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.

What is Fixed Asset ? | Meaning, Benefits and Examples

what is fixed asset
Reading Time: 6 minutes

Summary: Fixed Asset is a constituent part of your business. Fixed assets are long-term assets that a company owns to generate income through business operations. They cannot be converted into cash in the short term. Let us learn more about the characteristics and many aspects of fixed assets.

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An asset is a valuable resource you purchase, expecting a continuous flow of benefits and income. Anyone can own assets – companies, individuals and the government. In a company, the assets are recorded on the balance sheet. An entity must record two types of assets on the balance sheet – Fixed and current assets.

What is Fixed Asset?

Fixed assets are tangible properties or equipment a company uses to generate profits. These assets provide financial gain to the business for the long term. The company owns fixed assets for a long time for more than a year. The value of these assets is later depreciated, and they can be converted to cash after a year.

Fixed assets are recorded in the balance sheet under the property, plant and equipment (PP&E) category.

Fixed assets are also known by the terms capital assets or non-current assets.

Examples of Fixed Assets

Suppose a furniture company purchases an office building with industrial equipment for 25 crores. Here the land, building and industrial equipment are examples of fixed assets. All these assets can be used for more than one year and contribute to generating revenue. These assets are registered on the balance sheet as fixed assets.

Listing some examples of fixed assets below :

Property, plant and equipment (PPE)

  • It includes buildings and even under-construction buildings. Upon completion, an under-construction building will automatically be transferred under the right fixed asset category.

Land

  • Buildings and leasehold improvements, including interiors.

Vehicles

  • The truck, used to carry goods and other company vehicles, comes under the fixed asset category.

Furniture and Fittings

  • Furniture such as desks, cupboards, chairs, and conference tables come under the fixed assets category. Fittings like office equipment, mirrors, light and art are classified under fixed assets.

Machinery

  • Industrial machinery and tools used for manufacturing processes are considered fixed assets.

Computer equipment and software

  • Computer equipment such as servers, desktops, laptops, iPads and others.
  • Cloud-based applications are considered a fixed asset. Enterprise packages and platforms also come under this category.

did you know

 

Types of Fixed Assets

There are two types of fixed assets :

Tangible assets : Assets which has a physical form are denoted as tangible assets. Assets such as land, industrial machinery, buildings and many more are categorized under tangible assets.

Intangible Assets : Intangible assets don’t have a physical existence. Intellectual rights, goodwill, trademarks and copyrights are some examples of Intangible assets.

Benefits of Fixed Assets

A company has to record its assets to create accurate financial reporting, business valuations and in-depth financial analysis.

Fixed assets are significant for the company to conduct business operations and make a profit.

A fixed asset is crucial because the investors closely inspect a corporate’s assets to decide if they should invest in that specific company.

Capital-intensive industries like manufacturing that own large property, plant and equipment require an accurate record of fixed assets.

The value of fixed assets depreciates over a period of time. As the company records the depreciating value of fixed assets over time, the investors will get an indication that the company is growing.

Accounting for Fixed Assets

In a company, fixed assets are recorded to clearly understand transactions for the same.

Balance Sheet : 

In the first step, a purchased fixed asset and its value is recorded on the balance sheet. If the fixed asset is purchased in credit, it would be classified under the account payable category. A fixed asset is capitalized in the balance sheet as it is used for a more extended time to generate revenue.

Income Statement :

Fixed assets are depreciated after a year as property plants and equipment are used to conduct business operations. After a certain time, these assets will incur wear and tear charges.

For example, a building has to be repaired by maintaining the interiors. Office equipment has to be serviced every six months or every year, which is an expense for the company. The company’s net income is calculated after depreciating the value of fixed assets. Later the fixed assets are scrapped or sold and converted to cash.

Statement of Cashflow :

All business transactions are registered on the balance sheet. So purchase or selling of fixed assets is recorded in the investing activities section of cash flow statements. A fixed asset purchased is an outflow of cash and is classified under capital expenditures. The sale of fixed assets is an Inflow of cash categorized under proceeds from the sale of property and equipment.

Fixed Asset Accounting Cycle

  1. Acquisition

All the costs, including the fixed asset price, shipment, installment and service charges, are entered into the balance sheet. Even if you are paying instalments or via an exchange is also registered in the journal entry.

      2. Depreciation

The value of the fixed assets is depreciated periodically for tangible assets and amortization for intangible assets.

     3. Revaluation

Entries you make should reflect the current market value of the asset. Ensure that the revaluation causes any gain or loss in the accounting entries.

    4. Impairment

The period when the market value of an asset is lower than the valuation mentioned on the balance sheet. It is also known as writing down.

    5. Disposition

After an asset’s lifecycle is complete, it is sold, traded or scrapped down. Here you calculate the gain or loss of the asset. Then that specific asset is eliminated from the accounting entry.

<<<Also read: The Scope of Financial Management>>>

Depreciation in Fixed Asset

Fixed assets have a useful life of more than one year. They cannot be easily converted to cash as they help generate income. Each year the value of fixed assets deflates, which will be reflected in the balance sheet. This deflation of assets is known as depreciation.

The company knows the entire life cycle of fixed assets before they purchase them. We can say that the value of fixed assets keeps on depreciating each year, but on the other side, revenue will increase. One of the methods to measure the depreciation of these assets is straight-line depreciation.

For a year, fixed assets function relatively well. Later the company have to pay for the wear and tear charges. So the worth of the fixed assets depreciates each year, and they are later replaced with new ones.

Non-depreciable fixed assets

Fixed assets whose value cannot be depreciated yearly are non-depreciable assets. Land’s value cannot be depreciated anytime. Most of the time, land’s value keeps on increasing. In comparison, the value of the building keeps on declining every year.

Difference between Fixed Assets and Current Assets

What are a company’s assets ? A company’s assets are things they own to monitor and control business operations and generate revenue.

Generally, a company’s financial accounts are categorized into distinct divisions. Fixed assets and current asset is a part of that accounts.

Fixed assets are capital assets, also known as property, plant and equipment(PP&E), which are assets used by the company for more than one accounting period.

Current assets are items such as cash and inventory that are used or sold before an accounting period completes. It can be easily converted to cash. Inventory, cash, cash equivalents, and accounts receivable are current assets. The value of the current assets cannot be depreciated.

Challenges of Fixed Asset Accounting

  • Manually managing, tracking and monitoring asset transfer is critical for a company. As a result, there will be inaccuracy in financial accounting reports.
  • Real-time data visibility is significant here to avoid errors and confusion.
  • Changes in tax implementation affect fixed asset accounting.
  • Recording the accurate cost of depreciating value of fixed assets is substantial.

Benefits of Automation for Fixed Asset Accounting

  • ERP software provides accurate data for the accounting of fixed assets.
  • Simplified business processes and access information anytime.
  • Highly secured data can be accessed by accounting professionals or those who are trained for it.
  • ERP software helps to track, monitor and maintain the data of fixed assets of the company. And it also tracks if the asset is purchased within the budget.
  • Automation improves efficiency and saves time. It’s easy to calculate accounting without any errors.
  • ERP system can easily measure the precise lifespan and depreciation and predict fixed asset maintenance costs.
  • ERP software is compatible, and the specialities or features can be customized based on the company’s needs.

<<<Also read: Asset transfer from CWIP to Fixed Asset>>>

It is crucial to understand the fixed asset value of your company. Maintenance of fixed asset accounting up to date is not easy. Rely on an accounting expert or automated software to get the accurate value of your fixed assets. As the fixed asset has a useful life of more than one accounting period, it’s vital to know and calculate the net book value periodically.

The disposal of fixed assets is complex. Therefore, the right business decisions must be taken when purchasing a fixed asset. A robust record keeping has to be maintained to track and manage all the fixed asset accounting.

 

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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.

How Product Recall plays a vital role in the F&B Industry?

Product Recall
Reading Time: 5 minutes

Summary: A product recall can affect a company’s business processes. The food and beverage industry faces pressure to follow the regulations imposed by food regulatory bodies to curb health risks. In the year 2021, FDA identified 414 product recalls in the food and beverage industry. Anytime this industry should be equipped with the right plan and decisions to effectively manage ahead of a product recall.

 

A product recall can have drastic effects on a company. It is a process of removal of a product from the market following an issue. A product is recalled instantly if it’s defective or found unsafe for the consumer to utilise the product. The faulty goods are checked later, corrected or obliterated. The company takes responsibility for withdrawing its products from the shelf by alerting the public, retailers, distributors and manufacturing partners.

For example, a few years ago, a renowned food and beverage company instantly recalled tons of noodle packets for violating the regulatory standards of FSSAI. 

A company must take immediate responsibility to avoid causing severe legal, financial and safety issues. If the business takes on the challenge appropriately, it will receive praise for its practical and prompt action. However, the company should have a plan of action in case of a product recall. 

Effects of a Product Recall

A product recall can put a company at risk if the right action plan is not executed. A company recalling a product will have to go through legal and financial issues, damaged reputation and sometimes the business dies. Consumers majorly face a health risk if the products are not removed. Let’s look at the effects of withdrawing a product from the market. 

1. Lost Customer Loyalty

A company may lose loyal customers if they fail to own the mistake of the defective product. Taking prompt action to retrieve the products from the marketplace can set things right with the customers. Offering them compensation for the damages can change their perspective.

2. Brand Reputation

Product recalls can have a significant impact on a brand. It can diminish or end the reputation of the brand. According to a survey, 55 percent of the customers switch the brand for a similar product after a product recall. Nowadays, customers can quickly respond through social media, significantly dampening the brand’s reputation.

3. Expensive Legal actions

Companies incur heavy financial burdens during a product recall. They have to pay financial penalties to the regulatory bodies for violating the standards. Plus, they have to pay a hefty amount to the inflicted customer. Legal action costs a great deal.

4. Positive Brand Image

Your brand’s image may change the way you recall your product. It reflects the commitment you have toward customer safety and product quality. Your prompt actions and decisions impact your business in this critical time.

Reasons for a Product Recall

A product is retrieved from the market to prevent consumer health risks and to save the brand’s reputation. Let’s look at the factors resulting in a product recall.

  • Poor maintenance of manufacturing facilities and equipment.
  • Manufactured products not complying with the standard regulatory boards.
  • Product not in compliance with the company’s regulatory standards.
  • Failing to monitor the manufacturing process.
  • Using low-quality raw materials.
  • Issue detected on product during spot check.
  • Tracking issues of the product in the supply chain.

<<<Also Read: 9 Supply Chain Tips to Effectively Manage a Product Recall>>>

Effective measures to manage a Product Recall

Before a product recall occurs, a company should be equipped with a plan to face this issue. They should possess all the requisites to tackle the problem without destroying its reputation. A well-curated game plan for product recall can enhance the communication between the company and the customer. It displays the company’s core values of commitment, honesty and responsibility. So how can you manage the product recall situation?

  • Strategies to manage a product recall will differ depending on the product type. For example, a batch of noodles adulterated with some chemical will be recalled differently than microprocessors. So based on the product a company manufactures, each company should own a policy to combat a product recall. 
  • Do extensive academic research and develop a policy to manage a product recall.
  • Maintain database of the product and customer information. Give serial numbers for all the manufactured products so it would be easy to identify them during a recall. Also, keep a record of the customer information to track them easily.
  • Delays reflect a negative image of the company. Plus, it can increase the damage and penalties. Note that shareholders, regulators and customers evaluate your actions during lawsuits.
  • A product recall impacts legal, financial, engineering and customer service departments. All these departments will have to coordinate and deal with the problem. Appoint a manager to integrate and perform functions without any confusion. It improves transparency which helps to solve the issue efficiently.

How Product Recall plays a vital role in the F&B Industry?

ERP Systems are widely used in companies to balance the workflow and perform day-to-day business activities efficiently. It integrates all the business operations under a single database for clarity and increased productivity. Organizations that installed fully automated ERP software have seen tremendous growth in profit margins. 

ERP system plays a crucial role during a product recall. The information repositories in the ERP software give data on the defective product and the customer information. The manufacturer can track the development and retrieve all the faulty goods.

In the food and beverage manufacturing industry, hygiene is a significant criterion. The food and beverage industry is constantly under pressure to comply with the high standards of regulatory bodies. Manufacturers must adhere to all the specific regulations to prevent cross contaminations, remove allergens, and prevent accidental mixtures of toxic chemicals. 

Significance of ERP software on Product Recall in the Food and Beverage Industry

ERP system is essential in the course of a product recall. The company’s timely response and cautious action may put its organization in a positive light.

  • An ERP system can aid in tracing batches of defective goods immediately. Each product is registered in the ERP repository with a serial and batch number, making the traceability effortless. 
  • ERP system alerts the manufacturing executives to comply with the regulatory standards by sending notifications and reminders.
  • As all the data is registered in an ERP system, it will be easier to identify the root cause of the defective commodities.
  • Amidst a product recall, an ERP system helps in maintaining effective communication between suppliers, stakeholders and customers.
  • Real-time reporting is a vital feature of ERP software systems in assisting the authorities in making quick and meaningful decisions during a product recall. 

ERP solutions are robust, user-friendly software for preventing and overcoming a product recall. Its multiple features help the food and beverage industry follow all substantial safety standards to avoid mishappenings. It is an incredible system that gives accurate product information, the ingredients used, and the formula followed. All this information helps eliminate human errors and terminates misinformation. In a single database, it integrates all the functions from finance to recipe management. 

What is a Bills of Material (BOM)?

Bills of material
Reading Time: 5 minutes

Summary: Bills of Material (BOM) plays a significant role for companies involved in manufacturing finished products. It enables the manufacturing unit to plan inventories, design, and estimate the final cost of the entire manufacturing process. 

What is a Bill of materials? 

A bill of materials is a list of assemblies, raw materials, components, sub-assemblies, and essential parts required to manufacture a finished product. This finished product might be the final product itself or may serve as a raw material for producing another bigger product. Several departments, including manufacturing, logistics, operations, purchasing, and engineering, are involved while collecting accurate data for creating the BOM, and therefore, departmental collaboration plays a substantial role in BOM creation. Note that different teams create different BOMs. For example, the manufacturing team generates manufacturing bills of materials (MBOMs) and the engineering team creates engineering bills of materials (EBOMs).

Along with the raw materials required for production, the bill of materials also mentions the quantity of each component. You can generate multi-level BOM if your products are available in different configurations, colors, and sizes. Moreover, you can also define by-products or scraps produced during the manufacturing process in the bills of materials. BOMs also facilitate effective revision control for the New Product Development and Introduction (NPDI) process with supply chain partners. 

A word of caution: Whenever you share a BOM with a contract manufacturer, ensure it’s revised to avoid product launch delays and manufacturing errors. 

Top 8 reasons why a bill of materials is critical for your business?

1. Components or subassemblies not specified in the bill of material will not be acquired.

2. A bill of materials lists all the components of a product.

3. A bill of material makes the manufacturing process more cost-efficient.

4. Once you know the cost of all components required to manufacture the finished product, it becomes easy to identify which components you should purchase from a vendor and which ones you can manufacture.

5. A BOM helps identify waste products produced while manufacturing a finished product. 

6. BOM also ensures that repair and maintenance of components, subassemblies, and finished products are maintained. 

7. BOM provides a reasonable estimate of the cost price of the finished product. 

8. BOM allows companies to ascertain whether manufacturing or buying the product makes sense.

Components of a Bill of material

It’s best to include specific pieces of data corresponding to a product in the BOM record to ensure the product is built as it was intended. Whether you are creating a BOM for the first time or have done that multiple times, the following list will help you improve the BOM creation process.

  • Part number

Assign part numbers to each component or assembly, which helps identify at a later stage quickly. You can either use an intelligent or non-intelligent scheme to assign part numbers. Irrespective of the scheme you chose, don’t assign multiple part numbers to the same part.

  • Description

Provide a detailed description of all parts/assemblies to help yourself and others to identify specific parts quickly and differentiate between similar-looking parts.

  • Part name

By assigning distinct names to each component/assembly, you can significantly decrease the time spent identifying them.

  • Phase

The manufacturing bill of materials must record each component’s production stage in its lifecycle. A common notification used for recording this purpose is “In Production”. Similarly, you can use notifications like “In Design” or “Unreleased” to indicate components that have yet not received approval. Recording the “Phase” of each component plays an essential role during New Product Introduction (NPI) as it facilitates the creation of realistic project timelines. 

  • BOM level

Assign a number to each part to help anyone understand where that part fits in the BOM’s hierarchy. This process makes it easy for business stakeholders to decipher the entire structure of the BOM. 

  • Unit of Measure

The engineering bill of materials should contain information regarding the amount of materials that will be consumed or purchased. Commonly used notifications are feet, inches, and ounces. Unit of measure ensures that the right quantities of similar products are delivered to the manufacturing plant.

  • Reference designators 

If printed circuit board assemblies (PCBAs) are a critical part of your product, then including reference designators in the package makes sense. They tell the user the exact location where parts will fit on the PCBA. This way, you will save time and eliminate confusion while fitting the parts.

  • Procurement type 

The bill of materials should also document how each component is purchased — off-the-shelf or tailored according to the customer’s specifications. This process helps enhance manufacturing efficiency, procurement, and planning activities in the short and long term.

  • Quantity

Maintain and update the number of parts to be used in each assembly/sub-assembly in the bill of materials. It will allow purchase managers to ascertain the exact quantity of raw materials they need to restock the inventory.  

  • BOM notes

Maintaining additional notes along with product-related information is very useful. This way, you can quickly update a new employee about the project — work that has already been done and future plans.

Various types of Bills of Material

The following list provides the various types of bills of materials:

  • Configurable BOM
  • Service BOM
  • Manufacturing Bill of Materials (MBOMs)
  • Single-level BOM
  • Multi-level BOM
  • Engineering Bill of Materials (EBOMs)
  • Assembly Bill of Materials
  • Sales BOM

Let’s discuss the two most important types of BOMs from the list mentioned above.

  • Manufacturing Bill of Materials (BOMs)

This list contains materials required to manufacture finished products and their quantities. The procurement department uses this list to maintain an appropriate inventory level and update the ERP system with the latest BOM details.

Two formats to display a bill of material 

Bills of material can be displayed in two formats:

  • Explosion format

In this format, the finished product is exploded into its constituent parts. This process moves in the reverse direction, i.e., from end to start.

  • Implosion format  

In this format, the constituent parts are connected to form an assembly at the highest level. This process moves in the forward direction, i.e., from start to end. 

<<<Also Read: 10 types of BOM and why they matter?>>>

4 essential questions you must answer before creating the bill of material

1. Will your bill of material contain records regarding consumables?

Most manufacturers struggle to decide whether to keep items like fasteners, glue, wires, boxes, and labels in the BOM. Remember that if these parts aren’t accounted for in the bill of material, they will most probably not be there in your product as well. So, please document these parts in the BOM.

2. Who will use the BOM record?

Your bill of material should include as many details as possible. The reason is that people you will never meet face-to-face should be able to understand and utilize the BOM appropriately. In addition, the BOM must contain each bit of information stakeholders might need throughout the product’s lifecycle. 

3. How are you going to attach files to the BOM record?

Attaching supporting documents like work instructions and CAD drawings with your BOM is critical. When these documents are linked with their specific components in the BOM at the appropriate place, it helps avoid confusion, reduce quality issues, and eliminate unnecessary rework.

4. What is the right reconciliation process for your BOM?

Your bill of material may change multiple times during the design phase. So, it would be best to have all the BOM versions stored safely inside your ERP system, allowing you to compare them and check the revisions you have made. The reconciliation process includes:

  • Check all versions of the BOM to identify all components and subassemblies and how they fit together.
  • Check the changes made by a particular engineering change order (ECO).
  • Observe who made the changes and when.

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.

 

10 result-oriented CFO Trends you must watch for

CFO trends
Reading Time: 5 minutes

Summary: The role of CFOs has changed significantly over the past decades. Today, they have a lot on their hands, from leveraging existing operations to aligning the company’s financial policies according to changing market trends and customer preferences. CFO trends are primarily dependent on two areas, namely:

a. Adopting best digital practices to achieve existing priorities.

b. Analyzing the changing financial trends to keep the organization’s financial goals on track.

This blog will share ten CFO trends that companies across industries should imbibe to build a successful CFO office.

1. Zero-based budgeting (ZBB)

Zero-based budgeting is quickly becoming one of the most important CFO trends. Let’s understand why?

The world is going through a financial crisis. And businesses need to think of alternative ways of achieving their financial goals in this ever-changing market. Therefore, CFOs are reimagining their financial strategy from a “zero-base” to get a fresh perspective on value creation, business blueprints, resource allocation, and workforce effectiveness in the future. A recent report by McKinsey revealed that 43% of 127 CFO respondents said they need to reorganize their overall budgeting processes to respond to business challenges quickly and efficiently. 

ZBB models are enjoying massive popularity as they help CFOs bring down operational costs, achieve quick wins, and lay down effective business continuity principles. Moreover, recent AI and cloud systems developments are also accelerating the adoption of low-risk ZBB models.

Zero based budgeting

2. Digital transformation across all business departments

Digital transformation accelerates innovation, automates manual work, and helps build robust and long-lasting customer relationships. So, forward-thinking CFOs are looking for ways to integrate the finance function with digital systems to achieve long-term financial goals. Current CFO trends suggest that finance leaders are more interested in bringing digital transformation to the sales & marketing domains. Widespread automation, hybrid-selling, and social media promotions are essential to business success today. CFOs must brainstorm effective strategies considering adequate money and resources for achieving this level of digital activity.

3. Workplace transformation

Automation and remote working have become a reality in today’s business ecosystem. So, CFOs are spending more on cloud-based solutions and business automation tools like Enterprise Resource Planning (ERP) software to increase business productivity and provide a flexible working environment.

New CFO trends suggest that organizations today are adopting Diversity, Equity, and Inclusion (DEI) principles to create a supportive workforce culture and implement the best hiring practices. As a result, CFOs should allocate resources to facilitate workforce repositioning, better use of talent, and offer world-class training. Modern CFOs also need to supervise the efforts of the HR and payroll teams to design employee-first strategies.

<<<Also Read: Financial Management: The Ultimate Guide>>>

4. Better cash flow management

Above all, maintaining a positive cash flow is of utmost importance to any company. New CFO trends suggest that offices should create agile cash collection methods and optimization strategies to keep the cash coming in. Working capital inefficiency is one of the critical areas of the business that financial leaders want to address by establishing flexible cash flow models.

Moreover, in its recent survey, American Express India revealed that 2 out of 3 CFOs wish to pay attention to digitizing the payables and receivables management. The same report further reveals that 1 out of 2 CFOs wants to make better use of analytics for collection management. Modern cash flow management solutions streamline end-to-end processes, increasing profitability and providing a better experience for the company and customers. 

5. Governance models and data visualization techniques

CFOs today rely on real-time data to make better financial decisions. A recent Accenture survey reveals that 99% of CFOs understand that real-time data is instrumental in managing disruptions. Still, only 16% believe that they can do so. Implementing the best quality data visualization and analytics tools is one of the most significant challenges CFOs are facing. The finance team can make better forecasts, optimize cash flow, and formulate error-free plans for multiple business units by receiving refined data from various sources. But it also requires establishing ground rules for data governance. 

6. Forecasting models and tools

Accurate forecasts ensure positive growth across all business units, maximizing revenue. But making accurate forecasts using traditional methods is a big challenge. So, current CFO trends suggest using cutting-edge tools and techniques to reduce transactional accounting work. They help set realistic targets and manage time with periodic forecasting. Moreover, these models use the latest emerging trends and accurate financial data for making better decisions.

7. Real-time and predictive analytics

Modern CFOs are expected to steer the company’s future and carry out their everyday functions. Predictive analytics help CFOs forecast possible hazards, brainstorm strategies to prevent them, and engage with multiple stakeholders to find opportunities. Current CFO trends recommend relying on multiple data sets to extract analytical output to make better decisions. For example, CFOs examine business performance, identify emerging trends, and derive valuable insights using predictive analytics. The best part is that predictive analytics also generates values in allied business functions, including supply chain management, sales & marketing, customer relationship management, and detecting operational risks. 

8. Inclusion of self-service finance tools

Finance automation is a buzzword these days and CFOs are finding ways to incorporate them into their business strategy. It includes integrating new-age tools and sending real-time updates to facilitate business operations and simplify financial transactions for customers. Moreover, CFO trends suggest that these tools also help to analyze, report, and perform data visualization, providing a high level of flexibility. Different predefined report templates, intuitive financial tools, and KPI dashboards allow CFOs to supervise each employee’s activity and establish a robust relationship with external stakeholders.

9. ESG metrics for business sustainability

Modern CFOs pay adequate attention to the environmental, social, and governance (ESG) metrics while framing their financial strategy. Today, consumers are more aware of the environment around them and prefer buying products from companies that care for the environment. Moreover, the global pandemic has also encouraged CFOs to adopt ESG policies as it helps enhance transparency with employees, customers, stakeholders, and investors. ESG metrics also show customers that you pay as much attention to protecting the environment as you pay to earn profits. 

10. Increasing tech investments

Financial technology improvements enable CFOs to provide the facility of touchless transactions, which has significantly increased the penetration of financial services. Tech investments are also helping companies to automate their manual functions, increase productivity, cut operational costs, and allow employees to focus on mission-critical tasks. 

Remote working is another area where investing is an excellent idea. Several organizations worldwide are adopting the remote working model, enabling employees to work from anywhere, anytime, and anyplace. Modern CFO trends suggest that Industry 4.0 technologies, including AI, machine learning, data analytics, RPA infrastructure, and cloud-enabled ERP are a few cutting-edge technologies that organizations should invest in to become a market leader.

Sage X3 Finance challenges

How ERP Software improves Inventory Management System?

inventory management system
Reading Time: 6 minutes

Summary: You earn money when your inventory goes out of the warehouse. But do you have a 360-degree view of how the inventory is moving — from the initial receipt to shipping. The most important pillar for establishing a profitable business is total visibility of the inventory process from beginning to end. And it comes by implementing an inventory management system that keeps optimal inventory stock and supply chain organized throughout the year. 

This blog will offer knowledge regarding inventory management and how an inventory management system will help you increase profitability and eliminate waste. 

inventory management system

Disadvantages of inefficient inventory management 

Inventory is the most significant asset that businesses of all sizes own. And therefore, inventory mismanagement is one of the biggest reasons small and medium-sized businesses fail. 

Here are a few disadvantages you will face due to inefficient inventory management:

  • Longer lead time

If you are aware of the changing market trends and customer preferences, you will always stay ahead of the market curve. You can capitalize on popular items that customers are more likely to purchase, multiplying your profits.

  • Excessive stock 

If you have excessive stock, you are wasting a lot of money. Firstly, you are paying too much for renting warehouse space. And secondly, many perishable products decay even before you can sell them.

  • Inadequate stock

If you don’t have adequate supplies of products that customers want, they will look out for other sellers. Therefore, if you face stockouts too often, you will lose a large base of your customers.

What is an inventory management system and how can it help you?

To establish a profitable business, you must track and manage inventory quickly and efficiently. The benefits of inventory management software are:

  • Optimal stock of products
  • Quick and easy transportation of products from the vendor’s location to your warehouse.
  • Easy picking, packing, and labeling.
  • Eliminates product spoilage.
  • Protects against product stockouts. 

Earlier, companies used to count each item manually and record the figures using the traditional pen and paper format. But with a digital inventory management system, you save money and also eliminate human-induced errors. Moreover, finance professionals can focus on mission-critical tasks instead of wasting time on managing accounts.

The key capabilities of inventory management software include:

  • Asset tracking
  • Product identification
  • Inventory optimization
  • Service management

Inventory management software provides real-time inventory status allowing you to maintain adequate stocks. But simultaneously, it also offers insights into the changing market trends and customer preferences so that you don’t lose on sales opportunities and increase your customer base.

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

Perpetual vs. Periodic inventory management software

You can choose amongst different types of inventory management software — Perpetual and Periodic inventory systems.

Periodic Inventory

 Small businesses that have less inventory to manage and lack sufficient investment to implement a full-fledged computerized system opt for periodic inventory. They physically count the inventory and the Cost Of Goods Sold (COGS). 

A company’s gross margin is calculated by subtracting COGS from revenue. Here’s the formula for calculating COGS in the periodic inventory system:

inventory

Companies are often unaware of the exact quantity of stock they have in the warehouse. As a result, they conduct physical counts every week, month, or quarter. 

Here’s a brief description of the process:

  • A physical count is done and the inventory records at the end of the period are counted.
  • Merchandise purchases are updated in the purchases account.
  • Then the inventory account is updated.
  • This new balance acts as the balance for the next period and the process starts again. 

The only disadvantage of periodic inventory is that companies have to count and update every physical quantity in the inventory, which is time-consuming and prone to error. Consider an electronic equipment manufacturer with multiple warehouses worldwide purchasing various parts required for manufacturing a smartphone. Now, imagine a large team counting each such part. Can you imagine the time spent performing this activity? Consequently, companies perform physical count once a month, quarter, or year. 

Perpetual Inventory

The perpetual inventory systems measures inventory balance in real-time using computerized systems. Point of sale (POS) systems record inventory purchases and sales accurately (unless goods aren’t damaged or broken). Moreover, the COGS account is also updated as soon as a sale is made and the data is sent to central databases in real-time. Perpetual inventory uses technology to its fullest; therefore, the workforce plays a minor role compared to the periodic inventory. 

Here’s a brief description of the process:

  • Each product has a barcode that tracks the product’s real-time location and records how long it has been on the shelf.
  • The inventory management system updates whenever a product moves outside (or inside) the inventory using point-of-sale inventory.
  • It contains multiple ledgers for COGS, purchases, and leftover stock. 

However, implementing, updating, and maintaining an inventory management system is costly. But the advantages outweigh the disadvantages easily. For example:

  • It provides real-time monitoring.
  • Since all operations are automated, it’s easier to use than periodic inventory.
  • It’s more accurate than physical counts.
  • The barcodes attached to products allow the shop floor manager to get detailed information about that product.

did you know

How are inventory and accounting related?

 Inventory is a business asset and therefore, inventory management and accounting are intimately connected. It would be best if your inventory management software contains numerous inventory valuation methods. It helps extract real-time metrics about products at each step in the process. 

Here’s a list of essential inventory valuation functions your inventory management software must contain:

1. Weighted average costing

This function is calculated by dividing the total cost of goods available for sale by the total number of goods. 

2. Inventory turnover rate

This function is calculated by dividing the cost of goods sold by the average inventory in hand. 

Here are a few factors you should remember:

  • A high turnover rate corresponds to excessive shipping costs to quickly fill stocks of necessary items, wasted time locating misplaced or lost items, and fulfilling incomplete orders.
  • A low turnover rate corresponds to diminishing inventory value and duplicate orders. 
  • A balanced turnover rate signifies lower costs, high efficiency, and greater customer satisfaction. 

3. Bills Of Materials (BOM)

Contains the list of sub-items that form a single inventory item. 

4. Standard costing

The accounting records contain two values — The actual cost of the product and the expected cost of an item. The variance between the two values is updated in the accounting records. Companies use this method mostly when it takes substantial time to track actual costs in real-time.

5. Kitting 

Assembling parts and items to form a single finished item. 

6. Work in Progress

Monitors inventory progress from the manufacturing facility to the shop floor where it’s finally used. 

7. Just In time (JIT) inventory

It refers to receiving inventory just before or exactly at the predetermined time.

<<<Also Read: Everything You Need to Know about Inventory Management>>>

6 essential things you should look for in an inventory management system

An inventory management system is a critical part of Enterprise Resource Planning (ERP) software. ERP unifies various modules, including accounting, point-of-sale, inventory management, and supply chain management, into a single platform providing the required efficiency.

1. Business visibility 

Cloud-based inventory management systems enable businesses to collect, store and analyze inventory data in real-time. Other advantages include generating highly detailed reports for improved collaboration and accessing crucial data from anywhere, anytime, and on any connected device.

2. Integration

Without integrating the inventory management system with the ERP software or other back-end and front-end business applications, it might not be as effective.

3. AI & data analytics

Built-in AI capabilities provide suggestions regarding changing market trends and customer preferences, what customers are most likely to purchase in the coming future and data-based recommendations for inventory levels. 

4. Affordability & Scalability

Inventory management systems come in varying shapes and sizes. Therefore, it would be best to identify your business needs, which will help you zero in on the essential modules required to perform your business functions quickly and efficiently. Also, ensure that you implement a scalable ERP system, meaning it can add new modules as your business expands.

5. Implementation & maintenance

The best part about cloud-based inventory management software is that it’s easy to implement and update compared to on-premise solutions. In addition, cloud-based solutions have cutting-edge security features that are updated automatically. On the other hand, on-premise solutions take time to update and are vulnerable to external attacks. 

6. Product tracking 

Inventory management software should be able to track the real-time location of inventory while it’s moving across the supply chain. Also, you must check that the software is compatible with bar code scanners enabling you to scan product details instantly. 

Supply chain ERP software

 

What is Business Intelligence Software ?

Business intelligence software
Reading Time: 6 minutes

Summary: Data sources are increasing daily, and the amount of data that companies need to process is also increasing immensely. So controlling the channels of data and the ability to extract crucial knowledge from it is more important than ever. Business Intelligence software allows companies to extract critical data that help make better business decisions. For example, it reveals hidden market trends and customer preferences that tell what products and services customers are most likely to buy. Moreover, data allows business stakeholders to brainstorm and implement strategies that help save costs and ultimately enable you to become an industry leader.

Quote

What is Business Intelligence?

Business intelligence software comprises the following components: Data mining, Data tools & infrastructure, data analytics, and data visualization. Using these components, business intelligence aims to cull out critical information from large volumes of data that help make better business decisions. 

Modern business intelligence (BI) software help:

  • Understand changing market trends.
  • Examine transforming customer preferences. 
  • Eliminate work inefficiencies.
  • Brainstorm better marketing strategies.
  • Keep crucial data safe on platforms.
  • Get critical insights quickly and without any errors.
  • Users feel empowered when they use trusted BI software platforms.

How does business intelligence software work?

Businesses across industries collect data from multiple sources. This data can be beneficial if companies have the tools and know the techniques to extract valuable insights from that data. Such insights help achieve long-term goals and short-term objectives. Now let’s understand the technical side of the issue.

Data is firstly collected from business management solutions and then processed to eliminate unwanted crap. Finally, the leftover data is stored in cloud-enabled data warehouses allowing instant access to business stakeholders from anywhere, anytime, and on any connected device. Using this processed data, decision-makers can answer business questions quickly and efficiently. Another advantage of business intelligence tools is that they project hardcore data into easy-to-understand charts, graphs, statistics, and other visual mediums. Therefore, key stakeholders can view and understand data easily.

<<<Also Read: How can Business Intelligence significantly improve your ERP software?>>>

Business Intelligence (BI) methods

As described above, Business intelligence (BI) has multiple components that collect and process data allowing key stakeholders to fetch valuable insights. These insights optimize business performance by increasing productivity & efficiency, cutting operational costs, and developing robust customer relationships. In the last few years, business intelligence has evolved to include numerous activities and processes to enhance business performance, such as:

1. Data mining

Companies can uncover valuable insights from large data sets using advanced statistics, machine learning, artificial intelligence, and databases. 

2. Reporting 

The reporting feature enables key stakeholders to glean business insights in an easy-to-understand format.

3. Descriptive analytics

Descriptive analytics allows key stakeholders to identify changing market trends and customer preferences based on current and historical data. 

4. Statistical analysis

This method helps to uncover the underlying trends and patterns from data collected from multiple sources. This method is used in situations like statistical modeling, research interpretations, and designing surveys and studies. 

5. Querying

A business intelligence platform uses structured query language to request data from database tables.

6. Benchmarking

Customized dashboards allow a business intelligence platform to compare historical data to track performance against pre-determined goals. This way, key stakeholders can benchmark their performance and determine their performance. 

7. Data preparation

Collecting data from multiple sources, identifying measurements and dimensions, and readying data for data analysis come under data preparation.

8. Data visualization

Once the data is prepared, it’s time to represent it in an easy-to-understand format using various data visualization tools like graphs, charts, and histograms. 

9. Visual analysis

Visual insights allow key stakeholders to understand the data’s context and underlying intention. It enables decision-makers to comprehend the purpose for which data is being collected, filtered, and analyzed. 

How do business intelligence (BI), business analytics, and data analytics go hand in hand?

Business intelligence is an umbrella term that contains business analytics & data analytics and uses them to achieve a particular goal. Data scientists use predictive analytics and advanced statistics to identify and forecast future patterns. The primary question that data analytics asks is “Why did a particular activity happen and what is the probability of it happening again?”.

Then, business intelligence (BI) uses those algorithms and models to turn results into actionable language.BI software is customized to answer particular queries and critically analyze for planning or decisions. In addition, businesses can implement analytics processes to improve iteration and follow-up questions. Modern-day businesses use analytics to discover, access, explore, and share data, which is called the cycle of analytics. 

What is the difference between traditional BI and modern BI?

Historically, a traditional business intelligence model was used to develop business intelligence tools. IT organizations used a top-down approach to drive business intelligence and static reports were used to answer analytic questions. 

The most significant disadvantage of this process was that if somebody had a follow-up question, their request would be sent to the bottom of the reporting queue, and they had to wait for the process to start over again. As a result, it led to slow reporting cycles, and decision-makers couldn’t leverage real-time data while making decisions.

Even today, most companies use traditional business intelligence for answering static queries and regular reporting. However, some organizations are drifting towards modern business intelligence as it’s more approachable and interactive. Although IT departments play a significant role in managing data access, multiple user levels can customize dashboards and create reports at short notice. In addition, full-fledged software allows users to visualize data in various formats and answer their questions. 

did you know

Benefits of using a business intelligence software

A business intelligence software allows companies across industries to gain a series of benefits, as mentioned below:

1. Enhanced organizational efficiency

BI tools allow organizations to access data from multiple sources, get complete control over their business processes, and benchmark their results with short and long-term business goals. For example, business intelligence software allows for faster clinical trials, better-optimized patient diagnosis, and better closing of claims. The best part is that when employees focus less on compiling reports and performing data analysis, they can focus more on developing better business programs and competitive products for their business. 

2. Intuitive dashboards 

BI intelligence software performs data processing on the company’s servers and the cloud. BI software gathers data from multiple sources, stores them in the data warehouse, and critically analyzes the data based on user queries, interactive dashboards, and drag-and-drop reports. The best part is that a business intelligence tool provides interactive dashboards that empower non-technical users to share stories without much coding proficiency. 

3. Enhanced data organization

Business intelligence tools improve data organization and analysis, allowing different departments to access several databases without seeking permission. Business intelligence software tools can combine internal datasets with external data directories, including social data, customer data, and historical data, into a single warehouse accessible to all key stakeholders. 

4. Data-driven business decision

Better decisions require access to valuable insights churned out of volumes of data. For example, business intelligence software allows companies to view sales forecasts and real-time data to meet with potential clients. As a result, sales reps understand the clients’ needs and can therefore confidently speak with them. Moreover, decision-makers don’t have to wait weeks to access detailed reports, and the risk of outdated data is also eliminated. 

5. Improves employee satisfaction

Business intelligence software allows analysts and IT departments to examine business user requests without spending much time. The best part is that those departments that required permission (or technical expertise) from the IT team to process data can now begin data analysis with little training. Business intelligence tools allow non-technical users to seamlessly and intuitively analyze data without technical expertise. 

6. Enhanced customer experience

Business intelligence software significantly improves customer satisfaction and experience. It quickly pulls text data from multiple customer support chat sessions and operational data as well. For example, business intelligence tools helped Verizon reduce support calls and enhance customer service by 43%. 

BI analysis categories

There are three primary categories for BI software:

  • Predictive analytics: This category considers real-time and historical data to model future outcomes for efficient planning.
  • Descriptive analytics: This category uses historical and real-time data to identify relationships and trends in data.
  • Prescriptive analytics: This category uses simulation, graph analysis, neural networks, and recommendation engines to find answers to questions such as “What should we do to achieve a goal?”.

Factors to consider while choosing a business intelligence software?

Choosing the right business intelligence tool is critical for your company. Here are some factors you must consider while choosing one:

  1. Variety of visualization options 
  2. Multiple dashboard templates
  3. Flexible to implement
  4. Data connectivity
  5. Valuable insights
  6. Alerts and notifications for identifying best & worst metrics
  7. Integrates with multiple business applications

The future trajectory of business intelligence

Business needs, customer preferences, and market trends are continuously changing, and so are business intelligence tools. Current developments happening in the fields of machine learning and artificial intelligence will play a significant role while businesses plan their BI strategy. 

Moreover, businesses today are getting more data-driven to make better decisions. As a result, efforts for collaboration and data-sharing are increasing. Business intelligence software also integrates the best data visualization tools allowing employees with little or no coding experience to cull valuable insights from raw data.

infographic - business intelligence

What is the difference between Quality Control and Quality Assurance?

Quality
Reading Time: 5 minutes

Summary: Quality Assurance (QA) and Quality Control (QC) play an instrumental role in the lifecare and healthcare sciences. But organizations should understand the difference between quality control and quality assurance because institutions like FDA and ISO require QA and QC clearances. Not adhering to QC and QA standards can have multiple effects. For example, the product you sell to the customer might not meet the required standards causing massive damage to the brand image. And secondly, ill-manufactured products might have a lethal impact on the customer’s health, leading to heavy penalties and court cases.

Companies should know the difference between quality control and quality assurance because they are two different processes executed at different times. 

Quality Control Quote

What are Quality Assurance and Quality Control?

Quality Assurance is one of the most integral parts of the Quality management plan. It includes activities/operations required to ensure your product (or software product) is fit to pass through the manufacturing process (or software manufacturing process). QA ensures that you have all the quality requirements in place, preserving the quality of products during the manufacturing process. 

On the other hand, quality control examines the standard of quality assurance. QC consists of step-by-step procedures that ensure the finished product is safe to use (and consume) and retains its utility after production. 

Both QA and QC are necessary. The former ensures high standards of product quality during the manufacturing process. In contrast, the latter guarantees product quality after completing the manufacturing process. 

QA and QC can be done using various methodologies, including Six Sigma, Agile, and other process improvement and project management strategies. But irrespective of your product development strategy, please ensure that it complies with ISO 9001:2015 regulations.

Top 5 differences between Quality Assurance and Quality Control

Our above discussion reveals the fundamental difference between quality control and quality assurance. Now, let’s see how both work together to improve the quality of your manufacturing process and decrease the number of corrective actions in the entire scheme of things. 

1. Proactive (QA) vs. Reactive approach (QC)

Quality assurance takes a proactive approach as it identifies product defects during manufacturing. On the other hand, QC takes a reactive approach as it discovers defects in manufactured products. 

Quality assurance focuses on designing processes like documenting Standard Operating Procedures (SOPs) based on ISO 9000 standards. The core philosophy of QA is that effective and error-free products will be manufactured every time processes are adhered to. 

The difference between quality control and quality assurance is that the former is about checking whether manufactured products adhere to safety and efficacy standards. So, if a product doesn’t meet minimum standards, it will be disposed of. This step will ensure an unsafe product isn’t delivered to the end consumer. 

2. Process (QA) vs. Product (QC) oriented

Quality Assurance consists of process-related functions that inspect the whole manufacturing process and avoid quality issues. In comparison, quality control is product-oriented and checks whether manufactured products are built according to the consumer’s requirements. 

A crucial difference between quality assurance and quality control is that the former checks the actions that facilitate manufacturing the product. Instead, the latter deals with the resulting product. 

The list below contains examples of both categories. Let’s go through them one by one.

Examples of QA processes

  • Supplier management
  • Investigation procedures
  • Change control
  • Audits
  • Documentations
  • Personnel training

Examples of QC procedures

  • Product sampling
  • Lab testing
  • Software testing
  • Batch inspection
  • Validation testing

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3. Creation (QA) vs. Verification (QC) standards

The primary purpose of QA is to create top-notch products that adhere to pre-determined quality standards. As a result, quality assurance talks about defining standards for marketing, packaging, manufacturing, design, distribution, sales, and other manufacturing activities. 

The difference between quality control and quality assurance is that the former helps verify that manufactured products are defect-free before shipping them to the end consumer.

4. System (QA) vs. Parts (QC) focus

Quality assurance control methods contain a long list of procedures that ensure quality standards are adhered to. On the other hand, quality control systems inspect parts consisting the system output. For example, they also focus on raw materials purchased from a supplier that are ultimately used for manufacturing products.

The difference between quality control and quality assurance is that the former focuses more on the activities, such as batch sampling raw materials and auditing suppliers that ensure inputs are effective and safe.  

5. Full team (QA) vs. Committed individual (QC)

Quality assurance methods and procedures involve the entire team. Each team member is responsible for QA activities by adhering to SOPs. It also involves creating standards for documentation, training, and for reviewing the entire workforce.  

The difference between quality control and quality assurance is that the former requires a dedicated individual to follow SOPs for product testing. These SOPs allow the QC staff to perform quality control activities and document their findings according to standardized procedures for process validation and product testing.

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5 benefits of Quality Management

Businesses can benefit immensely by adopting a structured approach to quality management. They can identify the root cause of problems and brainstorm strategies to solve them.

Here’re 5 benefits organizations experience after implementing a Quality Management Plan software:
  1. Motivated employees actively participate in decision-making and take significant interest in executing the plan because they fully understand the quality management policies and how they impact the company as a whole.

 

  1. Drastic increase in company earnings is a direct result of getting more business from existing and referral clients. It also reduces the money spent on reworking tasks.  

 

  1. Better customer satisfaction, resulting in loyal customers and more referral business through word of mouth.

 

  1. Employees enjoy higher levels of confidence, ensuring repeat and referral business. 

 

  1. Eliminate waste by eliminating rework emerging from the need to solve bugs and bridge gaps in the quality management system’s ability to deliver customer requirements. 

 

The difference between Quality Control and Quality Assurance

Quality Assurance Quality Control
Quality Assurance includes activities/operations required to ensure your product is fit to pass through the manufacturing process (or software manufacturing process). Quality Control consists of step-by-step procedures that ensure the finished product is safe to use (and consume) and retains its utility after production.
The primary aim of Quality Assurance is to prevent defects during the manufacturing process. The primary aim of Quality Control is to identify defects after the products have been manufactured and improve upon them.
The entire project team is responsible for Quality Assurance. Dedicated personnel are responsible for carrying out Quality Control procedures.
The primary aim of Quality Assurance is to prevent defects during the manufacturing process. The primary aim of Quality Control is to identify defects after the products have been manufactured and improve upon them.
The primary aim of Quality Assurance is to prevent defects during the manufacturing process. The primary aim of Quality Control is to identify defects after the products have been manufactured and improve upon them.
Statistical Process Control (SPC) is the statistical technique used on Quality Assurance. Statistical Quality Control (SQC) is the statistical technique used on Quality Assurance.
Quality Assurance is concerned with the “process of manufacturing” a product, ensuring an error-free product is manufactured. Quality Control is concerned about the “verification of the manufactured product” checking whether the finished product is fit to be consumed.
Quality Assurance deals with the full software development life cycle. Quality Control deals only with software testing life cycle.
Quality Assurance ensures that you are manufacturing the right products. Quality Control ensures the results of the manufacturing activity is what you expected.
Quality Assurance is a managerial tool for avoiding quality issues. Quality Control is an operational tool to identify and remove deformed products before they reach the market.
Quality Assurance is a long process during the product design period. Quality Control is a comparatively shorter process that happens only after the product has been manufactured.

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

product lifecycle management
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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.