Control Spending by Simplifying Purchasing and Reducing Costs
As executives see signs of economic recovery, businesses are coming out of defensive postures and looking forward to resuming growth. Recently, orders for capital goods began to rise, and a quarterly survey of CFOs revealed that they expect to increase capital expenditures by 9% this year. With business spending picking up, there is no better time to review your purchasing processes for potential cost savings.
As the economy recovers, you don’t want to lose focus on the spending austerity that helped your company succeed during tough times. You want to continue to control costs and improve purchasing power. If you can purchase more goods and services than your competitors do for the same money, your company will gain an advantage that directly impacts the bottom-line.
At the same time, you don’t want purchasing to become painful or error-prone. Piles of paperwork, irritated employees, and a bogged down system of approvals for every little purchase can eat away at profits through lost productivity.
Before your company starts to purchase additional inventory, supplies, or equipment, you should first consider evaluating your purchasing solution. Automating your purchasing procedures with ERP software can help your company:
- Simplify purchasing procedures and reduce cycle time so employees comply with your process and don’t become exasperated by paperwork.
- Gain purchasing power so you can negotiate better pricing for commonly-used Maintenance, Repair and Operating (MRO) goods, as well as inventory items.
- Optimize your supplier base and identify preferred vendors for hard dollar cost reductions.
- Gain control over costs by centralizing all purchasing data and producing accurate, up-to-date spend data analysis.
- Balance supply vs. demand while maintaining optimal inventory levels through close integration between your purchasing, Accounts Payable, and inventory systems.
- Navigate the global economy with multi-currency purchasing and reporting that helps you compare spending across currencies.
In today’s competitive environment, purchasing is a critical corporate function. Its ability to hold down costs and contribute to the bottom-line cannot be overstated. Yet this vital function is often overlooked for automation, in spite of its proven cost reductions.
ERP software can make a positive impact on corporate purchasing power, cycle time, administrative costs, inventory management, customer satisfaction, and strategic planning and analysis. When viewed in the total context of the 21st century organization, an automated purchasing system might be just as important to your company’s success as Inventory Control, Accounting, or Human Resources applications.
If you need help simplifying your purchasing processes, contact AIM today.
Using Business Intelligence to Improve Business Processes
If you do not have a transparent view of your functional teams and how they are performing against key functional metrics, how do you know where to start making business process improvements? Your starting point to attack this priority is to measure your performance against agreed upon benchmarks. As Stephen Covey says, “the main thing is to keep the main thing the main thing.” Identify your “main thing” for each individual department by focusing on the top three to five initiatives the team needs to achieve over the next year. Be sure each department bears in mind the top three to five business objectives of the company, so they can determine how they can help the company succeed. Once the top initiatives are selected, determine benchmarks that will demonstrate the initiative has been achieved or exceeded. Then measure your success against recognized external or internal benchmarks. This is typically the most difficult step; however, by tying the objectives and benchmarks with a Business Intelligence tool, you get instant visibility of where you stand and can easily track your progress. Once you have this visibility, it’s simple to retain focus on your main thing, as you have real-time information on performance against your benchmarks and you can start to make proactive and constructive interventions. Best of all you can easily demonstrate where you stand to upper management or stakeholders.
As an example, take a look at accounts receivable. Cash is king, and in these economic times the more quickly you get paid, the less it costs you. Debt collection processes need to be efficient and effective. You must have clear targets on outstanding accounts and always know when you can expect cash flow. Do you have a metric set for debtor’s days? Do you know the impact of not achieving these targets on your cash flow report? Setting these key metrics up is the starting point, but then accurately measuring and reporting on them is vital to the lifeblood of your business—cash.
You can start by analyzing what your debt ratio looks like today! Paying attention to your debtor’s book will reap rewards as you will be able to easily identify collectible debt, which will boost your cash flow immediately, but then why stop there? You can go a step further by setting targets for your business that give you very visible metrics that allow you to measure how successful you are at collecting cash on a daily, weekly, monthly, or quarterly basis. All businesses differ, and some may be more cash driven than others, but if you start by using a simple table of key performance indicators or a graph as illustrated, you will get a much clearer picture of where you need to focus your efforts to collect your debt—and the better you perform, the better your cash position. For any business—small, medium, or large, the age old adage of “what isn’t measured isn’t managed” applies, and losing control of your cash flow is a surefire way to add sleepless nights when you start to be on the receiving end of your creditors’ calls.
To learn more ways that Business Intelligence can be used to improve business processes, contact AIM today.
Better Return Material Tracking
In the supply chain, there are multiple reasons that product must be (or is) returned to a supplier from a customer. It can be from an end user to the distributor or from the distributor to the manufacturer. In all cases, it can prove to be a nightmare of forms, lost information, and manual processes that create excessive paperwork, lost productivity, and reduced profits.
Some of the major reasons for returns are:
- A wrong product was shipped (and the value was less than the customer was going to be charged)
- The incorrect quantity was shipped (not enough to fill their customer order so they do not want the inventory or there was too much and the item does not turn enough to be worth the extra handling even if the excess inventory was not billed)
- The product is damaged during shipping due to inadequate or inappropriate packaging
- Poor product quality that does not pass predefined inspection requirements
- The product arrived late and the customer used an alternative supplier
- The customer decides to no longer carry product (obsolete inventory)
- The customer wants to recover cash by returning non-moving products
No matter what the reason, a complete process is necessary to initiate the process, track the material, handle it properly, issue credit memos, and finally, recover costs. In a perfect world, the process would be relatively simple.
When a customer initiates the return, it requires efficient handling by customer service personnel. They first must be able to verify that the inventory was actually purchased from their organization and then relate the purchase to a specific Purchase Order, shipment, and invoice.
Next, a shipping label with an easy to read bar code (linear or 2D) is generated which exactly identifies the material being returned and is sent to the customer by email (as an attachment) or FAX. The label provides a link to all of the electronically stored information that the CSR (Customer Service Representative) already researched and captured.
When the product arrives at the supplier’s receiving dock, it is positively identified by the bar code and instructions for its deposition are available to the receiving clerk. It may be held for testing, it may be inspected and returned to stock, or it may be cross docked to return to the manufacturer.
All of the internal paperwork is completed by the computer and the proper credit memos issued, less any restocking charges. Restocking charges can be determined by the product category cross referenced to the specific customer. If there was shipping damage, the system should assist the CSR in completing all necessary insurance claim forms and track them to payment.
Any material that is to be returned to the next level supplier (importer, master distributor, or manufacturer) will be properly identified with a custom shipping label that meets the supplier’s specifications. The label will be applied to the package and it is then ready to be forwarded on without additional human intervention.
The system will track the physical return of the merchandise based on the bill of lading. Once it has left the shipping dock, the application should follow up to make sure appropriate credit memos are issued and applied. The electronic paper trail will be available at any point to track the current status of any individual return or all returns to a specific supplier.
In this perfect world, the electronic system described above will eliminate the “spreadsheet in the drawer” that has been traditionally used to track and follow up as best as possible on returns. Through CSR access to information, both customers and vendors will have the ability to access and inquire against the database to verify the status of any given return.
If you aren’t operating in a perfect world, but would like to, contact us today and find out how you can make your return system better.
5 Principles of CRM Security
CRM is a fertile ground for security breaches. By their nature, most CRM applications involve mobile devices, such as notebook computers that employees bring into the field, and many applications use wireless connections to talk to the server. As a general rule, any mobile device is more vulnerable to security breaches, ranging from attacks against communication links to simply having the device stolen.
The below five tips will greatly enhance the security of your CRM system:
Encrypt your remote data.
- Do you encrypt data on laptops and other mobile devices? As a first line of defense, all confidential data on mobile devices should be encrypted. Consider using software to encrypt everything on your notebooks. At the very least, business-critical information should be protected by encryption.
- Do you have password protection on all mobile devices? Do you require strong passwords and frequent changes? Many organizations use combinations of numbers and letters at least six characters long and have users change them every 30 to 60 days.
- Alternatively, do you use other, more secure, authentication methods in place of passwords? More secure authentication methods can involve separate physical keys, such as USB drives, which need to be plugged into a computer to make files accessible. This is more secure if you keep the key separate from the computer, as on a key chain in your pocket or purse — not in the computer case.
- Do you have an independent firewall on your mobile products? Although Windows XP and Vista both come with firewalls, many experts recommend adding a more secure third-party product, especially if you’re using a wireless connection.
Watch your wireless connections.
Data is at its most vulnerable when it is in transit. This is especially true if you use wifi or other wireless connections to transmit your data to the home office.
- Do you use the appropriate level of wifi encryption? Wifi communications can be encrypted with WPA (Wifi Protected Access) or 802.11i standards to make interception much more difficult. The older WEP (Wired Equivalent Privacy) standard is much less secure.
- Do you turn off the wifi client when you’re not using it? If your wifi client is left on an intruder can try to use it to break into your computer. Turning off wifi when you don’t need it is an easy way to prevent unauthorized access.
- Do you verify SSIDs (Service Set Identifiers) before using them? Setting up a fake SSID is one way to access a wifi session. Essentially, this involves setting up an access point on top of another wifi hot spot in such a way that there is at least an equal chance that anyone logging in through the hot spot will connect through the phony access point — which will then read and record the entire session.
- Do you keep file and printer sharing disabled on your laptop? File and printer sharing are useful, but they also open dangerous vulnerabilities. If you aren’t using them, disable them.
- You may want to consider a policy of never using “open” (non-password protected) wifi hot spots in airports, coffee shops and other public places to transact business.
Consider role-based security.
Role-based security refers to establishing a series of finely grained classifications of your employees, each with a specific bundle of access and other privileges. Employees assigned to a classification only have access to the privileges associated with that role. When designing roles, carefully consider what employees actually do, not their position in the organization. Each role should give employees the privileges they need to do their job and no more.
Educate your staff.
- Do you keep employees up to date on security best practices? All the hardware in the world won’t help if your staff doesn’t understand enough to take basic precautions to prevent systems from being compromised.
- Do you have an ongoing security education program? Are your people made aware of the dangers of sharing, writing down passwords, etc.?
- Are your people trained not to open attachments from unknown sources?
- Are they taught not to add “grayware,” such as unauthorized file sharing applications to their systems?
5. Beware of phishing.
Phishing and its variants are a major source of security breaches. Most people know that phishing involves sending phony email messages with the aim of getting the victim to submit confidential information such as credit card numbers or account details. However, many people aren’t aware of the specific danger signs of phishing emails. For example, government agencies or banks will never ask you to submit confidential information in an email.
While the idea of phishing is common knowledge, it still succeeds because organizations don’t make a point of alerting their employees to the dangers. You should have a policy for dealing with suspicious emails and make sure your employees are aware of what constitutes a “suspicious” email.