Tag Archive: supply chain management


By Keith Fenner
Senior Vice President of Sales for Africa at Softline Accpac, part of the Sage Group plc.

Keith Fenner

Keith Fenner

Supply Chain Management (SCM) involves the supply of goods or services required by a customer.  The process involves many connected parties that are involved in the goods or services reaching their final destination. APICS defines it as the design, planning, execution, control and monitoring of supply chain activities.

The supply chain management cycle in Africa is vital for our customers to remain competitive with the ability to measure and monitor performance globally.  Planning and visibility is the key requirement in any successful SCM module from a logistical point of view and pre-costing from a financial point of view.  This visibility must extend to your suppliers and all the connected parties in that process in order to land goods at the right time and the right cost.  The visibility will lead to a lower stock holding which in turn will free up working capital to use elsewhere in the business.

How does SCM fit into Enterprise Resource Planning (ERP)?

Many ERP solutions only cater for a product once landed and costed but this is the first time the costs are known and stock is visible which does limit planning and cash-flow.  Typically goods can end up in stock and then additional costs are apportioned afterwards from a financial costing perspective based on weight, volume or value.  This is a very basic option and can lead to discrepancies when reviewing the gross profit on item level as these additional costs typically alloy across many stock items in a container.  A true SCM solution has a dedicated module where shipping routes, tariff codes, manage rules such as FOB and additional cost categories can be created and used to manage the true costing of goods in detail.  A module like this allows businesses to plan the costings and apply provisionally to stock before the additional cost invoices arrive, as often the stock has already been sold which causes further discrepancies. Once the final costs are known, the module will reverse the provision and add the correct apportioned costs to stock.  Moreover, in a modern web based ERP with SCM, you can simply give access to parts of the module to your suppliers to complete data relevant for shipping again improving collaboration.

When does is the right time to consider an SCM system?

Typically when importing starts to become a major problem in costing is the time to consider this solution.  When the frequency and volumes increase as well as the costs of warehousing, this is the time to review a proper integrated SCM and ERP.  It will massively reduce costs and deliver a better experience and service to their customers.

Advice

The best advice we can give is that SCM is not simple.  A distinction needs to be made between apportioning costs to landed stock which is the most basic requirement for a small business and what an importer looks for in order to better manage costs, improve service and delivery collaboration across the supply chain.  The key to the latter topic is a fully integrated SCM with ERP that has touch points across purchasing, suppliers, stock, warehousing, customers, customer service and costing that also talks directly to the supplier and customer with web based portals.  Luckily Sage ERP solutions have a scalable set of solutions for all sizes of businesses.

 

By Charles Pittaway, Managing Director of Netcash, part of the Sage Group plc.

Charles Pittaway

Charles Pittaway

Connected Services is a buzzword in the industry at present, though many people are still grappling to understand just how important it will become.  I strongly believe that any business or personal solution simply cannot afford to operate in isolation.  In order for software, handheld devices and hardware to offer something of real value, they will have to be developed to interact with one another.

In the face of the information explosion that is changing the way that we communicate at core level, I feel it necessary to take a step back and investigate where it all started.  When Alexander Graham Bell invented the telephone in 1876, it was initially intended as a voice communication tool.  The realisation that the telephone was able to transfer data set the wheel in motion for the evolution into the telex and faxing sphere.  The connection of the humble telephone into cellular networks ultimately formed the foundation for the internet, which was the big game changer.

We now had the ability to transfer information and data across multiple platforms, which has had a tremendous influence on how we do business.  An example is internet banking, which essentially allows two different banking systems to connect in order to perform a transaction.  The user then receives a notification via SMS or e-mail, which brings two additional platforms into the equation, beautifully illustrating the concept of connected services.

The question however remains as to what further evolution may be on the cards for connected services and the ramifications it may have.  There are currently two very different schools of thought in play.  The advent of the cloud led to the creation of Software as a Service (SaaS), which essentially allows us to utilise software such as accounting and payroll solutions through the web on a pay per use basis.  The traditional business model is however application based, where the software is downloaded onto a personal computer and utilised from your desktop or laptop.

I foresee these two schools of thought merging in the next five to ten years into hybrid solutions.  In order to evolve into true connected services, both online and offline solutions will need to change its platforms to allow inter-changeable communication to take place.

The international business economy was non-existent 20 – 30 years ago.  Countries were isolated and restricted to trade within its own borders.  It has since developed into a global economy that is interlinked:  Whatever happens somewhere in the world has a knock-on effect elsewhere.  If you bring that same analogy back to connected services, then hardware, the internet and software has given rise to a global economy of technology.  All the different vendors cannot operate in isolation and truly successful vendors and service providers will be the companies that get that right.

Inter-operability is already well on its way to becoming the next buzzword, paving the way for strategic alliances and agreements that will allow every application or software solution to be accessible from any device.  Business Intelligence (BI) will become a key aspect in the process of collating all the available information in such a way that it will assist users to make intelligent decisions about their business.  Imagine if you had your order system, warehouse, banking, accounting, distribution and every other aspect you can think of, connected with one click of a button?  The vendors that can ultimately get all the links in the chain connected, will be king.

Connected Services allows for transactions to be owned by various vendors, whether it is a banking system, order system, e-mail or SMS.  It is ultimately not about the number of systems to be linked in a supply chain, but how these systems interact to automate a total solution.