SOLAS

Maritime safety for workers and marine life is important. Businesses have a large footprint on the environment and ocean transportation still lies at the heart of global organizations.

New regulations on weight declaration is meant to create more transparency in the transportation and logistics industry.

How will this change the current structure of the logistics market? We have seen major consolidation and M&A in the market in the past three years, more regulation will help weed out the remaining week links and leave maybe five major shipping lines ruling the oceans.

How will SOLAS affect wholesale businesses, small and large distributors, and will this regulation also create a urgent need for upgrades at manufacturing facilities around the world?

General – SOLAS Container Weight Verification 1604

Coming to a port near you July 1st, 2016. Stay informed!

Intelligent Supply Chain Management

This week I will be joining two supply chain veterans at the Supply Chain and Logistics Summit to discuss the influences of technology, software and analytics on supply chain management.

Supply chains are in continual flux. Just when companies think they have developed the best strategies, everything changes. In line with the constant remodeling nature of global supply chains, the discussion is centered around Big Data and best practices leading supply chain executives to think collaboratively within and outside the organization: Supply Chain: of Marketing, Big Data & Digitization.

 Ahead of this discussion I want to share a few insights:

  1. According to a study conducted by Deloitte less than 26% of business executives are using data analytics tools and processes to help manage third party relationship risk. There are numerous data management and analytics platforms available that can empower supply chain executives to make more informed decisions. Companies are leaving savings and revenues on the table by not properly integrating supply network knowledge into their decision-making. According to the McKinsey Global Institute retailers could increase operating margin by more than 60% by exploiting data analytics. In conclusion, in the big data game most companies are doing it wrong!
  2. Fragmented collaboration within and outside the organization creates barriers to intelligent supply chain planning even for organizations that do have a strong data analytics strategy. Research from Capgemini finds that 79% of organizations have not completely integrated their data sources across the organization. This created fragmented decision making, and leaves departments powerless to disruptions within the supply chain. Seamless data exchange gives teams a heads up when a disaster has taken place at a nework facility, and protects the overall brand from making promises it cannot keep to consumers. The situation is even graver when considering the lack of information exchange outside of the organization. Deloitte finds that 23% of supply chain executives monitor their third party relationships less than once a year and 10% do not do it at all. These practices leave supply chains exposed to a variety of risks; they also do not empower teams to be proactive in decision-making.
  3. The spent on big data structures, analytics services, and employee training too often outweigh the benefits. More data does not necessarily mean better insights, the power lies in understanding the meaning of the information and gathering the right data with a plan in mind. Across organizations there is a huge interest in harnessing the power of data, yet this comes with a lack of direction in data collection. Companies do not yet extract the value from the data that is widely available to them from various sources. Managing data intelligently requires identifying and prioritizing opportunities where knowledge can be most beneficial; it is crucial that companies embark on this mission with a clear end goal in mind. The research firm Gartner predicts that by 2020, 50% of organizations will actively measure and assess returns on analytics initiatives; the highest ROI will be achieved by leaders who know exactly what they are measuring and why.

Global supply chains are successful only through strong partnerships and the power of knowledge sharing.

 

 

ERP Benefits for SMB Supply Chains

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Excel spreadsheets, emails, FTP sites, Quickbooks, Salesforce, SharePoint, PDFs back to Excel. Does that sound like the operations process in your business or department?

The use of incongruent systems to store and manage information is the norm for more that 60% of small and medium size businesses (SMBs) in the United States. For these types of businesses an enterprise resource management system (ERP) implementation can appear cumbersome, costly, and stressful on the workforce. However, to maintain a competitive advantage in today’s volatile markets, organizations must invest in data management systems with robust analytics capabilities and improved supply chain visibility. Supply chains are exposed to a variety of risks; organizations must be able to anticipate, quantify, and prepare for the effects of foreign actors on their business. Utilizing integrated business solutions, leading with ERP software, is a business best practice and a necessity for continued successful operations in a global economy. ERP software organizations understand these challenges and numerous solutions exist to support a lean implementation project.

Prior to starting an ERP project companies must conduct a thorough analysis of the foreseen financial and human capital costs, and the software needs of the business. Upon deciding that an ERP system will support the future growth of the business SMBs aspiring to have a successful implementation must focus on the following items:

  1. Appoint an ERP Project Champion

Leadership is key to a successful implementation. Prior to launching an ERP project, organizations should look inward to their workforce and find an individual to champion the project. Having a project champion who is able to create a link between the organization and an ERP consultant can significantly streamline the project and reduce the overall implementation costs. This person is responsible for guiding a business through process transformation, recognizing errors, as well as understanding and mapping all business processes. They will work with internal and external teams on demos and testing, preparing the data prior to being loaded into the system, and training end users.

For most SMBs the project champion is also the project manager, who will hold all responsibility to ensure that implementation is on time and within budget. Project champions should have a good understanding of all business operations and the ability to work cross-functionally with different departments. This person will also become the spokesperson to the CEO and CFO on the project charter, budget, and team readiness. Most importantly the ERP project champion will be the in house post implementation support for the team. According to Panorama Consulting in their study Key Findings From 2015 ERP Reports: more than 52% of companies faced some sort of material operational disruption at the time of go-live, making this a critical role to implementation success.

  1. Find a Transparent ERP Partner

Organizations undergoing an ERP implementation are exposed to risk. A challenging part of an ERP implementation project is finding the right solution for the unique operations of the business. A system that appears to be one-size-fits-all approach is usually not the right way to go for a smaller business. Organizations must focus on their core business practices and find a partner that can support improvements in specific areas. There are numerous ERP solutions available on the market, according to research from Gartner “50% of businesses say that lack of industry standards makes it hard to compare solutions, while 39% feel that vendors are muddying the waters with lack of clarity about cost.” Change is demanding on the workforce and operational disruptions are inevitable, finding the right ERP partner can help leadership understand these risks ahead of time and prepare.

  1. Licensing & Hosting

The backbone of an ERP system is the data storage server that supports smooth operations. Aside from finding the right partner with the appropriate software, the IT department must make decisions on the type of licensing and hosting. ERP systems can be hosted on the cloud or hosted on site. The latter requires: a backend data management system, most common is SQL server, and enough computing power and space on a terminal server. Organizations will also need a strong firewall to protect the information and high quality internal network for client machines to reach the data server. On site hosting is burdensome for the business, as the initial capital investments in the infrastructure are very high and the maintenance costs outweigh the benefits.

Finally, businesses must decide if they require a full ERP cloud system, if their needs are more limited they can seek a software- as-a- service model (SaaS). Cloud and SaaS hosting differ slightly, in that the ERP provider generally hosts the SaaS model on their own infrastructure. This gives the vendor full control over the system, but also all responsibility for upgrades and maintenance. These types of systems also have a different cost structure to the business. The graphs below offer a representation of the various hosting models, showing that for both small and medium size businesses the hosted or cloud solution is the best financial choice.

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  1. Focus on Process Waste

ERP systems are a first step in helping organizations becomes leaner in their operations and supply chain management. During the first phase of the implementation, organizations undergo a vigorous business mapping and analysis process to help all those involved visualize the entire business operations. Lean Six Sigma principles encourage organizations to focus on operations improvements by analyzing processes, discovering where any of the 7 wastes are manifested. To ensure that the project is carried out correctly those involved must agree on key performance indicators, and measure and analyze this data. This is precisely the role of an ERP in small or medium sized business.

For example, if a SMB’s main concern is that order-to-cash time is taking on average 30 days longer than the expected 60 days, the implementation of an ERP system will help streamline the information exchange between internal departments and shorten the time by 50%. Some of the most significant wastes organizations face without a proper ERP system can be tied to extra processing, inventory and motion. These are costly, with direct effects to a company’s financial statements.

  1. Reporting

ERP systems offer new and more complex data analytics capabilities, compared to fragmented systems. While creating the report can sometimes be timely, once the structure exists, running these reports can take a few seconds and offer new visibility into the company’s operations, sales, supply chain and financials. The best way to capitalize on these capabilities is to work closely with each department and understand what information would be most valuable to them, and how this information can improve their processes. This is another place where the project champion holds a unique and important role. This person should be communicating with the department managers, listening to their concerns and delivering the message to the ERP partner, who will most likely produce all of the initial reports. When this is done correctly companies see immediate results in better S&OP planning, customer invoicing, less accounts payable mistakes resulting in late fines and increased customer satisfaction.

Enterprise resource management systems are beneficial to small and medium sized businesses, by streamlining operational and supply chain processes. They offer a centralized location for sales, purchasing, inventory, customer information, AR, AP and GL data, and strong analytics capabilities so SMBs can stay competitive and lean. When choosing an ERP system it is important to understand the core of the business and find partners whose strengths are aligned with the operations. Ask the right questions, have the long-term business goals in mind and assemble the right team.

Supply Chain or Value Chain?

Michael Porter first addressed the notion of value chains in his famous business writing Competitive Strategy. He explains the concept as a set of business processes operating within a firm that together provide increased value to customers. This value building set of process operations incorporates information and activities connecting a company’s supply side with its demand side, and thus covering raw materials, inbound logistics, production process, marketing, sales and all other aspect of a diverse supply chain. Following this explanation, companies whose values lie in corporate social responsibility and sustainable operations should think of their supply chain as a value building mechanism. To do this organizations must shift focus from the customer centrist approach to a more holistic one that incorporates the well-being of people, environment and resources in countries where they have a licenses to operate.

From the perspective of the organization the concept of value is subjective, but there are various benchmarks that help companies measure and quantify efforts. As an example, the textile industry is one of the most chemically dependent industries on earth and the #2 polluter of clean water.  As we have seen in recent years, clean water is becoming a coveted treasure as drought and bad business practices continue to deplete the last remaining clean water sources. In countries like Pakistan, India and China, where the textile industry is booming, we can notice the most deplorable water situations. This is not sustainable for the local societies, and it builds instability up the supply chain creating a very risky environment for large multinationals.

New technologies are available to help multinationals gather information from the bottom of the supply chain such as water use in cotton growing, energy use in knitting and weaving, or chemicals used in dying and cleaning. At the moment these are measured at factory level, and are rarely shared with buyers. Such practices allow bad practices to continue unnoticed, and the supply chain in weakened by unsustainable practices. Multinational corporations cannot make proper forecasting decisions when they depend solely on production from unsustainable suppliers; their supply risk increases as they choose to ignore these practices.

Furthermore, the public is keeping a much closer eye on the business practices of large organizations. Take for example the multiple scandals that Nike has been a part of over the years. From unsafe working environments, to child labor their stock prices have suffered one blow after another. This has weakened their buying and negotiating power to suppliers and hurt their image to customers around the world. The public relations department tried to defend the company by placing the blame on suppliers’ business practices, but in the eyes of Nike customers the company should have assumed responsibility for all practices in their supply chain.

So is value building through improved business processes a concept that should still be questioned, or is it the norm for industry leaders? Organizations must find ways of monitoring materials and information flows in the supply chain. A resilient supply chain is one from which all actors benefit and want to be a part of for an extended period of time. This ideal supply chain is built on best practices learned over years of exchanging information with customers and suppliers in a transparent manner; this IS building value through operating processes. Companies can implement best practices offered by organizations such as the Global Impact Investing Rating System or the Global Reporting Initiative to ensure the maximum amount of value is drawn from all business processes for all actors’ part of the supply chain.

#supplychain #compliance #competitiveadvantage #job #water #resources #valuechain #Nike