Covid-19, Force Majeure and Impact to Global Supply Chains

On a previous supply chain minute I focused on a topic I’ve discussed on the show before which is force majeure as a direct impact of Covid-19. This is something I highlighted earlier in February on the show, as I believe it will have long lasting effects across industries so let’s dive deeper into what it means and what’s happening globally with force majeure declarations.

Force majeure- what is this? The general contracting language for this clause reads something like this: Neither party shall be liable to the other for failure or delay in the performance of its obligations under this Contract to the extent that this is caused by matters beyond the reasonable control of the party affected, which in short means if either party cannot meet their contractual responsibilities due to extenuating circumstances force majeure can be declared without any penalties.

Force majeure is a clause that generally protects the organizations in case they cannot conduct business according to the pre-agreed terms due to an unforeseen event out of their control. What this means for individuals is that if we purchased a service, such as an airline tickets or hotel stay, and due to any situation covered by force majeure the business could not provide the service, consumers cannot hold the business legally responsible if this is invoked. In this situation, consumers may have other options like taking a credit for later use, and hope this is an isolated, one-time event. For international businesses, however, the situation is different.

force picThis brings to mind an earlier instance when force majeure declarations were widespread, during the 2014-2015 International Longshore and Warehouse Union (ILWU) strikes affecting 29 US ports and impacting global trade. The negotiations between ILWU and the Pacific Maritime Association lasted many months leading to port closures, chassis shortages, container ships stranded at distant anchorages, and racking up tens of thousands of dollars a day in contractual demurrage and detention charges. After months of turmoil global organizations impacted resorted to invoking the force majeure clauses within their contracts.

At the time I was working with a global manufacturer and distributor of home textiles with printed licensed graphics such as NBA, NFL, NHL and Disney. Some may recall, the port strike did not conclude until after the holiday retail season in the spring of 2015, and once things got “back to normal” our company was stuck with hundreds of containers full of holiday merchandise, as many other retail distributors. In our case the product was Frozen themed home textiles stuck in shipping containers at ports across the West Coast. This inventory was slated for holiday sets in large retail stores, but given the port delays the good were released months later. Raw material suppliers, manufacturers, carriers, and freight partners had declared force majeure so there was nowhere to turn as holding costs for obsolete inventory continued to grow. During that time the situation was somewhat isolated, now we are looking at a far greater number of organizations who may resort to force majeure declarations.

When organizations declare force majeure, ripples are felt throughout the entire supply chain. The current pandemic has pushed global organizations to invoke force majeure clauses- let’s see what’s impacting global supply chains?

  1. DHL Global Forwarding– has declared force majeure first for it’s Europe- Asia trade routes, however later in March this was extended globally. With this declaration DHL has reserved the right to make changes to all or a part of its air and ocean services.
  2. Ceva Logistics has put forth a declaration stating that under current circumstances any previously agreed rates and charges can change, and additional surcharges can be applied through invoking their force majeure clause.
  3. Royal Enfield one of the oldest motorcycle manufacturers globally has been impacted, announcing that their force majeure clause may extend beyond the 21 day lockdown that India has declared.
  4. The Chinese government issues force majeure certificates to over 1,600 organizations with specific focus in the gas and oil, textile, mining and machinery industries. Below is a breakdown of the allocated certificates by sector.

China

  1. India has become the center for force majeure declarations after the country announced a 14 day quarantine on all goods coming from China or any other impacted nation; these delays are specifically impacting the energy sector and the country’s imports of liquid natural gas.
  2. Sports- will a force majeure clause determine if the NBA is required to pay the players for a season that has not been played and the current decision to postpone.
  3. Global trends show force majeure are more prevalent in emerging markets and with significant impact to the energy sector– this can have long lasting effects on local supply chains and bottom of value chain contributors.
  4. The mining sector has seen a high number of organizations declare force majeure impacting mining operations as well as suppliers who are unable to make deliveries of product already ordered.

 

Some force majeure clauses specifically exclude pandemics and global health crises, others will explicitly include these- when was the last time you checked this contract clause? Will this lead us to think differently when negotiating supplier and vendor contracts in the future?

People Will Keep The Lights On- Warehouse Management of Tomorrow

Robots, algorithms, automated answering machines, self driving cars and unmanned drones….Are organizations moving closer to the lights out supply chain? Not. Most organizations have learned that keeping a close pulse on their customer’s market trends and utilizing this valuable information to make supply chain decisions can improve the brand growth and ROI. There are certainly technology solutions aiming for a lights out outcome, and market leaders, like Amazon, increasingly investing in automation and testing new solutions; however even from Amazon the prospect of a lights out fulfillment network in decades away.

Supply chain is the new competitive weapon of the business. As consumer closely scrutinize every business decision of their favorite brands, the supply chain ability to be accurate, timely and deliver goods as promised has become more important than ever. Progressive organizations are leveraging their supply chain and creating competitive advantage by building stronger partnerships with their main suppliers, diving deep into last mile delivery solutions, and incorporating the voice of the customer in forecasting and supply planning.

1.      Build Strong Partnerships with Key Suppliers

Companies cannot guarantee the integrity of their supply chain or quality of their product being far removed from sourcing and manufacturing processes. The growing expectation of accountability from consumers is pushing companies to become more engaged within their supply chain, build closer relationships with original equipment manufacturers and raw materials providers. Millennials prefer to make procurement deals directly with manufacturers- cutting out distributors. This process helps ensure tight quality controls, improve direct from factory cost savings; it also impacts margins and health of distributors who have thrived in this space. A research study conducted by UPS shows that millennials prefer researching companies online using tech channels that may be less familiar to older buyers. This trend has seen a 20% increase in the past two years and is expected to continue growing over the next 3-5 years, potentially eliminating a percentage of middle market distributors.

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As companies shape stronger partnerships in their supply chain and become more informed about their provider’s operations, new opportunities for data sharing, process improvement and collective costs savings will emerge. Currently, supply chain professionals struggle with the types and integrity of data available within and outside of the enterprise. Lack of accurate data sharing and collaborative analysis causes demand forecasting, supply and inventory bullwhip problems.  Accurately predicting and communicating demand trends across the entire supply chain will help businesses negotiate year-over-year price reductions in the order of 3%-5%. These are a direct result of setting shared goals with suppliers’ brands trust over time.

Successful organizations need to be connected to their partners to ensure real time sensing of risk, changes in demand, or updates to orders. In supply chain, as in business at large, success is 100% dependent on strong partnerships, the sustained consolidation of the marine shipping industry over the past five years is a clear indication that together we are stronger.  Will we start to notice more vertical integration of organizations across varying industries?

2.      Dive Deep into The Last Mile

This is the #1 opportunity for the supply chain to interact with the customer, and oftentimes one of the most impactful times in the customer delight process of any purchase. The last mile offers unique opportunities for optimization, and cost savings with a focus on guaranteeing customer happiness and brand loyalty. Many traditional, and online only retailers focus on improving the last mile service with real time order updates, which include reverse logistics, and sometimes even. Consumers expect products to arrive on time and not damaged, with continuous visibility into the delivery status. Some organizations, such as Amazon have gone so far as to ensure the package is pleasant for the consumer to open, while maintaining packaging costs low with their SIOC (ship in own container) program.

Over the past few years, as ecommerce growth has increased, leading companies invested pointedly into research and development for autonomous vehicles to help last mile delivery processes. Other service providers are expanding partnerships outside of the traditional shipping industry to continue improving services and transit times to consumes. For example, FedEx is increasing its partnership with Dollar General (8,000 locations) and Walmart (500 locations); the company is also investing in additional store fronts to continue servicing their most important customer sector, ecommerce SMBs. According to FedEx CMO “the FedEx Office retail locations bring in some of our most profitable small and medium business because [of] the experience they get when they are shipping…and they want the peace of mind of proper packaging.” This illustrates an understanding FedEx of just how important success in the last mile is for all involved.

Last mile delivery is most impactful for the food industry, there are numerous opportunities to learn from innovations in this space. Whether prepared or online grocery, organizations providing these services to consumers must be even more vigilant of last mile services.

3.      Listen to the Voice of the Customer

Traditional supply chain solutions were designed to solve problems within the walls of the organization. Globalization forces all businesses, including SMLBs to think globally. Most realize that success with continued growth fully depends on outside factors, some out of our immediate control but some which can be influenced. Analyzing existing or historical data only teams do not get full visibility of their customer trends. This approach delivers sub-optimal supply and demand forecasting models and leads to making decisions on based fragmented information.

Supply chain teams require real time point of sale data, consumer online sentiment, alongside partner driven forecast to assemble the monthly demand and supply planning. To successfully utilize the information organizations must diagnose customer behavior to prescribe the right market segmentation. Customers are getting closer to the supply chain- this is especially noticeable for higher end brands and items, where customers have immediate and direct impact on the well being of the organization, but this is increasingly truer even in highly commoditized consumer goods organizations.

Tracking the brand, the consumers who interact with it, and translating this data into intelligent information that can help drive precise winning decisions. Supply chain needs to work with the data and truly know the customer. Who drives the business? E-commerce companies such as Amazon have huge amounts of customer data that can be used to target specific people and convince them to buy certain things. With mobile apps and loyalty programs, chains such as McDonald’s, Burger King, and Starbucks are attempting to similarly track customers, adjusting options to convince them to spend more. Supply chain teams need to be in the know of all these push/ pull strategies and collaborate cross-functionally to truly understand consumer trends.

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So, are we heading towards an era of lights-out supply chain management? No! Supply chains, as most consumer dependent businesses, rely on people to run them successfully. People to build the right supplier partnerships, people who can strengthen the connection between a brand and customer when the product is delivered, and people who can reach into the hearts of consumers and understand what drives them.  Lights Out? People in the Supply Chain of Tomorrow.

This article first appeared on https://www.letstalksupplychain.com/blog/- make sure to visit Let’s Talk Supply Chain website for the latest #supplychain discussions, videos, articles and podcasts.

ePlanning: Leverage the Logistics Network for Competitive Advantage in eCommerce

IMG_0704Check out my presentation at the SCOPE Supply Chain Summit: SCOPE Atlanta 2019_ ePlanning Presentation Slides

 

 

 

 

Takeaways:

Key Actions for an Optimal Distribution Network:
1. Design an Agile Network with Optimal Inventory Distribution
2. Create End-to-End Visibility Connectivity
3. Pivot to Demand Driven Forecasting and Planning

Supply Chain Leading Strategic Opportunities for Continuous Growth:
• eCommerce Evolution
• Price Control
• Drop Ship Opportunities- Retail Strategic Partner
• Own the Amazon Marketplace- Seller Fulfilled Prime
• International Growth
• Forecast & Revenue Security
• Robust Reverse Logistics
• Best Customer Service
• Offer Innovative Solutions

 

When a customer has opted into the brand, there’s no mystery
about what they want- retention is key!

 

Let’s Talk Supply Chain

I was recently interviewed on Let’s Talk Supply Chain as part of their Women Leaders in Supply Chain Series. This was an absolute honor considering the other amazing group of women who comprised the speaker lineup and a pleasure to share my experiences with others. Thank you to the podcast host Sarah Barnes-Humphrey,CITP, CCI. Sarah and I will be speaking together on a panel at the Footwear Distributors and Retailers of America in Los Angeles at the end of October- stand by for insights!

Listen to the episode here: “>Let’s Talk Supply Chain- Women Leaders in Supply Chain- Irina Rosca

For more awesome episodes follow Sarah’s popular podcast:

  1. Let’s Talk Supply Chain Website
  2. LinkedIn
  3. Twitter 
  4. Instagram: @letstalksupplychain

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!

Catch Up!

blue-binary-code-jigsaw-puzzleThe supply chain discipline is young. As professionals in the field we are just now starting to learn from past mistakes and develop best practices. We are searching for innovative tools to help streamline processes, cut waste and increase visibility. As a group we are starting to have discussions around big data, analytics and the integration of machines that communicate and learn over time, as part of the greater internet of things (IoT).

The challenge? Software companies have not caught up with the needs of the industry.

Leading companies have been using integrated enterprise resource management (ERP) systems since the 1980s; more than 60% of all SMBs in the US are still not utilizing such platforms and their information storage is fragmented. Furthermore, those who are using these systems suffer from lack of communication between modules, and therefore remain stuck in decision making without real time information.

Organizations that have taken the leap to integrating their business management systems rarely have an easier time gaining visibility and real time information. Software companies develop solutions in silos, they do not collaborate with each other and create platforms that mimic the static vertical structures of organizations. These outdated structures fail to empower teams within organizations to make the most informed decisions. A recent study shows that there is a breakdown in communication between sales, operations and finance in more than 45% of all integrated business solutions.

There are no benefits to inventing working capital in hosted or cloud based solutions, and employee training on new platforms if he solutions are limited by design. The software and technology that will empower the supply chains of the future allows real time, seamless knowledge sharing across multiple departments and network participants. To maintain competitive advantage in a global economy where consumer’s desires are constantly changing companies must utilize consensus based collaborative forecasting and planning within their supply chain teams and networks.

To optimize supply chain decision making actors require a platform that supports collaborative and iterative simulation taking into account all constraints across the network and integration of PoS data for accurate forecasting.

Supply Chain Dynamics: What if… We Could Think Differently

Screen Shot 2015-11-02 at 12.54.34Supply chain innovation means taking full advantage of best of breed technology and data algorithms that empower intelligent decision-making. The exchange of information, from inside and outside the organization, must be real time, autonomous and continuous.

Previously, I shared an article with insights into the integration of advanced data analytics in supply chain planning. Last week I had the opportunity to participate in a discussion on this topic at the 13th Annual Supply Chain and Logistics Summit. I also attended presentations from Kellogg, Johnson & Johnson and Colgate Palmolive; companies recognized as leaders in supply chain innovation and part of this year’s Gartner Supply Chain Top 25 report. Each speaker mentioned the importance of real time data integration and end-to-end visibility, and gave examples of how this is currently achieved in their respective organizations.

For more than 98% of global companies, implementing a data strategy and using advanced analytics, especially within the supply chain, is a challenge. Not all companies have the talent or financial resources to undertake this type of project. Investments in data structures, analytics and employee training are costly. Knowledge gains from this information are still fragmented between functional silos and across supply chain networks, creating a lack of value and low ROI.

What if we think differently about supply chain data, network collaboration and knowledge sharing.

  1. What if we brought everyone to the planning table?

The Sales and Operations planning process (S&OP) has taken a leading role in supply chain design. S&OP is a great way to connect previously detached processes and prepare a better forecast. This process often falls short because we do invite all departments involved to the planning discussion.

In the consumer-packaged goods industry the cost of logistics accounts on average for 7% of revenues. Logistics partners and internal stakeholders are not part of the S&OP process. This creates a discrepancy in understanding the total cost to serve, and can lead to major challenges in meeting demand and preventing stock-outs at retail stores. Unforeseen trouble in the transportation and logistics network can also hurt brand image. When we involve all actors in the planning process and use data from all nodes within the network we are able to prepare more accurate forecasting models.

Speed and agility are the most important drivers in meeting customer demand. As supply chain executives we must take full advantage of all the knowledge available in the data and capitalize on our partner’s core competencies. This is the model of future intelligent supply chains.

  1. What if we removed longstanding communication barriers?

Functional, siloed organizational structures are standard. A chain of command exists in every organization, each department has specific KPIs, and actors in a supply network have individual vested interests. The ultimate goal is to drive down costs, extend payables periods to release working capital and increase gross margin, all without regard for how this affects the overall system.

This is a direct result of the lack of communication and visibility within organizational departments, and throughout the entire supply chain.

What if we used data knowledge to create an unprecedented alignment of all stakeholders, with common KPIs across the entire network?

If we did this, we could create truly agile supply chains with increased flexibility and visibility. This network could offer better response to omni-channel customer demands. We could lower overall costs and risk by incentivizing shared inventory, shared operations and gain complete chain visibility.

Ultimately, we would create real time automated information sharing networks and continuous supply chain optimization. Participating in such a system creates value for all actors; it promotes proactive policies for risk prevention and creates cognitive systems that learn over time.

  1. What if we built supply chains with end customers in mind?

A recent study from Terra Technology finds that for most companies 10% of items generate 75% of sales, and that the bottom 50% creates a long tail contributing to only 1% of sales. The costs associated with planning, producing, moving, storing, marketing and shelving all of all products affect the overall bottom line.

Only 18% of suppliers receive point of sale data from retail partners. Without SKU level data from downstream partners in the retail sector it is impossible for upstream actors to plan accordingly. Furthermore, the retail sector continues to charge upstream suppliers for these insights. New research from GT Nexus finds that around the world 81% of adults have tried to purchase a product that was out of stock at a brick and mortar store. The study also shows that this leads consumers to become dissatisfied with the brand, 1/3 of shoppers blame the retailer and 65% of them shop for the product online from a competitor.

Unlike excess inventory, we cannot measure the lost sales due to inventory stock outs. We must rethink the design of our supply chains, the sharing of knowledge within organizations and networks to gain visibility and become truly agile. Lack of collaboration is an archaic practice in supply chain management and will serve to further distinguish leaders from laggards.

If we really planned the supply chain with the end customer in mind we could significantly lessen the number of stock outs. E-commerce and click-and-collect models apply new pressures on global supply chains. We can no longer use the same fragmented processes, information and technology to meet demand and enhance customer experience.

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The future of competition is no longer business vs. business, but supply chain vs. supply chain. We must empower our supply chains to sense system changes and adapt accordingly, while increasing collaboration within our global networks.  Our ability to think differently about managing supply chain processes will lead to the development of truly intelligent organizations.

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.