 

Therefore, relying on automation response tools is the best way to increase the average number of customers you respond to over a particular period.

Customer Relationship Management (CRM) is the best example of automating a business’ customer outreach program. 

For example, Sage CRM is one of the most effective CRM software. The following infographic will explain the benefits of implementing Sage CRM in your business.

Why this strategy works?

Today, building real-time customer connections dictate CLV. The better and earlier you respond to your customers, the higher the probability your customers will stick with you and refrain from associating with your competitors. While responding to your customers within one hour might not be possible right now, you can work towards decreasing customer response time. 

This way, you can hold customers’ attention and encourage them to continue buying from you.

The below infographic explains how Sage CRM can help you build robust and long-lasting customer relationships.

How to improve customer lifetime value

5. Improve the product return experience

It might be the case that your customer is unhappy after purchasing a product or subscribing to a service. Therefore, you must have an appropriate channel for expediting product recall and providing refunds.

Why this strategy works?  

There is a high probability that the customer will return to your website to give your product or service another try if you have a painless, smooth, and straightforward return process. 

6. Create and share targeted marketing collateral

Succeeding in today’s cut-throat competitive world is impossible without investing substantial resources in developing high-quality marketing collateral, including ebooks, guidebooks, whitepapers, case studies, blogs, research papers, explainer videos, customer testimonials, podcasts, etc. Once you have an extensive repository of high-quality content, you should focus on sharing it across various social media platforms to increase your customer reach.

Why this strategy works?

Highly targeted marketing collateral enables companies to share critical information/data tailor-made for a specific target audience. This way, you can address their challenges, provide 360-degree information about your product or service, and build personal relationships. In addition, such sustained efforts allow a company to increase customer spending over a long period. 

7. Simple and straightforward buying experience

Businesses measure cart abandonment rates to identify how many customers add products to their cart but leave the website before making the final purchase. 

The below infographic shows the cart abandonment rate per industry:

How to improve customer lifetime value

As you can see in the infographic above, the cart abandonment rate varies between 61-89%, meaning many customers don’t click on the final purchase button. 

By providing a seamless and clutter-free purchase experience, you can encourage customers to pay for the products they have added to their buying cart. 

Why this strategy works?

The fewer stages a buyer has to pass to reach the checkout page, the less likely they will abandon the cart. So ensure that the purchase experience is seamless, simple, and straightforward.

8. Identify and reward loyal customers

Remember that a loyal customer is one of your company’s most significant assets because they usually have the best CLV. So create hyper-relevant marketing collateral, up-selling & cross-selling opportunities, and give cash rewards to your most loyal customers to hold their interest. 

Why this strategy works?

By giving top-tier benefits to your most valuable customers, you ensure that they will continue purchasing your products for a long time. In addition, you can also provide exclusive access to pre-released products & services and free expedited shipping services to hold on to your most valuable customers and significantly increase your customer lifetime value.

9. Manage unhappy customers

It’s critical to handle unhappy customers to increase your customer lifetime value. The following reasons explain why:

  • You can reduce the customer churn rate by converting dissatisfied customers to loyal ones.
  • You can resolve customer problems before they escalate out of proportion, resulting in the breakdown of the customer relationship.
  • Not addressing or ignoring customer challenges can lead to irreparable reputation loss and spread bad word-of-mouth in the market.

Why this strategy works?

By managing unhappy customers, you can identify loopholes in your products and improve them. Also, you can encourage detractors to try your products/services again, contributing to your company’s revenues. 

Few customer lifetime value mistakes

We have discussed the benefits of CLV and how it can benefit your business. But it isn’t a cure-all pill. If misused, CLV can waste a lot of time and money.

Following are a few CLV mistakes that you should avoid:

1. Choosing the wrong customer segment

Choosing the right target audience is at the center of CLV. You will lose significant time and money if you run behind customers who display the least interest in buying your products. But on the other hand, creating relevant customer segments requires cutting-edge research and mathematical precision, which may be a stumbling block for small and mid-sized companies that lack access to machine learning algorithms and AI.

2. Choosing a random number for your CLV

Small companies or start-ups lack concrete data regarding customer lifetime value. So they assume a random number. The problem with accepting random CLV is that it continually changes with:

  • An increase/decrease in the number of customers.
  • Launch of a new array of products in the market.
  • New product prototypes. 

Remember that you can estimate a better number if you have access to more data sources. So try to gather data from as many sources as possible. 



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At Sage Software Solutions (P) Ltd., we are home to world-class ERP software and CRM software that will solidify your business tech support fundamentals and enable you to build a customer-centric organization. You can also write to us at sales@sagesoftware.co.in.

Disclaimer: All the information, views, and opinions expressed in this blog are those of the authors and their respective web sources and in no way reflect the principles, views, or objectives of Sage Software Solutions (P) Ltd.

3 Golden Rules of Accounting

Golden rules of accounting
Reading Time: 6 minutes

Summary: A company tracks its financial transactions by following rules of accounting. They help review, summarize, and report financial transactions to tax collecting authorities, finance watchdogs, and regulators. But remember that financial accounting is much more than book-keeping. Each financial transaction has two entries, namely credit (what goes out) and debit (what comes in). Financial institutions must know which account needs to be credited and which one should be debited. Moreover, it’s also essential to remember the three golden rules of accounting that create an easily understandable set of book-keeping principles ensuring all financial transactions are recorded systematically.

Golden rules of accounting

Types of accounts

The golden rules of accounting enable financial companies to document financial transactions in ledgers safely. Each financial transaction has two entries — credit and debit, and it belongs to any of the following three types of accounts:

  • Real account
  • Personal account
  • Nominal account

Let’s study them one by one.

  • Personal account

A personal account is a general ledger account for a firm, person, or association.

It can be further subdivided into three categories:

a. Natural Personal Account

These accounts are held by humans, including creditors, debtors, capital accounts, and drawing accounts.

b. Artificial Personal Account

These accounts are not held by humans but by various legal entities. For example, cooperatives, companies, partnerships, banks, hospitals, government bodies, non-governmental organizations, etc.

c. Representative Personal Account

Natural or artificial people hold these accounts. Transactions in these accounts belong either to the former or the following year. Therefore, they are called representative accounts because they represent financial transactions. For example, outstanding salary, meaning salary that hasn’t been paid since the last year. Similarly, prepaid rents represent the rent that has already been paid in advance for the following year.

Golden rules of accounting


2. Real account

A real account is an account that represents an organization’s total assets. It appears in the balance sheet and helps critically examine a business’s financial position. 

These organizational assets can be further divided into categories:

a. Tangible assets

This category consists of assets that can be seen, touched, and measured. For example, buildings, machinery, land, furniture, and a cash account.

b. Intangible assets

This category contains assets that can’t be measured, seen, or touched but felt. However, these assets have monetary value and, therefore, are essential for the company. For example, patents, copyrights, goodwill, and trademarks. 

3. Nominal Account

A nominal account is an account that records incomes, losses, profits, and expenses. The adjustments in the nominal account are made using the loss and trading & profit account at the end of a particular financial period. 

Examples include Salary, Interest, and Rent accounts, and commissions received. 

3 Golden Rules of Accounting

1st Golden rule of accounting: Debit the Receiver, Credit the Giver.

This rule works for personal accounts. For example, when a person or a business donates something to another organization, it becomes an inflow for the latter. As a result, the creditor must be mentioned in the records. Similarly, the recipient must be debited in the same records. 

2nd Golden rule of accounting: Debit what comes in, Credit what goes out

This rule applies to real accounts, including soil, machinery, buildings, furniture, land, and much more. The things mentioned above have a debit balance by default. Therefore, debiting the assets purchased by the company increases the existing account balance. Similarly, crediting the assets that move out of the company decreases the account balance.

3rd Golden rule of accounting: Credit all profits and incomes, Debit all expenses and losses.

This rule applies to a nominal account. A firm’s money has a negative credit balance because it’s a responsibility. Remember that capital decreases when deficits and liabilities are debited. On the other hand, it increases when profits, gains, and incomes are credited. 

The following table explains the three golden rules of accounting in a better way:

Accounting rules Personal Accounts Real Accounts Nominal Accounts
Credit The giver  What goes out Profits and incomes
Debit The receiver What comes in  Loses and expenses

Modern Accounting Approach

The modern approach classifies all accounts into five categories:

  • Liability Accounts
  • Expense Accounts
  • Revenue Accounts
  • Capital Accounts
  • Asset Accounts

Let’s analyze them:

  • Liability Accounts

These are accounts of creditors for goods, lenders, and outstanding expenses.

  • Expense Accounts

These accounts record all expenses and losses incurred while performing the daily activities of a business. Examples include salary, wages, discounts, rent, depreciation, etc.

  • Revenue Accounts

These accounts store profits and incomes. Examples include bad debts recovered, sales, discounts received, interest earned, etc.

  • Capital Accounts

These accounts belong to proprietors, angel investors, and partners who have invested their money in the business. Capital accounts include the Drawings account and Capital account.

  • Asset Accounts

These accounts relate to the tangible assets held by a firm, including furniture, machinery, buildings, plant, bank accounts, cash, etc.

Golden rules of accounting

The following example will help you understand the three golden rules of accounting in a better manner.

Here’s the list of transactions that will form the basis of our calculations.

  • Firm A begins its operations with an initial capital of INR 1,00,000.
  • “A” rents a property worth INR 20,000 for conducting business activities.
  • “A” purchases products worth INR 40,000 from firm B on credit.
  • “A” sells products worth INR 80,000.
  • “A” pays in cash for the products bought from firm B.
  • “A” pays salaries/wages worth INR 40,000 to its workforce.

Before moving forward, let’s identify various accounts and the type of accounts for each transaction mentioned above. This exercise will simplify the application of the golden rules of accounting. 


Transactions Accounts involved Types of accounts
Capital worth INR 1,00,000 Captial A/c; Cash A/c Personal Account; Real Account
Rent of INR 20,000 Cash A/c; Rent A/c Real Account, Nominal Account
Purchase of products worth INR 40,000 Purchases A/c; Company Y A/c Nominal Account, Real Account
Sell products worth INR 80,000 Sales A/c; Company Y A/c Nominal account, Real account
Pays in cash for the products bought from B. Cash A/c; Company Y A/c Real account, Personal account
Pays salaries/wages worth INR 40,000 to its workforce Cash A/c; Salary A/c Real account, Nominal account

Applying the golden rules of accounting

Now, let’s determine the journal entries using the golden rules of accounting.

Company A starts with an initial business capital worth INR 1,00,000.

Cash is a tangible asset and is, therefore, part of a real account. On the other hand, capital is a personal account. 

Based on the golden rules of accounting (for personal and real accounts):

  • Credit the giver
  • Debit what comes in
Account Cr Dr
Capital A/c 1,00,000
Cash A/c 1,00,000

Company A rents a property worth INR 20,000 for conducting business activities.

Rent is considered an expense and is, therefore, a part of the nominal account. On the contrary, cash is a part of a real account. 

Based on the golden rules of accounting (for nominal and real accounts):

  • Credit what goes out
  • Debit all expenses and losses
Account Cr Dr
Cash A/c 20,000
Rent A/c 20,000

Company A purchases products worth INR 40,000 from firm B on credit.

Purchase transactions are part of a nominal account because they are taken as an expense. Whereas, firm B is a part of the personal account. 

Based on the golden rules of accounting (for nominal and personal accounts):

  • Credit the giver
  • Debit all losses and expenses
Account Cr  Dr
Firm B A/c 40,000
Purchases A/c 40,000

Company A sells products worth INR 80,000.

A business generates income by selling products and, therefore, it’s a part of the nominal account. 

Based on the golden rules of accounting (for real and nominal accounts):

  • Credit all profits and incomes
  • Debit what comes in
Account  Cr Dr
Sales A/c 80,000
Cash A/c 80,000

Company A pays in cash for the products bought from firm B.

Firm B is a personal account and cash is a part of the real account. 

Based on the golden rules of accounting (for personal and real accounts):

  • Credit what goes out
  • Debit the receiver
Account Cr Dr
Cash A/c 40,000
Firm B A/c 40,000

Company A pays salaries/wages worth INR 40,000 to its workforce.

Salary is a part of the nominal account as is considered an expense to the business. And cash is part of a real account. 

Based on the golden rules of accounting (for nominal and real accounts):

  • Credit what goes out
  • Debit all losses and expenses
Account Cr Dr
Cash A/c 40,000
Salary A/c 40,000

Sage X3 for Finance

The foundation of the modern accounting system stands on these three golden rules of accounting. It helps companies across industries standardize financial transactions, enabling government authorities, financial institutions, and tax authorities to get a 360-degree view of the business’s financial situation.

Always remember these guidelines while applying these golden rules of accounting:

  • Identify the types of accounts in the transaction.
  • Monitor whether transactions in the account increase or decrease the account value. 

The three golden rules of accounting will always keep your accounts updated. 



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At Sage Software Solutions (P) Ltd., we are home to world-class ERP software and CRM software that will solidify your business tech support fundamentals and enable you to build a customer-centric organization. You can also write to us at sales@sagesoftware.co.in.

Disclaimer: All the information, views, and opinions expressed in this blog are those of the authors and their respective web sources and in no way reflect the principles, views, or objectives of Sage Software Solutions (P) Ltd.

Efficient Supply Planning in the Chemical Industry

Chemical Industry
Reading Time: 6 minutes

Summary: Supply chain functions in the chemical industry optimize warehouse, freight, distribution, and warehouse operations to run their everyday activities. As a result, challenges don’t come into the limelight unless something unexpected happens. But remember that even a small problem like a slight increase/decrease in chemical potency, lack of precise equipment, or not complying with industry standards can lead to huge problems. Therefore, the chemical industry needs to build supply chain strategies based on material allocation and customer commitments to handle such situations effectively.

Chemical Industry - quote

The shape of the Chemical Industry


chemical industry categories

Chemical manufacturing

The current state of the supply chain in the Chemical Industry

Stakeholders in the chemical industry can be broadly classified into three categories: chemical manufacturing, chemical distribution, and chemical engineering. 

  • Chemical manufacturers

They produce chemical products using raw materials such as natural materials, chemical compounds, and biological-based substances through a chemical reaction process. 

  • Chemical distribution

They buy chemical products from chemical manufacturers and sell them to the end consumer (wholesalers, retailers, and governments).

  • Chemical engineering

They work with chemical scientists and professionals in developing new chemicals or upgrading the existing ones. Chemical engineers primarily focus on minimizing environmental impact, improving production processes, and solving real-life problems.

<<<Also Read: Meet chemical regulations through integrated traceability data>>>

How can I improve my chemical supply chain?

The chemical industry is globalizing, increasing the volatility in raw material costs. Also, service improvements in other sectors worldwide encourage customers to demand better service. Moreover, mergers between chemical giants like Clariant and Huntsman, and Dow and DuPont are consolidating the chemical industry further. Further, established businesses are also facing increased competition from new players. 

The points mentioned above put undue stress on the chemical industry’s supply chain, for which they must find cost-effective solutions. Therefore cutting-edge technology that can improve service performance, minimize working capital, increase asset productivity, and provide significant market power is the need of the hour.

Here’s how chemical manufacturers can efficiently manage their supply chain.

1. The Five-Layer Framework

BCG has prepared an excellent infographic containing 20 elements distributed across five layers, including network, processes, strategy, digital enablement, and organization. It’s called the five-layer framework that explains how companies in the chemical industry can improve their supply chains:

chemical industry address elements

Don’t forget to give appropriate credits to BCG in the infographic above.

Here’s a brief description of the elements in the infographic:

  • Strategy

In this layer, companies create various product segmentations based on which they prepare goals, processes, and policies for each segment. In addition, businesses can go a step ahead and generate niche segments based on various parameters like margins, volume, and life-cycle stage. Product segmentation is essential as it allows organizations to devote their resources to vital products instead of others.

  • Network

Many chemical companies created their supply chain — transportation flows, warehousing operations, inventory management, insourcing of raw materials and outsourcing of finished products long back. Therefore they aren’t aligned with recent development in the logistics marketplaces. Networking allows companies to minimize delivery lead times, reduce logistics costs, and maximize product availability by using local hubs and developing better outsourcing strategies. 

  • Organization

This layer has two aspects. Firstly, the interfaces between the critical supply chain functions like manufacturing, logistics, sales, and marketing aren’t appropriately defined. A perfect solution to this challenge is by assigning roles & responsibilities and setting metrics and goals for measuring accountability. This method will facilitate the smooth functioning of the supply chain.

Secondly, setting Key Performance indicators (KPIs) and incentives is essential for ensuring high-level supply chain performance. An easy-to-use dashboard provides an in-depth understanding of the performance metrics allowing senior management to track the performance of each employee. 

  • Processes

There are two sublayers within this layer. The first one is Integrated Business Planning (IBP) also called Sales & Operations Planning (S&OP). It helps maintain a healthy balance between demand and supply across each business function. Moreover, it takes care of seasonal shifts in product demand, long process times, and large batch sizes.

The second sublayer is short-term operation planning for inventory. It helps maintain an adequate inventory by applying advanced product analytics models, creating high-quality service levels, and handling inventory targets across numerous supply chain stages.

  • Digital enablement

Digital technologies have helped companies in the chemical industry achieve supply-chain-specific goals for decades. But contemporary digital technologies like IoT, AI, machine learning, and cognitive computing also support operational execution and decision-making capabilities. Digital enablement can be subdivided into three categories:

a. End-to-end planning

These technologies allow companies in the chemical industry to make advanced business decisions, bolster the planning process, and forecast the performance of particular sectors. The best part is that these tools write planning decisions inside the Enterprise Resource Planning (ERP) systems and handle any adjustments.

b. Specific activities

These advanced tools tailor specific supply chain processes, including logistics, warehousing, transportation, and commissioning. They take data from multiple sources and provide mobile-ready intuitive data. 

Chemical Industry - did you know


2. Trends that are putting undue pressure on the chemical industry’s supply chain.

supply chain implications

3. Supply Chain differential

Robust customer orientation and supply chain excellence create immense value for industry leaders in the chemical industry. Unfortunately, companies have invested time and resources in improving their supply chain initiatives, but due to the industry’s growing product complexity and expanding customer base, it has ample room for improvement. Also, many companies have given unwanted attention to understanding customers’ perspectives. Due to these factors, organizations have high inventory and logistics costs, and they perform weakly on supply chain metrics like delivery service and lead times that impact customer experiences. 

On the contrary, supply chain leaders incur low costs and achieve higher growth levels with greater efficiency and customer satisfaction. For example, BCG reports that industry leaders turn over their inventory 14 times compared to 6 times by worst performers. Moreover, top performers spend 2.2% of their revenue on transportation costs compared with 3.6% paid by worst performers.

While distinct regions, differing business models, and varying product offers are minor factors for this variation, the different ways chemical companies design, operate and run their supply chains are the primary determinants of this variation.

Organizations can significantly improve their supply chains by strengthening planning & forecasting, introducing lean processes, and establishing regional operations. Moreover, companies can better their asset productivity by aligning manufacturing and planning activities. Further, by brainstorming their inventory strategies, chemical enterprises can lessen their working capital, improving their cash flow.

<<<Also Read: ERP for Chemical Industry: Proven Formula for Success and Growth>>>

Customer experience, the final stage in the supply chain, offers substantial improvement opportunities. Earlier, excellent use of production assets and R&D — instead of customer behavior and developments in market trends ensured success in the chemical industry. 

But today, the rise in positive customer experiences in other industries like eCommerce and industrial services has also raised customer expectations in the chemical industry. Therefore, customer interactions, including product information and product updates via social media apps, have become effective ways to establish robust and long-lasting customer relationships. 

Remember that an efficient supply chain is a cornerstone of specialty chemical and commodity businesses, although for varying reasons. For example:

  • Short lead times and robust customer relationships in specialty chemical businesses ensure productivity. 
  • Building efficient supply chains increase market share in commodities.

Chemical Industry -supply chains

Chemical Industry - did you know


The future of the supply chain in the Chemical Industry

Minimizing wastage, better resource management, and fulfilling customer & market needs will be the three fundamental pillars of the chemical industry in the future. To realize these goals, the chemical industry needs to adopt a more circular economy mindset to create customer value through operational change. The following points explain how:

  • Building a broad portfolio of services and products for end consumers. 
  • Innovating new products based on market trends and customer preferences.
  • Expanding the target audience will help increase profits.
  • Working together with customers to build customized products.

Chemical industry challenges




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At Sage Software Solutions (P) Ltd., we are home to world-class ERP software and CRM software that will solidify your business tech support fundamentals and enable you to build a customer-centric organization. You can also write to us at sales@sagesoftware.co.in.

Disclaimer: All the information, views, and opinions expressed in this blog are those of the authors and their respective web sources and in no way reflect the principles, views, or objectives of Sage Software Solutions (P) Ltd.

E-Invoicing in Sage X3

E-Invoicing in Sage X3
Reading Time: 3 minutes

At first, we will see what is E-invoicing?

E-Invoicing is a process in which invoices are validated electronically through GST Network (GSTN) for further use on the common GST portal. In this process, an identification number will be issued for every invoice which is selected for E-invoicing by the Invoice Registration Portal (IRP) to be managed by the GST Network (GSTN). All invoice information will be transferred directly from IRP to the GST portal.

Invoice details will be uploaded via API integration, either directly or through a GST Suvidha Provider (GSP).

Benefits of E-Invoicing:
  • Automating the tax return filing process, saving time and cost for filing the invoices manually.
  • Real time integration with IRP portal/government portal, which generates IRN number and QR code for respective sales invoices in a fraction of seconds.
  • E-invoice details like QR code and IRN number are displayed on the tax Invoice print.
  • Reduces mismatch and data entry errors.
  • Eliminates frauds.
  • Improves account reconciliation.
  • Information about each transaction is stored, helping reduce the surveys required by the tax authorities.

Sage X3 provides an automated solution for filing E-Invoices with a single button click, eliminating the manual filing of invoices. 

Path: Goods and Services Tax à E-Invoicing

As soon as Sales invoice is booked in the system, user can directly do the E-invoicing for specific Sales Invoice from sales invoice screen itself or user can generate E-Invoicing for bulk of invoices from separate E-invoicing screen which is available under GST module in Sage X3. Once, E-invoice is generated by user, IRP system (government portal) returns, IRN number and QR code of the sales invoice which get automatically captured in GST module to the specific Sales Invoice.


[E-Invoicing Screen]

1. User has to select desired invoice by entering the required parameters on the E-invoice screen – Company, Site, Customer, Date and Invoice Number in E-Invoicing screen.

2. On clicking ‘Generate E-Invoice’ button, selected invoices will be sent to govt. portal/IRP System and in response to that ‘IRN’ (Invoice Reference Number) along with digitally Signed ‘QR code’ will be received from IRP system/government portal which will be capture in the Sage X3 against each sales invoice and the same will get printed in the respective report.

3. After generating E-Invoice successfully, one pop-up message will be displayed.


[E-Invoice Generation – Successful]

And IRN Number will be captured on the Sales Invoice screen. Refer below screenshot:


[Invoice Entry after E-Invoice generation]

IRN (Invoice Reference Number): After uploading the E-invoice on the GSTN portal, a unique number is generated by GSTN which will be referred as IRN Number.

How does the Tax invoice prints look like along with E-invoice details?

Below screen shots shows the TAX INVOICE form where IRN and Signed QR Code which is received from IRP system is printed:


[Tax Invoice report with IRN and QR code details]

In this way, users can easily do the E-invoicing process in Sage X3.


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At Sage Software Solutions (P) Ltd., we are home to world-class ERP software and CRM software that will solidify your business tech support fundamentals and enable you to build a customer-centric organization. You can also write to us at sales@sagesoftware.co.in.

Disclaimer: All the information, views, and opinions expressed in this blog are those of the authors and their respective web sources and in no way reflect the principles, views, or objectives of Sage Software Solutions (P) Ltd.

Top 4 Reasons to use ERP in the Furniture Industry

ERP in the Furniture Industry
Reading Time: 5 minutes

Summary: ERP in the furniture industry helps small, medium, and large enterprises to adapt quickly to changing market conditions and customer preferences. It helps companies carry out their business plan effectively, increase profits, optimize expenses, and forecast what customers are most likely to buy. It accelerates the entire business cycle by synchronizing multiple critical activities, such as: 

  • Supply chain management 
  • Financial & accounting management
  • Production & manufacturing management
  • Sales & marketing management
  • Customer relationship management
  • Vendor/supplier/distributor management
  • Services management
  • Project management
  • Human resource management

ERP in the furniture industry

Challenges in the furniture manufacturing industry

Future trends like the growth of online furniture sales and increasing interest in eco-friendly furniture show that this industry has a bright scope. Moreover, statistics show that the Indian manufacturing industry is expected to grow at a CAGR of 11.97% from 2018 to 2023. But this industry is also replete with significant challenges, such as: 

1. Low production effectiveness

Many companies, especially small ones located in remote regions, still rely on outdated manufacturing practices. As a result, they recruit a large workforce that increases their salary expenses and also shoots up the possibility of human-induced errors. They also hesitate to purchase advanced machines and business management solutions, compromising productivity and effectiveness. 

2. Organizational structures aren’t defined

Most furniture manufacturing companies in India lack a well-structured organizational and reporting structure. It means managers don’t have the required metrics to monitor employees’ performance, which deteriorates their efficiency in the long run. In addition, employees work in a chaotic environment where they don’t know whom to report to, decreasing their accountability.

3. Planning problems

Brainstorming effective strategies requires valuable business insights and informed employees. Unfortunately, furniture manufacturing companies lack advanced ERP systems that collect and analyze business-critical information, helping understand changing market trends and customer preferences. Without adequate planning, furniture companies fail to identify 

  • market challenges
  • changing customer preferences 
  • procuring an exact quantity of raw materials.  

4. Lack of reporting and information systems

Furniture manufacturing companies that don’t implement ERP systems lack a coherent method of communicating business-critical data with verified stakeholders, resulting in information silos. They also fail to generate visually-rich reports that present data in an easy-to-understand way and can be quickly customized based on the selected parameters. As a result, different departments fail to collaborate on mission-critical tasks, bringing down the company’s overall efficiency and productivity.

5. High wastage of resources

Furniture companies procure high-quality raw materials from multiple vendors spread across various geographical regions. Without dedicated furniture ERP software, furniture manufacturers cannot set a benchmark for procuring the exact quantity of raw materials. Consequently:

  • They may purchase more raw materials than required and lose money.
  • They will fall short of manufacturing enough products and risk losing customer loyalty.

<<<Also Read: Top 6 Ways Furniture Manufacturing Industry Can Boost Productivity Using ERP Software With Enhanced Integration>>>

How can a reliable ERP system help furniture companies?

ERP in the furniture industry offers multiple benefits, such as:

1. Effective resource planning

Consider the following case. You get an order to construct a piece of furniture that requires various constituent materials, including sheets of metals, wooden barks, and fabric. So, you place orders with multiple vendors located in different regions to get raw materials. Unfortunately, you will face difficulties if you lack a unified management software to deal with numerous vendors simultaneously. On the contrary, ERP in the furniture industry will help you place orders instantly, generate quotes, and track the precise location of transport vehicles on the roads. In short, effective resource planning is the most critical application of a furniture ERP. 

2. Handling thousands of customer orders simultaneously

Furniture manufacturers deal with multiple customer orders, each with varying needs. These include unlimited product configurations of diverse styles, colors, designs, and materials. Managing all of them manually is a time-consuming task and is prone to human errors. ERP in the furniture industry provides a viable solution to this challenge by allowing you to configure the product in a thousand ways until you meet the customers’ preferences. 

3. Control production costs

ERP in the furniture industry automates business processes allowing your workforce to focus on mission-critical tasks and brainstorm effective strategies. Moreover, it also decreases waste, monitors product quality, and shares reports with the product service team if any product defects are identified.

4. Improves customer satisfaction

ERP in the furniture industry stores customer details in a data repository that can be accessed, edited, and shared with business stakeholders anywhere, anytime, and through any connected device. This feature helps process customer orders faster and provides solutions to their queries at the earliest. 


 ERP in the Furniture Industry

Benefits of ERP in Furniture Manufacturing

1. It improves inventory management

The primary benefit of implementing ERP in furniture manufacturing is better inventory management. It monitors where raw materials and finished products are stored in the inventory and warehouse, respectively. Moreover, recording the exact location of delivery vehicles and estimating the time when they will reach their destination has never been easier.

2. It makes the supply chain management even better

ERP in the furniture industry provides data-driven forecasts that help derive valuable insights. These insights are based on purchase history, seasonal changes, customer preferences, and future projections that enable streamlining a company’s inventory. In addition, this software ensures that a product is always delivered to the right customer, reducing product return orders. It can also track the real-time location of delivery vehicles, optimizing supply chain management.

 3. It makes the production process smooth

Furniture companies can efficiently customize products using a product configurator. Managing customized furniture’s cost and product specifications and reducing bottlenecks becomes simple with a furniture ERP.

Additionally, companies can track shop-floor activities, attain transparent work-in-progress (WIP) reports, and optimize labor requirements.

 4. It helps manage finances strategically

ERP in the furniture industry allows companies to comply with local and global financial regulations, including GAAP and IFRS. It also handles accounts receivable and payable to provide better financial visibility and identify cost-saving opportunities. 

<<<Also Read: 8 manufacturing industry trends that will shape the industry in 2022>>>

How do I choose the best ERP for my furniture manufacturing business?

Start by creating a list of your business goals before picking a suitable manufacturing ERP. Also, identify your most critical furniture manufacturing processes and the challenges & weaknesses you want to solve by implementing a furniture ERP. 

Then it would be best if you search for vendors that provide the features you want at the most affordable price. You should:

  • Start by researching what your competitors are using?
  • Confirm whether your competitors are satisfied with their existing furniture ERP software?
  • Conduct a market reputation check of the selected ERP vendor.

An example of a market-leading furniture ERP solution is Sage X3. It has all the features you require to get ahead in the competition and deliver the best services to your customers. 

Here’s why Sage X3 ERP for the furniture industry is a cohesive suite of applications to help solve all challenges:

1. Furniture inventory management

Efficiently manage and configure countless products. Generate and share detailed low stock, excess stock, and no stock inventory reports quickly and efficiently. 

2. Multiple warehouse management

Fetch critical inventory data for multiple warehouses from a centralized database using any connected device instantly. 

3. Effective resource planning

Manage countless work orders and deal with multiple vendors situated across different regions using a single, integrated system.

4. Low production cost

Reduce waste and optimize cash flow by automating business processes. The best part is that quality analysts can monitor product quality and identify any manufacturing defects in the early stages. 

5. Robust and evergreen customer relationships

Sage X3 furniture ERP has a robust CRM module that allows different business departments, including sales & marketing, finance & accounting, production & manufacturing, logistics & distribution, and service departments. This collaboration will enable you to identify customer issues and solve their queries instantly.


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At Sage Software Solutions (P) Ltd., we are home to world-class ERP software and CRM software that will solidify your business tech support fundamentals and enable you to build a customer-centric organization. You can also write to us at sales@sagesoftware.co.in.

Disclaimer: All the information, views, and opinions expressed in this blog are those of the authors and their respective web sources and in no way reflect the principles, views, or objectives of Sage Software Solutions (P) Ltd.