In today’s business environment of high global uncertainty, activist investor influence and global manufacturing activity contraction, industry supply chains are once again under pressure to uncover opportunities for reducing costs. It seem as though the mantra continues to be a constant effort to drive down costs, increase efficiency and profitability.
After many months, and perhaps years of cost-cutting, the effort becomes harder and harder.
But, what if there are hidden opportunities that have been overlooked up to this point? What if built-up inefficiencies among existing business processes and supporting software applications are driving unnecessary inefficiencies and cost?
This type of opportunity for discovery of hidden opportunities for cost reduction and cash generation can often manifest in complex and precision engineered business systems environments such as SAP ERP. Without constant diligence to exception reports or data misalignments, the system can inadvertently prompt its own set of inefficiencies and cost burdens. Areas of opportunity to uncover such hidden cash opportunities can be in procurement, inventory management, supply chain operations or customer service.
As an example, perhaps the single most common byproduct of an imbalance of product supply and demand can be excess open procurement and inventory. The more complex in terms of number of plants, product lines, ERP instances, and the larger the potential exposure. In SAP ERP environments, when demand shifts downward, MRP creates an Exception Notice in a process termed MD04. If there is not constant review of MD04, unneeded and excess component supply continues to flow in. Real cash money is spent to pay the supplier, the freight, the receiving dock workers, and locations in the warehouse are taken up. The problem can become more compounded in industries such as food and pharmaceuticals where raw materials inventories have shelf-life expiration and there are added risks for unnecessary inventory write-downs.
Another area of potential inefficiency is data misalignment. In the day-to-day pressures to get work completed and customer orders fulfilled, teams can be innovative to find ways to work around systems for the sake of time. Transactional data errors where users inadvertently do not update a completed process in the ERP system cause the system to view orders as incomplete when they really are complete. When multiple organizations or teams download and modify data in individual Excel spreadsheets without closing the data loop in the backbone ERP applications supporting business processes, other system misalignments occur. The result can often be undiscovered bloated inventory.
What if a technology vendor, with multiple years of built-up experience in uncovering hidden value in SAP ERP environments offered over a period of just five days, the opportunity for customers to uncover at least 10 times more in hidden business costs in their SAP ERP environments or the evaluation is complimentary?
Readers may want to checkout Supply Chain Matters sponsor Every Angle Software’s announced Business Value Discovery program offering. It includes an analysis of business value draining activities and an evaluation of results monetized into optimistic, realistic and pessimistic categories. Every Angle will produce an additional proposal to realize quick win savings along with recommendations to harness longer-term recurring ones as well.
Disclosure: Every Angle Software is one of other sponsors of the Supply Chain Matters blog.