In my last installment I discussed the viability of archiving documents and its effect on creating more efficiency in lifecycle information management and why it was largely lost on many businesses. But it was easy to understand. It’s just not that sexy, that is unless you’re so backlogged with hard copy documents that nothing can be found or your compliance has lapsed.
Then sexy doesn’t enter into it, but urgent does.
Still Bogged Down
That brings me to the archiving’s first cousin, e-invoicing. And this is where I’m really baffled. Here in the age of Globalization, expanded markets, fierce competition and increased data where speed of business has never mattered more, many companies still find themselves bogged down in costly, time-consuming manual processes.
Think of it like this, if you’re going to compete at today’s Indianapolis 500, why would you do so in 10 year-old race car?
What makes it even more of a face palm is that we’re talking about converting sales into cash faster and more efficiently. Yet you still have companies competing in a global economy that are clogged with old and uncollected receivables and Days Sales Outstanding (DSO) cycles of longer than three months. This directly affects a company’s cash on hand, not to mention putting them at a major competitive disadvantage.
So what’s the problem?
Initially it was technical issues such as the legal validity of electronic documents, differing standards for recognition of electronic signatures, different EDI (Electronic Data Exchange) formats and a lack of standardized e-invoicing formats. In Europe, one of the biggest problems was the lack of cross border agreement on VAT (Value Added Tax) rules.
But many of those issues have been ironed out. New digital signatures, certificates and e-invoicing archiving regulations now guarantee the integrity and authenticity which helps companies meet national and legal regulations in EU countries. There are now project specific documentation including process descriptions and compliance maps. These templates help companies crate documentation jointly with their customers, including those recommended by the customer’s tax authorities.
With that significant obstacle largely hurdled, there is still the barrier of more behavior-oriented resistance, i.e., change management. A wider adoption of e-voicing does require investment and a management impetus along with opening thinking from suppliers and buyers. The technology remains unfamiliar despite a proliferation of service platforms, even on-demand and pay-as-you-go. While the relative implementation is fast, all of those other factors take some time and effort to put everyone on the same page.
Cost Savings of 50% or More
That said it’s well worth it if it means removing slow and inaccurate manual processes and reducing your DSO and cash conversion cycles. Research has shown that most paper invoices cost a company around $5 while electronic invoices cost around $2. That means a cost savings of 50% or more in most cases. And that’s only one benefit. You can add in the time and man hours saved on resolving invoice disputes or fixing errors as well. The end result is freeing up cash on the bottom line that can be used to repurchase stock, expand business operations or even pay off debts.
The fact is e-invoicing is a no-brainer. If your objective is to stay competitive in the global marketplace, boost your company stock price and performance, the time is now. Like Indy cars coming out of a yellow caution flag, (the recent worldwide recession) the green flag is about to come up again. So the question is: do you want to keep driving the same car or optimize it to gain more speed?
The answer seems simple to me.
In the ever changing technology of supply chain management, you hear terms like E-sourcing On-Demand, Procure to Pay, Spend Intelligence and SaaS SRM thrown around quite frequently. But mention the term “Archiving” and you’ll likely get a glazed look and a shrug along with mental images of dark shelves and silos collecting dust in some nameless backroom.
“Hey what are we, a business or the Smithsonian?”
Critical Activity
Well, if you’re a business, archiving is a critical activity and should be regarded as an integral part of the information lifecycle. A recent survey of CIOs found that more than 75% want to develop an overall information strategy in the next three years, but an even higher percentage are not close to implementing a an enterprise-wide content management strategy.
Thus, many companies are handicapped by slow systems, hard copy documents that get lost, damaged or simply disappear and an entire data system becomes a game of whack-a-mole. Oh, and did we mention regulatory compliance? That’s right. Laws and regulations to guide the proper use, storage, access and disposition of information are updated all the time and often are completely different in various countries around the world.
Better and Faster Decisions
There are several benefits to having a seamless integrated archiving solution that provides employees, customers and business partners critical information that makes collaboration easier and allows companies to make better and faster decisions.
- Better system availability: By increasing system availability you make conversions, upgrades and disaster recovery time much faster.
- Storage Savings: Reducing storage costs associated with disk space, memory and manpower.
- System performance: Creating much more acceptable response times and faster access.
- Legal and Compliance Issues: Archiving addresses the increase in legal and compliance requirements whether it’s Sarbanes-Oxley or the recent European Union directives. The costs for compliance are increasing as more media and types of information are being employed.
Archiving may not be sexy, but its importance can’t be minimized when it potentially reduces the time and effort to manage the lifecycle of enterprise content. The beauty of archiving is that it provides quick, secure access to content at any point in its lifecycle. This, in turn, means better business intelligence, more efficient business processes and collaboration, not to mention regulatory compliance anywhere in the world.
It was with more than a little sadness when I read today that Purchasing.com and Purchasing Magazine will no longer be around.
Reed Elsevier, parent company of Purchasing, announced today that it is closing Purchasing and the magazine’s website, purchasing.com, as well as most of its other U.S. publications, effective immediately.
The closing is part of a broad divestiture that itself is part of a restructuring of the London-based company.
The magazine has published for almost 95 years and has been a comprehensive and valuable source of strategic procurement information.
Ironically, the journalism was never better evidenced by its nomination as a finalist in the Jess Neal Editorial Awards national competition, one of the most prestigious competitions in business-to-business journalism.
For so many procurement professionals, Purchasing, Purchasing.com and Purchasing Biz Connect were the defining influences in the Supply Chain industry. Today’s closure will create a significant gap leaving many supply professionals without a solid media connection.
“The readers of Purchasing have one of the most important jobs in industry and will be key players as the economy moves into the recovery phase,” said Paul E. Teague, editor-in-chief. “And, the editorial staff is the best I’ve worked with in more than 30 years in journalism, as evidenced by their nomination as a finalist in this year’s Jesse Neal Editorial Awards.”
“I am very proud of the entire Purchasing, teams for their professionalism and dedication,” said Kathy Doyle, publisher. “I want to thank them and our advertisers for their support. The magazine has brought buyers and sellers together for almost a century.”
Excellent online customer service may be worth almost US$17.3 billion in 2010, according to a new Ovum survey commissioned by StellaService.
That’s the the round figure for the 10.7 percent premium the report suggests customers are willing to pay for good customer service according to CRM Buyer.
The survey was conducted across multiple categories — financial services, healthcare, utilities and retail — including both online and brick-and-mortar stores. The total value of great customer service across all categories, both online and off, was found to be $268 billion per year, or a 9.7 percent premium.
Addtional Percentage for Online Customers
That online customers are willing to pay an additional percentage isn’t surprising, Jordy Leiser, cofounder and CEO of StellaService, told CRM Buyer.
“It was quite a shock for us, actually, especially considering that so few companies meet the criteria for offering this level of service.”
Here are the three components:
1. Having all of the necessary online tools and interfaces — which includes comprehensive content with an easy-to-use format.
2. Shipping delivery and return polices. Are customers or buyers able to easily execute the returns process or are they forced to jump through numerous hoops?
3. Human support. To test this, the survey called each business more than 12 times to ask questions about products, its business operations, personal concerns, etc.
It seems pretty simple, but it is rare that a company has all three working at the same time. How would your company do?
Is the “lean” supply chain movement that started with the recent world wide recession increasing the overall supply chain risk exposure?
There was good reason as the world economy plummeted to create supplier oversight and quality management processes with the ultimate goal of reducing spend as much as possible. But as the economy recovers, the new question is how far should procurement professionals go on reducing spend before they push a supplier’s margin to minimally sustainable levels?
Fine Line
It’s a fine line, to be sure. For example, if raw materials costs rise, the supplier is now in a world of hurt and it’s going to create one of two outcomes: Either the supplier goes belly up or he sacrifices on quality with cheaper materials and processes.
Either way, it’s not good.
There is a call among many long-time supply chain observers to for organizations to shift from cost reduction to supply chain agility, sensing customer demand and adapting to changes or occurrences of risk, like product contamination or recalls.
In a recent blog Christian Verstraete, the Chief Technology Officer, Manufacturing & Distribution Industries at Hewlett-Packard, thinks the traditional Supply Chain is dead, or at least should be.
“With the growing globalization and with the need for increased responsiveness, the nature of the Supply Chain itself has changed dramatically,” Verstraete writes.” Unfortunately, we are still measuring many procurement specialists by how much they can reduce the cost of supply.”
Cross Functional Collaborative Approach
Verstraete believes that a cross functional collaborative product life cycle perspective, which includes product management, supply planning, finance and procurement with an emphasis on supplier risk management, is necessary in today’s evolving supply chain.
“Taking an end-to-end look at the supply chain and analysing the implications of such decisions, are typically not within the procurement professional’s scope of responsibilities. And obviously, many of them are trying to do what makes sense, they are great professionals. However, there is no systematic way of looking at the supply chain. Beside the cost, quality, responsiveness, visibility and availability of supply are all aspects that should be taken into account. Ultimately, what is critical is the total cost of making the end product, not the cost of the components. “
The bottom line here is that as the recession gets further and further in the rear view mirror, companies should examine a refocus on weighing the needs for cost control with the needs for increased supply chain agility and responsiveness.
There is a growing consensus around the world that supply and reverse-supply chains should not only be managed efficiently but also achieve sustainability of the global environment.
Companies such as IBM, Hewlett-Packard, Xerox, and Body Shop International have been involved in green-manufacturing (production-remanufacturing), green-marketing (remarketing), and green-logistics. Now with more requirements from governmental legislation and regulation in Europe, Japan, and North America designed to reduce pollution as well as requiring manufacturers to practice green reverse logistics management in recycling used-products, it really isn’t optional any more.
Unfortunately, there is still resistance from business leaders and industries when it comes to green sustainability and for them, it usually boils down how it will affect profitability and the bottom line. But are profitability and sustainability really at odds?
Opportunities Exist
The short answer is no. Or at least, not any more. In fact, there are great opportunities to actually reduce costs in compliance and production while gaining marketing, sales and branding up-sides according to a recent piece called Misguided, Opportunistic or Strategic by Executive Vice President and Chief Sustainability Officer for SAP, Peter Graf.
Take compliance for instance. Let’s face it, the mandates are either already in place or are coming. If you plan to stick to error-prone hand monitoring, you can expect to pay more in fees and compliance costs. However, by employing on-demand, automated compliance services you can not only lower your costs, but risk as well.
It can also drive down production costs according to Graf.
“Consider how reliant your production processes are on energy and natural resources and their price volatility. When you drive down resource consumption you not only drive down costs but the risks associated with price volatility.”
Gains for Marketing, Sales and Brand Value.
“A lot of people, and I count myself among them, want to buy sustainable products and services,” writes Graf. “This preference is becoming more and more pronounced, so there is a looming upside to companies who can develop and market eco-friendly offerings.”
A further upside is that products do tend to be less expensive when created in a more environmentally way.
The resistance to sustainability by using profitability simply doesn’t wash any more. Sustainability is not only just a moral imperative. But in the hands of the opportunistic companies and forward-thinking leaders, it can be a path to increased profitability. Cost reductions in compliance and production consumption usually mean bottom line savings.
By taking a strategic approach, companies can move out of in front of competitors by seizing more market share and brand value.
The magnitude 8.8 quake that struck central Chile on February 27 appears to have disrupted copper production and shipments more than originally reported as mining companies report at least 16% of country’s copper output still was closed last Friday according to Purchasing.com
It was no surprise to many observers that spot copper averaged $3.37/lb on the London Metal Exchange (LME) last week and futures for May delivery jumped to $3.41 on the Comex division of the New York Mercantile Exchange (Nymex). LME copper cathode averaged $3.11/lb in February.
The government of Chile is responding — as it should - to the human casualty toll along with devastated roads, bridges and communications. The latest concerns revolve around a potential outbreak of disease brought on by the effects of the devastation.
Largest Producer of Copper
Chile is the world’s largest producer of copper with the metal last year representing half of the nation’s $53 billion of exports. At least four copper mines responsible for 20% of the country’s output halted operations after the quake struck and early reports suggested they would be in operation quickly. However, Bloomberg now says Codelco and Anglo American, the largest mining firms, still have several mine operations shut with Codelco working to meet supply contracts from undamaged plants in the country’s north.
Chile’s copper output, which was 5.4 million metric tons in 2009, accounted for 29% of global supply, according to Barclays Capital estimates. So, problems with Chile’s supply are a concern among traders and buyers. The country also accounted for half of China’s record 3.19 million metric tons of refined copper imports in 2009, according to customs data.
Earthquake in Taiwan
On Thursday, the planet continued the trend as a major earthquake and several aftershocks struck Taiwan, the heart of many high tech, consumer electronics and apparel supply chains. The magnitude 6.4 quake struck near the city of Pingtung in the southern region. This quake was rather shallow (3.1 mile) in depth, and disrupted roadways, bridges and transportation, and damaged four undersea Internet cables in six different places.
This damage to the SWM-3 (Southeast Asia-Middle East-Western Europe 3) cable temporarily disrupted all Internet service between Taiwan and China’s Guangdong Province, the major coastal manufacturing region of China. Service has since been rerouted through other cables and networks. There were also service disruptions on the CUCN (China, US Cable Network), APCN (Asia Pacific Cable Network), and FLAG (Fiber Optic Link Around the Globe) North Asia Loop between Taiwan and Hong Kong.
Why so many quakes?
While the effects of these series of major earthquake disasters across the globe have indeed been devastating in human, infrastructure and supply chain disruption perspectives, it’s not necessarily an increase. In fact, according to the U.S. Geological Survey site, athough it may seem that we are having more earthquakes, earthquakes of magnitude 7.0 or greater have remained fairly constant throughout this century and, according to their records, have actually seemed to decrease in recent years.
While this may seem reassuring to most of us, it’s probably not to those in Haiti, Chile or Taiwan. Regardless, of whether major earthquakes are actually decreasing or not, supply chain professionals need to be prepared for such major disruptions.
With 2010 fully under way and the two years of world-wide recession hopefully in the rear-view mirror, ideas on how to approach the improving supply chain landscape abound. Here are a couple of lunch links with some food for thought:
Honest Communication
In an interview with Supply Chain Digest, Ann Drake, the CEO of DSC Logistics, a leading third-party logistics and supply chain management company, thinks a three-pronged strategy of honest communication is the key:
What we’ve found is that open, honest communication is even more important in tough times than it is in good times. We advise people throughout our organization to do three things: “Be receptive to change, accept feedback openly, and look for win-win solutions.”
Our pros also have a few suggestions for customers.
- “Leverage our intellectual capital. Give us the chance to collaborate on solutions before all the decisions have been made.”
- “Work closely with us, so we’ll have as much time as possible to re-evaluate and re-design.”
- “Have an open mind and consider ideas that originate outside your immediate organization. When demand patterns change, the supply chain partner is sometimes the first to feel the impact.”
- “Focus on the long term. Plan for the recession and at the same time, position for coming out of the recession.”
Why Aren’t Companies Lining Up For Services Procurement?
ProcurementSteve Hall writes on the procurementleaders.com blog that now is the time to be honest about services procurement.
Hall quotes a procurement services provider as saying: “70% – 75% of companies in North America,” he claimed, “don’t have services procurement solutions or strategies in place and are missing out on potentially huge savings.”
So, why hasn’t more notice been taken?
“Education is a real barrier. Because it is hard to track, there’s a huge disconnect between how effective procurement outsourcing can be and companies’ response to it. ”
Hall adds: If business isn’t prepared to consider that there are ways of managing its services spend and continues to hide behind the resistance to spend in order to save, it seems it has plenty to lose.
Tags: procurement services
In the previous installments, we’ve looked at how you can prepare for an upswing in your business by evaluating your partners and the people who work for you. Make no mistkaes, those are two very important pillars in the process, but I think you also need to validate that you have the right information technology, physical plant and support structure plans in place for a return to growth.
How Much Do You Need To Add?
Many companies trimmed their operating plans by decreasing office and warehouse space; slashed their capital plans by not investing in more effective and efficient equipment; and delayed information technology purchases.
- Determine what you may need to add back to your business to address 10%, 30% or perhaps 50% growth in a 12-month period.
- Maybe you add nothing, but then again, perhaps you take advantage of extremely low interest rates or high volumes of cash on hand to make capital investments “on the cheap.”
Timing is Everything
In many areas of the world, construction material costs are down by as much as 40% and builders are looking to simply break-even on their personnel costs. Some companies have invested in new technologies to drive increased efficiencies that will enable their business to scale faster without having to add significant personnel in the future.
There are many things you can do:
- Automate your tactical RFQ process
- Complete that integration project.
- Implement a new inventory management system.
Whatever you choose, do something today to insure your ability to respond to growth demands tomorrow.
Whether you can invest now or just plan for investing, take the time today to devise plans for how you will tackle the next growth phase in the global economy. It may not be here yet, but it will come and will you be prepared to take advantage of it? Plan now, build when possible and rapidly respond to upswings in market conditions in the future.
In the previous installment, we focused on getting your business ready to handle growth as the economy starts to rebound by investing time and resources with your strategic partners.
In this installment, we’re going to focus on the most important resource you have: your own employees.
A Growing Future
If you are like most businesses these days, you are demanding more and more of your employees when their numbers are lower than experienced almost a decade ago. While many businesses trimmed staff due to the decrease in demand for goods and services, those cutbacks may or may not have been scheduled with eyes on the future. A growing future.
Take time now to determine where you are likely to have the greatest need for staff if an economic upswing occurs.
- Is your product or service human resource intensive to produce? If so, take the downturn time now to re-develop on-boarding plans for new employees.
- Focus on the functional areas of your business that will be most impacted by an upturn in business.
- Review your Human Resources processes and just as you would focus on winning the best overall deal in a negotiation for your business.
- Hone your hiring and employee orientation processes and remove waste/inefficiencies while focusing on the critical information needed to make those new-hires contributors to your business as quickly as possible.
The general “learning curve” for new employees is long enough without having to deal with lacking educational materials or programs.
Next installment: Infrastructure