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.

SCM

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.

The vital role of ERP in Manufacturing Industry

ERP in Manufacturing
Reading Time: 6 minutes

Summary: The ERP in manufacturing industry revolves around the production, process, and preparation of raw materials into a finished product. According to a recent study, capacity utilization in India’s manufacturing sector stood at 72% in the second quarter of FY22, indicating a significant recovery in that sector.  Some of the challenges faced in the manufacturing industry are distribution, finance, cybersecurity, supply chain management and many more. Advanced ERP software helps overcome manufacturing challenges and automates manual and repetitive manufacturing operations.

ERP in Manufacturing

ERP or Enterprise resource planning has various features, including production, business intelligence, inventory & warehousing, quality control, finance & accounting, vendor relationship, and much more. 

It assists the users to plan, manage, and execute manufacturing business operations, helping in:

  • Cutting operational costs.
  • Eliminating redundancy.
  • Generating Bills of Materials (BOMs).
  • Identifying obsolete machines with reduced efficiency.
  • Automating shop floor control.
  • Efficient quality control.
  • Quick product recall.

Collecting real-time data from multiple sources and updating them across disparate data systems simultaneously is another crucial feature of ERP in manufacturing.

It saves employees’ time allowing them to focus on mission-critical tasks instead of performing repetitive functions that give rise to human-induced errors.

ERP in manufacturing is the backbone of a large-scale industry managing all intricate business functions efficiently. 

Pain points of the Manufacturing Industry

A manufacturing company is filled with challenges like integrating disparate information systems spread across different departments, collaborating with vendors, suppliers, and distributors, real-time monitoring of inventory, reducing machine downtime, forecasting products customers are most likely to buy, and forging robust customer relationships.

1. Supply Chain disruption

  • Increasing the cost of raw materials can impact the supply chain.
  • Absence of end-to-end data transparency.
  • Shortage of raw materials.
  • Drop in product demand.
  • Insufficient inventory data.

Here’s a comprehensive account of the challenges in each department:

2. Finance and Accounting

  • An accounting executive faces challenges while tracking, planning and budgeting the financial data to reduce unprecedented expenses and maintain suitable profit margins. 
  • Maintaining multiple ledgers gives rise to human-induced errors and wastes employees’ time that they could have used for brainstorming strategies and achieving mission-critical tasks.   
  • Monitor cash flow — Calculating accounts payable and accounts receivable manually is a challenge. Sending emails and notifications to vendors who don’t pay on time and sharing reminders with the finance & accounting team to pay distributors on time is difficult if done manually.
  • Estimating a competitive price for your product based on average market cost is challenging. It can reduce your gross profit margins in the long term.
  • Better inventory management allows companies to maintain an appropriate quantity of raw materials in the inventory. Employees might find it challenging to monitor inventory in real-time, leading to stockouts or surplus stocks that drain a company’s profit. 

Moreover, if done manually, identifying vendors that provide discounts and deliver products on time might take plenty of time.

  • Next, plan to keep indirect expenses like people, utilities, rent, supplies and insurance at the minimum. Check if the purchased machinery and warehouse space are optimally utilised. Moreover, you can sell dysfunctional machines to reduce maintenance costs. 
  • The advanced business intelligence module allows decision makers to take the right financial decisions — cut operational costs and earn better profits — based on changing market conditions and customer preferences. 

3. Shipping and logistics 

Shipping and logistics are a significant part of the supply chain

  • Monitoring the inventory.
  • Distribution of stored goods to the destination.
  • Reversed logistics – Customer returning the goods to the supplier.
  • Transportation of goods to the warehouses.
  • Manage proper packaging of goods.
  • Handling the product with care till it reaches the location.

4. Monitoring systems ineffective

In manufacturing companies, there are a lot of critical business functions that need to be tracked. Operations like distribution, finance, production, front-to-back office management and customer relationship management are to be checked to maintain workflow. 

Automation is the key to managing all these crucial functions. Installing an ERP system helps integrate all the operations into a single database. 

5. Frequently changing regulations

Manufacturing companies must be aware of the changes in regulations imposed on versatile industries. 

In India, FSSAI(Food Safety and Standards Authority of India), ASCI( Advertising standards council of India), Pharmacy Council of India and many more are examples of regulatory bodies. 

<<<Also read: ERP for Manufacturing Industry in India>>>

The Significance of Enterprise resource planning ERP for Manufacturing industries

1. Inventory management

  • An ERP system gives accurate data on the quantity of the stocks left in the inventory. If the stocks are less, the software will send a reminder to the executive in charge of the inventory.
  • ERP software gives precise data on product status, finished products and purchase order tracking.
  •  Track the amount of raw materials used for the production process to reduce wastage. Sometimes the use of excessive raw materials can affect profit margin.
  • Monitor all the operations of the inventory.
  • Aids in exact Materials Requirement Planning(MRP).

2. Compliance and risk management

  • The information stored in an ERP software database is highly secure.
  •  ERP system gives updates on the changes in the regulatory standards by sending alert notifications.
  • ERP software ensures that manufacturing companies adhere to human resource regulations.

3. Quality Control

ERP system ensures that the manufactured product meets the highest quality standards by tracking and monitoring its development throughout its manufacturing stages. 

The quality of the product is improved by continuous testing and examination. All the data are later registered in the ERP database. 

4. Process Automation

 ERP in manufacturing is a highly automated software that integrates sales, purchases, records, stock and human resources processes. 

Automation saves time, and executives can focus on more value-added tasks. The users can access real-time data to monitor and control business operations.

5. Raw materials Management

  • Manufacturing ERP software aids in tracking raw materials to prevent wastage. 
  • ERP system helps in planning to reduce excessive wastage to lower production costs. 

6. Financial Accounting

Manufacturing ERP systems manage the business functions from the top floor to the shop floor. The finance and accounting module is a significant function of the company. 

ERP in manufacturing maintains an accurate record of the financial reports helping the senior management make the right business decisions in the future.

7. Access to data to improve Customer Service

An ERP system allows continuous distribution of information accessible to all the internal teams. The coordination of front office to warehouse management is a crucial aspect of ERP in manufacturing industries. 

Real-time information is accessible even for non-IT users helping them to have accurate data to answer all customer-asked queries. Better customer service helps a business to grow.

8. Supply Chain and distribution

Enterprise resource planning (ERP) is vital in the supply and distribution module. Accurate on-premise data on packages, warehousing, logistics, point of sales, vendors and suppliers are recorded in an ERP software database. 

 Continuous flow in the supply chain function enhances the production of goods for manufacturing industries. Let’s look at the benefits of ERP for supply chain and distribution modules.

  • Faster delivery of the product to the customer.
  • Enhance productivity.
  • Monitor inventory control.
  • Navigate product location.
  • Well-organised shipping operations.

<<<Lets study in detail: How can Manufacturing ERP help businesses function smoothly?>>>

Types of ERP in Manufacturing

There are three types of ERP in manufacturing industries. Let’s learn more about these types.

Cloud ERP

  • Cloud or SaaS services are delivered via an offsite cloud system. 
  • It can be accessed via a desktop or a browser.
  • Cloud solutions are subscription based. Monthly plans or annual plans are the payment modes.
  • Data and configuration are done by the vendors providing the services.

On-premise ERP

An on-premise manufacturing ERP system can be accessed only in an office location or any specific business location. It is an all-in-house software that can be accessed only by executives in the company. The data is stored in a private cloud system without any cyber security risks. The updates and the application is managed by the company.

Hybrid ERP systems

  • Hybrid ERP is also known as a two-tier ERP system. 
  • It is a combination of cloud ERP systems and an on-premise ERP system. 
  • The sensitive workload can be stored in the private cloud and general data can be stored in the public cloud.

ERP in manufacturing industries is essential to manage all business processes. An industry is an intricate sector with multiple business functions. It has to be managed efficiently without any confusion or blockage. Plus, it is a rat race among industries to stay on top. ERP in manufacturing is the solution for monitoring and controlling this huge business effectively.  Investing in top manufacturing ERP systems will assuredly increase profit margins. 

About 88% of the companies succeeded in managing their business upon ERP software implementation. Undoubtedly ERP in manufacturing solutions is the best software to leverage the company’s growth for manufacturing companies. 

 

Top 7 ways to measure your Business Efficiency

Business efficiency
Reading Time: 6 minutes

Summary: Ensuring high business efficiency requires an interplay of diverse forces. For example, procuring raw materials at a minimum price, understanding changing market conditions and customer preferences, building excellent customer relationships, and distributing the best quality finished products to customers at the earliest. Measuring business success requires valuable data that enables:

  • Identifying the pros and cons of your existing business strategy.
  • Analyzing business performance through easy-to-read graphs and pie charts.
  • Building better business blueprints based on new market challenges and changing customer demographics.

business efficiency

What are Success metrics?

Success metrics are a collection of Key Performance Indicators (KPIs) that determine whether a business is achieving its targets. While each company has a different set of success metrics based on industry-specific challenges, target audience, compliance requirements, and business priorities, effective metrics are measurable, actionable, and result-oriented. 

Remember that preparing a list of success metrics becomes easy once you identify your industry challenges. And it also becomes simple to communicate them to business stakeholders without providing much context.

7 types of metrics to measure business success

This blog will shed light on the different types of success metrics that will help you measure business efficiency. 

1. Break-even point

A Break-even point refers to the minimum amount a company must earn in a particular period to cover all its expenses and keep itself afloat. 

For example, if your total expenses for March 2022 = USD 500,000

And suppose you earn USD 500,000 in the next quarter (April, May, and June). Then, it means you took three months to reach your break-even point. 

Tracking and measuring whether your company can meet the break-even point is necessary as it enables:

  • You to have enough cash to pay vendors, suppliers, and distributors.
  • You have the financial ability to repay your debts.
  • Angel investors to understand your financial situation and make up their minds to invest in your company.

For conglomerates, meeting break-even points might be the lowest achievable target. But for startups and new ventures, recovering their expenses is one of the most important targets to achieve. 

2. Monthly recurring revenue

Monthly Recurring Revenue (MRR) is a crucial metric for businesses whose primary source of income constitutes service subscriptions. This metric tracks and measures a company’s monthly revenue based on:

  • New products bought & services subscribed in a month
  • New customers added to the customer database
  • Number of customers who abandoned their subscriptions

MRR enables businesses to identify changes in customer behavior and track individual spending over time. 

3. Net income ratio

The net income ratio is the resultant profit you get after subtracting expenses from your revenues. 

For example, 

Revenue = USD 500000
Expenses = USD 200000
Net income ratio = USD 500000 – USD 200000 = USD 300000

This metric allows the senior management to comprehend their current financial situation and check how close they are to achieving their economic targets.

Most companies correlate an increase in net income ratio with better financial performance. But startups and newly established companies might have to wait for a few months (or years) before seeing any positive net income ratio. 

Also, remember that it’s essential to factor in the company’s historical financial performance and trends while analyzing the net income ratio.

4. ROI and ROAS

ROI stands for Return on Investment, a ratio between investment and income. You can calculate ROI by subtracting the cost of goods and services from your revenue and dividing the result by the cost of goods and services. The formula below shows how ROI is calculated:

business efficiency

In marketing parlance, ROI measures the money a company makes after spending a particular sum on running a marketing campaign. When used with conversion rates and lead generation metrics, it helps calculate a customer’s average value. 

Business

ROI is one of the best metrics to measure your business’ worth. If your organization’s ROI is higher, you have made a worthy investment. If not, you might want to brainstorm better strategies to increase your revenue.

Return on ad spend (ROAS) is critical if you significantly depend on advertising expenses to generate sales. It tracks the precise amount of revenue your ads generate over a specific period. 

5. Conversion rate, leads, and bounce rate

Do you have a big marketing budget?

If yes, then you should track the following three metrics:

  • Number of leads generated:

    Calculate the total number of potential prospects reached.

  • Number of leads converted:

    Calculate the total number of potential prospects converted into full-time paying customers.

  • Calculate the conversion rate:

    Lead conversion percentage tells how effective your marketing strategies are in reaching potential clients and converting them into loyal customers.

Bounce rate is the converse of conversion rate. It measures the number of customers who land on your company’s website but leave immediately without scrolling down or making a purchase. The number of bounces against leads generated identifies gaps in advertising, marketing, and user experience.

 6. Customer-focused metrics

An expanding or shrinking customer base is the best way to identify the performance of your marketing campaigns. If your customer base is expanding, your marketing efforts are paying off, and people are showing tremendous interest in your products and services. If not, you need to brainstorm effective marketing campaigns to regain the interest of lost customers. 

Many companies rely on customer-focused metrics to build sustainable practices and forecast what products customers would most likely purchase.

Here’s a list of the essential customer-focused metrics to measure:

  • Conversion rate

This metric measures how many customers have done any of the following:

  1. Filled out a website form
  2. Downloaded an eBook/guidebook/case study
  3. Purchased a product
  4. Subscribed to a service
  5. Subscribed to the email newsletter

For example, if you want to calculate your website’s conversion rate, stick to the following formula:

Business efficiency

  • Customer Health Score

Customer Health Score can be measured by tracking the number of new and old customers and identifying varying customer purchase habits. In addition, this score lays down the foundation for calculating other business-critical parameters, such as and customer retention cost, net promoter score, and customer lifetime value.

  • Customer Satisfaction Score (CSAT)

CSAT measures how satisfied customers are with your products and services and how likely would they spread excellent word-of-mouth to others. Different methods to calculate CSAT include:

a. Customer satisfaction survey

b. Focus groups

c. Post-service

d. In-app surveys

e. Social media monitoring

f. Customer Relationship Management (CRM) surveys

Sage 300cloud

  • Customer Lifetime Value (CLV)

This metric helps determine how much profit a business can generate from a particular customer over a definite period. You can calculate CLV using the following formula:

CLV = Customer’s average value of purchase * Customer’s average frequency of purchase * Customer’s average lifespan

  • Customer churn rate

This metric determines how often customers abandon doing business with your company. It’s also known as customer attrition rate and provides the number of customers who have:

a. Canceled your subscription

b. Stopped purchasing your products

c. Closed accounts

business efficiency

7. Employee satisfaction

Are your employees satisfied working in your organization?

If yes, then your employee satisfaction rate is high. It means that your employees care about their position and are satisfied doing their job. 

Do you know that employee satisfaction corresponds to high customer success?

A customer satisfaction study conducted by combining data from the American Customer Satisfaction Index (ACSI) and Glassdoor employee reviews revealed that each one-star improvement in a company’s Glassdoor rating increased 1.3 points out of 100 customer satisfaction scores. 

So, ensure that your employees get a supportive ecosystem as it:

  • Decreases employee turnover rate
  • Reduces employee training costs
  • Increases customer retention rate

How Sage X3 will help you increase your business efficiency?

Sage X3 is an industry-leading ERP software that helps companies across industries to increase their efficiency, improve productivity, reduce administration costs, build robust customer relationships, forecast changing market conditions and customer preferences, and provide real-time insights. It has various modules for managing critical business functions like finance & accounting, sales & marketing, inventory & warehouse, supply chain & distribution, and customer relationships. 

The infographic below shows how Sage X3 can multiply your business efficiency.

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.

How can food and beverage manufacturers accept the circular economy mindset?

circular economy
Reading Time: 5 minutes

Summary: The fundamental pillar of food and circular economy is transforming how we grow and consume food. It also has a significant impact on rebuilding biodiversity, addressing climate change, and creating healthy cities. The present-day food ecosystem supports a fast-growing population, fueling economic growth and urbanization. However, it’s causing substantial loss to the environment and society. Food and Beverage manufacturers should adopt regenerative food practices, source raw materials from local suppliers, reduce food wastage, and design and market healthier food products to improve the global food system. 

circular economy

A circular economy mindset is the best way to counter the ill effects of food waste and build a healthier and greener food supply chain. This blog will shed light on how you can achieve this goal:

Upcycled opportunities

Upcycled opportunities provide F&B manufacturers to transform agricultural and food waste into value-added products. The Upcycled Foods Definition Task Force defined “Upcycled food” in 2020 as foods that:

  • Use ingredients that humans wouldn’t have consumed  
  • Are acquired and produced using authentic supply chains
  • Impact the environment positively

Ellen MacArthur Foundation predicts that upcycled foods have a worldwide annual economic potential of USD 700 billion. 

One of the best examples of the positive impacts of Upcycled business models and product applications comes from craft and commercial brewers. Brewers’ spent grain, a by-product of beer brewing, is often considered a waste product. But it contains cellulose, protein, fiber, and hemicellulose and therefore has immense potential in upcycled food formulations. Real-life examples include flour from NETZRO and protein bar products by ReGrained.

circular economy

 

What do consumers think?

One of the biggest challenges comes from what consumers think. For example, some consumers might not like consuming “waste” products. For instance, in an online survey conducted in the UK, 106 participants were shown two images, one made using conventional ingredients and the other using upcycled sunflower. After that, the participants were asked to choose their preferred biscuit concept, selection drivers, and understanding of the word “upcycled”. Interestingly, 85% of participants didn’t know about the term upcycling, but they expressed their desire to consume upcycled ingredients. 

Here are the reasons that consumers gave for consuming upcycled ingredients:

  • Low prices
  • Health and environmental benefits
  • Playing a role in combating food waste

Implementation issues

Implementing a circular economy mindset requires innovative business models, new processes, and socio-cultural changes that need the participation of various stakeholders, including:

  • nongovernmental organizations
  • consumers
  • policymakers
  • scientists

Moreover, you also require cost-effective operating models that depend on affordable fresh ingredients like agricultural products. But the most significant challenges with circular economy initiatives are lack of performance indices and longer payback horizons. Moreover, distribution, formulation, and added processing pose additional hurdles for F&B manufacturers. 

F&B manufacturers should create a consortium that communicates their efforts in this direction, ensuring consumers don’t feel confused.

Transitioning to a Sustainable Food System

Food production, manufacturing, distribution, and consumption patterns have changed drastically in the last few decades. Globalization and industrialization have also transformed consumer preference for healthier food and opened new ways for trade, prosperity, and innovation. 

Hence, a complete makeover of the food system is necessary for the coming years, specifically focusing on eight themes. The infographic below shows them in detail:

circular economy

Preventing food waste

About 33% of food goes uneaten globally and about two billion people worldwide face food insecurity. 

The best way of reducing food waste is by adopting a circular economy. 

What is the difference between a linear food economy and a circular food economy?

A linear food economy is based on four principles: ‘take, make, use, dispose’ system. In this system, food articles are procured, finished food products are created, and the leftovers are disposed of. The disadvantages of this system are:

  • Price volatility resulting from resource scarcity
  • Reduction in product and material price
  • Insufficient supply of raw materials due to overconsumption
  • Release of greenhouse gases resulting from resource pooling

On the other hand, a circular economy focuses substantially on building a full-fledged waste reduction infrastructure that eliminates the environmental impacts of consumption and production. Moreover, they also help reuse products and generate economic opportunities in different areas.

Waste valorization, the process of recycling and reusing waste products into valuable materials, helps increase market competitiveness. 

circular economy

How to transition to a circular economy instead of a linear economy?

Tesco and WWF inform that a significant share of food (15.3%) is lost in the farming stage. Therefore, farmers and food producers require more solutions to adopt a circular economy model.

  • Solutions for farmers 

Inflexible contracts, crop shortage, and agricultural by-products are the three most significant factors contributing to food loss at the farm level. Farmers can transition to a circular economy model by reducing waste channels, optimizing farming processes, implementing regenerative practices, and finding better ways of employing waste products. 

The following example sheds light on how farmers can transition to a circular economy model:

Only 20% of the olive fruit is used during olive oil production. The rest 80%, called olive pomance, is a by-product. PHENOLIVA, an EIT food project, is contributing in the following ways to creating a self-sustained circular economy for olive oil production:

  1. The high antioxidant content of olive pomance can be used as an affordable food additive. 
  2. Antioxidant additives extend the shelf-life of food products by eliminating deterioration caused by oxidation.
  • Food services and retail

The UNEP food waste index reveals that retail outlets and food services waste about 2% and 5% of the total food in the supply chain stage.

Companies like Mimica are creating advanced food expiry labeling that enhances food security and reduces food waste. For example, “Mimica Touch” is an expiry label that accurately indicates a product’s freshness by turning bumpy when a food or beverage item is spoilt. It’s compatible with dairy, juice, and red meat and will soon become compatible with milk products and vaccines. 

  • Households

The Food waste index report 2021 shows that 11% of the total food is wasted at the consumption level. It further reveals that 74 kgs out of 121 kgs of consumer-level food are wasted every year. 

Most people waste food because it’s simple to dispose of food articles instead of devising ways of reusing them or due to confusing expiration dates. So F&B manufacturers need to develop innovative ways of changing food consumption habits. 

Few initiatives like ‘From waste to value: How to tackle food waste’ allow food consumers to know about the cause behind food waste and discover new ways to counter food waste at the personal, community, and national levels. Similarly, Unilever launched an initiative called “Bring your own food restaurants” in 2019 to educate people about food waste

circular economy

circular economy

How does Sage X3 help food & beverage manufacturers solve industry challenges?

Sage X3 ERP software for the food & beverage industry is a market-leading business management solution with advanced modules for quality control, lot tracking, recipe management, and regulatory compliance.

circular economy

 

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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.

Purchase Order New features and improvements in Sage 300cloud Version 2022

Sage 300 Version 2022
Reading Time: 5 minutes

Sage 300 version 2022 offers users exciting new features that guarantee increased flexibility and compatibility needed for today business. This latest version presents additional functionalities and superior user experience through Sage 300cloud screen improvement and general enhancement. Let’s have a look at the Sage 300cloud features and improvements. The improvements made to Purchase Order in Sage 300cloud and we will show you how to add negative additional costs on PO credit notes and how to easily set the expected arrival date and location for all details on a Purchase Order.

Starting with the Sage 300 Version 2022 
  • User can enter negative additional costs on Purchase order credit notes.
  • User can now also update the Arrival Date and Location or Expected Ship Date in order detail lines.

Firstly, We will see how to enter Negative additional cost on P/O credit notes. When entering a credit note on PO credit note entry screen you can now enter negative amounts for costs on the additional cost tab. For example, this could be useful to record for shipping or restocking fees you paid as a result of returning an item. Such negative additional cost is recorded as debits when you run day end processing.

Now you also have a convenient option to set Expect Arrival Date and Location for all details. On purchase order two new buttons are available in the order tab of the PO purchase order screen.

Set Arrival date to set the expected arrival date for all details on a Purchase Order to be the same as the arrival date for the purchase order.

To set the location for all details in a purchase order to be the same as the ship to location for the purchase order.

Let’s, see how to use this feature in Purchase orders beginning with Negative additional costs on PO credit notes.

We consider the following example the company has order, received and been invoiced for 10 widgets purchased at 100 rupees each after receiving the items the company returns 2 widgets the vendor applies a restocking fee of 20 rupees in our case the receipt entry has already been recorded. We then use the return entry screen to return the two items select the vendor as well as the receipt number. In our example we enter a quantity returned of two then we post the return.

Below is the image you can see that we have returned two widgets.

Sage 300 Version 2022

Now we will select the Credit/Debit notes entry screen to record the credit note. We enter the credit note number then we select the return that we previously recorded the vendor number appears automatically as well as additional information.

Now we will use the additional costs tab to enter additional costs we select our restocking additional cost if you enter a positive amount it will increase the amount of the credit note. However, in our case the restocking fee charged by our vendor should decrease the amount of the credit note we therefore enter a negative amount for restocking fee. Note that prior to sage 300cloud V2022 it was not possible to enter negative amount here and the restocking fee would have needed to be recorded as a separate entry. Select the total tab to confirm the total and then we can post the credit note.

Below is the image you can see that we can now add Negative amounts in PO credit note.

Sage 300 Version 2022

The credit note will be created in Accounts Payable when running the day end processing.

Follow the steps to navigate to Day end processing.

Inventory control–> IC periodic processing–> Day end processing. To run the day end processing.

Now, let’s have a look at two new options that are available when creating a Purchase Order. Under Purchase order select PO transaction and Purchase order entry screen. Let’s begin by entering the purchase order details. Notice that the location is not same for every item. Below is the image for your reference.

Sage 300 Version 2022

If we scroll through the right side we can also see the expected arrival date is not same for all the items. Below is the image for your reference.

Sage 300 Version 2022

If you would like to use the same Location or the same Arrival date for each item on the order you may now use two buttons. Below is the image for your reference.

Sage 300 Version 2022

If you use the Set Location button the ship to location selected for the purchase order will be assigned to all the items lets click this button then click yes. Below is the image for your reference.

Sage 300 Version 2022

We can see the Set Location has been assigned to all the items then after we will post this purchase order. Below is the image for your reference.

Sage 300 Version 2022

If you use the Set Arrival date button the arrival date selected for the purchase order will be assigned to all the items lets, click this button then click the yes. Below is the image for your reference.

Sage 300 Version 2022

If we scroll to the right side we can see that the arrival date has been assigned to all the items then after we will post this purchase order. Below is the image for your reference.

Sage 300 Version 2022

So, we have shown you how to enter Negative Additional costs on PO credit notes and how to easily set the expected Arrival date and Location for all details on a Purchase Order.

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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.

Contract Pricing

Reading Time: 2 minutes

In this blog we are going to learn about a feature called “Contract pricing” in Sage 300cloud.

What is Contract Pricing?

In Sage 300cloud Contract Pricing allows creating special pricing for certain customers, for example, if you agreed to give them additional discount or allow you to sell the same product at lower rate.

 What is the use of Contract Pricing?

We all know that sometimes we have different prices for one specific item for different clients, the I/C Contract Pricing screen is used to set up contract pricing for specific customers. Sage 300cloud Order Entry uses this information to calculate the default price for any item affected by the customer’s pricing contract.

Contract pricing

Contract Pricing is flexible; it can be setup for one item at a time, or for a whole category of items. However, you always need to specify a customer, so you cannot define contract pricing for all, or a range of customers. Here is an example.

Contract pricing

In Sage 300cloud, the prices can also be defined with the specific item for specific customer. Here is an example.

Contract pricing

Whenever, you choose item A1-103/0 for Customer 1520, the defined value will be fetched  in Order Entry screen.

Here you can see the screen.

Contract pricing

Contract Pricing

Contract Pricing

The “Use Lowest Price” option selected, which means if the price defined in the standard item pricing is lower than the price in special pricing, the lowest price will be used. This ensures that the client gets the best possible deal.

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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.

Sales Statistics Report in Sage 300cloud

Reading Time: 2 minutes

In sage 300cloud, Sales Statistics screen allows you to view sales statistics summary level of a particular item for a particular month, period based on location. This screen will provide you the summary level data for sales and sale returns in your business. You can navigate The IC sales statistics from inventory module under IC statistics inquiries.

1)Total number of quantities sold from a location in a particular month.

2) Total quantity of sales return.

3) Total sales amount

4) Total sales Return amount

5) Total sales cost

6) Total sales return cost.

7)Total sale margin [(Sales amount – Sales Return Amount) – (Sales cost – Sales Return cost)]

This is very useful screen for monitoring sales and sales return details of an item for a particular period at a particular location.

Sales Statistics

In the above screenshot, we can see that for Item Number ‘A1-310/0’ at location 1 in the period 8 of year 2019 there was 15 quantities. A1-310/0 was sold once at an Amount / Selling Price of ₹1047.70 the cost of which was ₹512.62 leading to a margin/profit of ₹535.14.

Also, in the next column one can see that there was no return made for particular item in the particular period and the last column shows us the stocking unit of measure which in our example is each.

This Screen is very useful for a vendor to look for sales statistics of a particular item for a particular period and helps in taking important decisions like in the next batch how much quantity of the same item is to produced or at what price it should be sold. It helps recognise the demand of the product and crate the supply accordingly.

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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 9 Ways Cloud ERP Can Benefit Furniture Manufacturing

Furniture Manufacturing
Reading Time: 4 minutes

Summary- Furniture manufacturing is confronting a number of challenges and the implementation of cloud-ERP has proved to be a boon for manufacturing companies. Let us see more in this post about the best ways cloud-ERP can help benefit the furniture manufacturing industry. 

Furniture Manufacturing

Like the rest industries across the globe, the furniture manufacturing industry has also undergone rigid business fluctuations, economic downfalls, and a drastic change in customer choices. Today’s time has given a huge rise to online shopping. Due to this, the demand for customization as well as modularity in the furniture manufacturing space has made the manufacturers, as well as retailers, transform their internal business functions. Hence, the furniture manufacturers, as well as furniture retailers, are focusing more on investing in ERP solutions

Improved visibility

To enhance business functions and to fix some issues, visibility stands at first. For better performance, your business requires visibility, varied different production, supply chain, inventory, and much more. However, an ERP system for furniture manufacturing can help you gain access to critical data from all these different departments of the business. 

Also, with the help of dashboards and reports, the senior executives of the manufacturing plant can make informed decisions more quickly. 

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

Quick update of variable price points

Today, most furniture manufacturing companies are leveraging ERP for enhanced results. For manufacturing businesses, it is essential to develop price tags that would display a product’s current cost along with the MSRP. With the help of cloud ERP software, your business can enter a new value in the field which is one of the biggest benefits.

Frequent quality checks 

Even though the cost is the foremost factor to consider, the other crucial point to consider here is the quality of the product. An excellent ERP system for your furniture manufacturing business should allow you to take frequent quality checks of the products so that you can surely deliver the best-in-class products to your consumers. 

The system also lets you also set the timings at which you want to run quality checks before the product is shipped to the customer. Moreover, the set timings of the quality check processing should help you check exactly where does the problem lie. This way, all your issues will be resolved on time while keeping your customers satisfied. 

Integrating purchase orders 

With the advanced cloud ERP software, you can quickly review the pending POs that are yet to be placed. It can help you group into a single PO while also assisting in placing all of them with the customer. This feature of the ERP system helps simplify the procurement procedure while saving huge on freight where transportation is on rising. 

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

Appeal customers with great functionality

An ERP software has innovative identifiers for each product that helps receive and sell that product. However, this functionality was never seen in the old system. With the right ERP system for furniture manufacturing, the sales executives of your business can precisely check and identify the fashion trends occurring in real-time. 

Also, you can create reports, forecast the trending fabric types, and much more. This helps drive customers’ attention while also driving overall sales of the business. 

Regulating accounting & finance functions

An efficient cloud ERP system can help you make faster month closure processes that might take a few days to execute. This is the biggest benefit of the standardized financial structure and rules of advanced ERP. The software also makes it easy to maintain and manage without generating any concerns. 

Furniture Manufacturing

High productivity

It is so obvious that a business functions smoothly when it is cloud-based. Likely with the help of cloud ERP software, you can easily process materials in terms of a combined order, You can effectively record material utilization while enhancing the overall material productivity of the business. 

Due to the automated and cloud-based functioning, you won’t feel any need for additional people to execute tedious tasks. Rather, you can seek some more productive jobs in order to deliver high improvement of the business. 

Precise supply chain management 

A number of furniture organizations take materials from varied regions with the best available prices. But, this is a highly complex process. To deal with this, you would need an efficient system that could help you manage suppliers. Also, the system should get integrated with your inventory in order to keep things up-to-date. 

Once an ERP system is integrated with the supply chain management of the furniture manufacturing business then, it can help manage varied warehouses in different locations. Also, it can help manage different subsidiaries through a single dashboard which eliminates the need for location cross-checks completely. 

<< Also Read: Boost Your Furniture Business with Sage ERP>>

Improved production process

Having an ERP system at your business place helps you get in-detailed insight into your production process. Be it any function such as Bill of Materials, routing, work centers, and more. The system offers automation in the production from work orders creation and gearing production cycle. This surely makes the production cycle completely reliable. Not least, you can also manage the inventory and supply chain flawlessly. 

You can also track the manufacturing steps with direct integration. It is widely used to take components through varied production stages while giving real-time insights. 

Wrapping up 

Now, it is a clear conception that ERP software offers a plethora of benefits to not just furniture manufacturing companies but also to rest industries in the globe. You get better visibility in your business and also get effective management of the furniture production, inventory, as well as, supply chain functions

To achieve better results, you can also integrate the existing systems at your business with the ERP system and get a high-tech functioning experience. 

 

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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 Ways Manufacturers Can Keep Their Suppliers Afloat During COVID-19

3-Ways-Manufacturers-Can-Keep-Their-Suppliers-Afloat-During-COVID-19
Reading Time: 2 minutes

The COVID-19 pandemic has erected numerous financial challenges across industries. But the ones that are most affected by it are small businesses that don’t have enough resources to survive through the prolonged crisis. Although governments have announced and distributed various bailout packages, they are not enough for everyone. This is where big manufacturers can play an important role and as luck may have it, they are doing that. Reports suggest that to financially support their suppliers, manufacturing industries are buying materials in advance and providing loans. History shows that those manufacturing industries/companies that have stood resolutely behind their suppliers during tough times have received intense loyalty in the form of bigger discounts and early access to raw materials.

This article dives deep into the matter and discusses 3 ways manufacturers can keep their suppliers afloat during the COVID-19 crisis.

1. Check your supplier’s financial status

It’s imperative to know how good/bad the conditions are at your supplier’s end. Your procurement officer or chief supply chain manager should get in touch with them and know their current status. It’s easier to figure out the financial health of publicly-traded suppliers as it’s mandatory for them to report their financial data. As far as private suppliers are concerned, you should try to get them to disclose their financial health and provide a suitable package as per their needs. 

2. Figure out who needs help instantly

Manufacturing industries must closely monitor the financial health of all their suppliers and rank them in ascending order. This will let them know who needs instant help and who can wait. You should do this process even for below tier-1 suppliers after ascertaining how you might be affected if they shut down. For example, consider that you are a car manufacturer and you depend on a tier 3 supplier for floor mats. Though they (floor mats) are inexpensive, they are important for selling a high-end product (car). Thus, you must analyze the effect of a supplier not by what they provide you but on how it affects your top-line.

3. Chose different support options for varying suppliers

Manufacturing industries should choose different support options keeping in mind the supplier’s susceptibility to the COVID-19 crisis. As far as big suppliers are concerned, you can buy items well in advance so that they get enough receivables to keep themselves afloat. Talking about medium suppliers, you can buy a minority equity stake to let them have the required cash. And last but not the least, you can pay small suppliers upfront and ease service level agreements that might be hard for them to adhere to.

Manufacturing industries must keep in mind that they work in an ecosystem where the weak feeds the strong. Small suppliers → Medium suppliers → big suppliers → manufacturing conglomerates. If small suppliers go bankrupt and close down, the survival of manufacturing industries will be at stake. To prevent this from happening, the latter must analyze the current situation appropriately and come up with good bailout packages. 

At Sage, we are home to world-class CRM, ERP and HRMS software that will make remote working a piece of cake, boost employee productivity, synchronize inter-departmental activities, and generate more profits.

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.