Posts Tagged ‘eInvoicing’

Everything has Big Data, Big Data Has everything

February 24, 2016

During the course of 2015 and on into 16 I have been studying, researching as well as working. My study, research has been on various topics from IoT, Sustainability, Environment, Food Security, Complex Decision making, Supply Chain Management, Cyber Security, In memory Computing, Statistics to name but a few(FutureLearn). Work wise I have been a Consultant for Enterprises Solutions(Trobexis), Enterprise Asset Management, Enterprise Content Management (OpenText) in a variety of Industries, which include, Oil & Gas, Utilities, Construction, Maintenance even Banking. Here is the thing though, what do all these study, research and work all have in common? Simple BIG DATA!!!! That’s getting bigger everyday.

T1

If you want to be successful with big data, you need to begin by thinking about solving problems in new ways. Many of the previous limitations placed on problem-solving techniques were due to lack of data, limitations on storage or computing power, or high costs. The technology of big data is shattering some of the old concepts of what can’t be done and opening new possibilities for innovation across many industries (SAP S/4 HANA.)

The new reality is that an enormous amount of data is generated every day that may have some relevance to your business, if you can only tap into it. Most likely, you have invested lots of resources to manage and analyse the structured data that you need to understand your customers, manage your operations, and meet your financial obligations. However, today you find huge growth in a very different type of data. The type of information you get from social media, news or stock market data feeds, and log files, and spatial data from sensors, medical-device data, or GPS data, is constantly in motion.

These newer sources of data can add new insight to some very challenging questions because of the immediacy of the knowledge. Streaming data, data in motion, provides a way to understand an event at the moment it occurs.

Working with TROBEXIS over the last 12 months we have built a model which has big data constantly in motion, which is both structured and unstructured, coming from a variety of sources, in a variety of formats. The data is constantly in motion and events occur when you least expect them, giving rise to exceptions and causing problems to occur in the best laid plans. Some of the questions that we have found ourselves asking are:

– Do we have the right people, with the right skills, in the right place, at the right time, in the right phase of the project, with the right materials, for the right service, at the right cost, in the right numbers, against the right contract, for the right client?

– What if we do this job, in a different phase of the project, using a different contractor, with a different set of numbers, an alternative process, with a higher cost?

– Are we buying the right materials, through the right channel, at the right cost using the right process?

Data in Motion – a real world view.

To complete a credit card transaction, finalise a stock market transaction, or send an e-mail, data needs to be transported from one location to another. Data is at rest when it is stored in a database in your data center or in the cloud. In contrast, data is in motion when it is in transit from one resting location to another.

Companies that must process large amounts of data in near real time to gain business insights are likely orchestrating data while it is in motion. You need data in motion if you must react quickly to the current state of the data.

Data in motion and large volumes of data go hand in hand. Many real-world examples of continuous streams of large volumes of data are in use today:

✓ Sensors are connected to highly sensitive production equipment to monitor performance and alert technicians of any deviations from expected performance. The recorded data is continuously in motion to ensure that technicians receive information about potential faults with enough lead time to make a correction to the equipment and avoid potential harm to plant or process.

✓ Telecommunications equipment is used to monitor large volumes of communications data to ensure that service levels meet customer expectations.

✓ Point-of-sale data is analysed as it is created to try to influence customer decision making. Data is processed and analysed at the point of engagement, maybe in combination with location data or social media data.

✓ Messages, including details about financial payments or stock trades, are constantly exchanged between financial organisations. To ensure the security of these messages, standard protocols such as Advanced Message Queuing Protocol (AMQP) or IBM’s MQSeries are often used. Both of these messaging approaches embed security services within their frameworks.

✓ Collecting information from sensors in a security-sensitive area so that an organisation can differentiate between the movement of a harmless animal and a car moving rapidly toward a facility.

✓ Medical devices can provide huge amounts of detailed data about different aspects of a patient’s condition and match those results against critical conditions or other abnormal indicators.

The value of streaming data

Data in motion, often in the form of streaming data, is becoming increasingly important to companies needing to make decisions when speed is a critical factor. If you need to react quickly to a situation, having the capability to analyse data in real time may mean the difference between either being able to react to change an outcome or to prevent a poor result. The challenge with streaming data is to extract useful information as it is created and transported before it comes to a resting location. Streaming data can be of great value to your business if you can take advantage of that data when it is created or when it arrives at your business.

You need to process and analyse the streaming data in real time so that you can react to the current state of the data while in motion and before it is stored. You need to have some knowledge of the context of this data and how it relates to historical performance. Also you need to be able to integrate this information with traditional operational data. The key issue to remember is that you need to have a clear understanding of the nature of that streaming data and what results you are looking for. For example, if your company is a manufacturer, it will be important to use the data coming from sensors to monitor the purity of chemicals being mixed in the production process. This is a concrete reason to leverage the streaming data. However, in other situations, it may be possible to capture a lot of data, but no overriding business requirement exists. In other words, just because you can stream data doesn’t mean that you always should.

How can you use data to change your business? In the following use cases, look at how organisations in several industries are finding ways to gain value from data in motion. In some situations, these companies are able to take data they already have and begin to use it more effectively. In other situations, they are collecting data that they were not able to collect before. Sometimes organisations can collect much more of the data that they had been only collecting snapshots of in the past. These organisations are using streaming data to improve outcomes for customers, patients, city residents, or perhaps for mankind. Businesses are using streaming data to influence customer decision making at the point of sale.

Use Cases

2015 became the age of the data driven organisation. Thanks to the rise of easier collection mechanisms and the ubiquity of available data sources, savvy organisations are now implementing data in new and novel ways that address real business issues. Here are just a few worth a mention: –

Objective: Operational Analysis; Efficiency Enhancement & Risk Elimination

Organization: Siemens

Article title: Using Big Data and Analytics to Design a Successful Future

Overview: Siemens Mobility Data Services division is capitalising on big data and analytics to ensure transportation around the globe is fast, reliable and more energy efficient. Innovation that includes predicting failures, ensuring a seamless supply chain for parts to reduce or eliminate downtime and use weather data to differentiate problems in the same train model in different regions.

URL: http://blogs.teradata.com/customers/siemens-using-big-data-analyticsdesign-successful-future/

Objective: Cost Analysis & Reduction, Operations Analysis, Risk Elimination

Organization: N/A

Article title: Could Big Data be the Solution to Clean Technology?

Overview: Big data analysis is extraordinarily useful and powerful in terms of identifying ways to reduce waste and improve processes. There is a massive amount of data available today that can be used to predict energy needs, improve energy production methods, build more energy-efficient structures, and even curb consumer energy consumption.

URL: http://blog.syncsort.com/2015/04/could-big-data-be-the-solution-to-cleantechnology/

Objective: Efficiency Enhancement, Market Sensing & Predictive Analysis

Organization: IBM

Article title: Big Data & Analytics adds to the power of Renewable Energy

Overview: Sophisticated weather forecasting and analytics matures renewable energy market

URL: http://www.ibmbigdatahub.com/infographic/big-data-analytics-adds-powerrenewable-energy

Objective: Cost Analysis & Reduction, Risk Elimination

Organization: N/A

Article title: Use Big Data to Survive Market Volatility

Overview: For every single well they own, executives in the oil and gas industry must know full lifecycle costs, from exploration to abandonment. Data is the foundation of this understanding; even at a basic level it requires looking at everything from geophysical exploration data to real-time production data to refining operations data to trading data, and more.

URL: http://data-informed.com/use-big-data-to-survive-market-volatility/

Objective: Operations Analysis; Revenue Generation / Customer Acquisition

Organization: Panjiva

Article title: The global import-export data you need to take your business across borders

Overview: From import-export trends, to the tally of cargos for individual shippers or consignees, right down to the details of each transaction – you are just clicks away from information you need to gain market insights

URL: http://www.panjiva.com/

Objective: Risk Elimination

Organization: N/A

Article title: How advanced analytics are redefining banking

Overview: Innovators are using big data and analytics to sharpen risk assessment and drive revenue.

URL:http://www.mckinsey.com/insights/Business_Technology/How_advanced_analytics_are_redefining_banking

Objective: Efficiency Enhancement

Organization: Nutanix

Article title: The Impact of Big Data on the Data Supply Chain

Overview: The impact of big data on the data supply chain (DSC) has increased exponentially with the proliferation of mobile, social and conventional Web computing. This proliferation presents multiple opportunities in addition to technological challenges for big data service providers.

URL: http://linkis.com/flashglobal.com/86eXA

Objective: Market Sensing / Predictive Analysis

Organization: DHL

Article title: “Big Data in Logistics: A DHL perspective on how to move beyond the hype”

Overview: Big Data is a relatively untapped asset that companies can exploit once they adopt a shift of mindset and apply the right drilling techniques.

URL:http://www.dhl.com/content/dam/downloads/g0/about_us/innovation/CSI_Studie_BIG_DATA.pdf

Objective: Operations Analysis

Organization: N/A

Article title: Making Big Data Work: Supply Chain Management

Overview: The combination of large, fast-moving, and varied streams of big data and advanced tools and techniques such as geo analytics represents the next frontier of supply chain innovation. When they are guided by a clear understanding of the strategic priorities, market context, and competitive needs of a company, these approaches offer major new opportunities to enhance customer responsiveness, reduce inventory, lower costs, and improve agility.

URL:https://www.bcgperspectives.com/content/articles/technology_making_big_data_work_supply_chain_management/

Objective: Efficiency Enhancement

Organization: Transport for London

Article title: How Big Data And The Internet Of Things Improve Public Transport In London

Overview: Transport for London (TfL) oversees a network of buses, trains, taxis, roads, cycle paths, footpaths and even ferries which are used by millions every day. Running these vast networks, so integral to so many people’s lives in one of the world’s busiest cities, gives TfL access to huge amounts of data. This is collected through ticketing systems as well as sensors attached to vehicles and traffic signals, surveys and focus groups, and of course social media.

URL: http://www.forbes.com/sites/bernardmarr/2015/05/27/how-big-data-and-theinternet-of-things-improve-public-transport-in-london/

 

And one of my particular favourites being a lover of Starbucks……

Objective: New Product Creation

Organization: Starbuck’s

Article title: How Big Data Helps Chains Like Starbucks Pick Store Locations – An (Unsung) Key To Retail Success

Overview: The reality is that 94% of retail sales are still rung up in physical stores, and where merchants place those stores plays an outsized role in determining whether their chains fly or flop.

URL: http://www.forbes.com/sites/barbarathau/2014/04/24/how-big-data-helpsretailers-like-starbucks-pick-store-locations-an-unsung-key-to-retail-success/

The Deep Web (The Dark Net)

November 5, 2013

Most of us know little or nothing regarding the Deep Web or the Dark Net, just two of the names for that area of the Internet that harbors the possibility of anonymity for its users or can enable search results for illegal drugs or pirated porn. However, there is an ever growing Deep Web/Dark Web community which has touched us in some shape or form. I am guessing here but has anyone won the lottery recently or been bequeathed a fortune and all you have to do is supply your details and whereabouts?

How did the Dark Web come about?

During 1995 at the University of Edinburgh, a teenager named Ian Clarke wrote a thesis for his computer science course proposing a revolutionary new way for people to use the Internet without detection. This project was called “Distributed, Decentralized Information Storage and Retrieval System”. The idea was that by downloading unique software (which was to be distributed free) anyone could chat online, share files, read or set up a website with almost complete anonymity.

Unfortunately the tutors were not too impressed, but this did not stop the student from going ahead with his project releasing the software called “Freenet” in 2000. Since then, millions of copies of Freenet have been downloaded, which remains readily available on several websites. Simply do a Google search for “Freenet download” to find it.

Entering the Realm of the Deep Net

Once the file has been downloaded, installation takes barely a couple of minutes and requires minimal computer skills. There you are a previously hidden online world where you can find resources such as “The Terrorist’s Handbook: A practical guide to explosives and other things of interest to terrorists”. Freenet is also the portal to accessing pirated­ copies of books, games, movies, music, software, TV series and much much more.

What started as a seemingly innocent project has today become a means for a plethora of online criminal activity from creating and sharing viruses to accessing and distributing child pornography all anonymously.

The Internet has always been associated with openness and is often labeled as the ultimate form of freedom where free speech, free access and lack of censorship have prevailed (just look at the internet society’s tagline “The Internet is for everyone”). Yet where do we draw the line when it is simply becoming easier and easier to engage in online criminal activity without been traced?

Putting it into perspective, the Dark Web has grown so fast that it is estimated to be at least 500 times larger than the surface web.

So what is the difference between the Deep Web and the Surface Web?

Simply put, the web is defined as a collection of hyperlinks that are indexed by search engines. In other words, the pages/content that appears when we do a Google search, is the Internet as we know it, this is called the surface web.

The Dark Web, also known as the deep web, invisible web, and dark net, consists of web pages and data that are beyond the reach of search engines. Some of what makes up the Deep Web consists of abandoned, inactive web pages, but the majority of data that lies within have been crafted to deliberately avoid detection in order to remain anonymous.

How deep is the Dark Net

The Internet has changed significantly over the years, but researchers are still only beginning the plunge to the depths of the Deep Web. The bottom line is that there is simply too much data available for any search engine to index the entire deep web.

Coupled with this issue is the deliberate use of invisible web space by individuals who do not want to be found. This is the origin of groups of criminals who sent out millions of spam e-mails suggesting that you have won the international lottery before quickly disconnecting. No matter what developments are made toward catching crooks they will always find new ways to remain hidden.

Is there any light down there?

It was never the intention to create a breeding ground for online criminals, which is sadly the predominant direction that the Deep Web seems to have taken.

There are secretive parts of the Internet that were specifically designed for secret services and law enforcement officers to surf questionable websites and services without leaving tell-tale tracks. Perhaps the domain of the dark net would make sense in oppressive regimes such as China­ where the government goes to extreme lengths to censor images that contain large expanses of supposedly naked flesh. It could certainly have a positive impact in countries such as Iran allowing people to rally support against oppressive governments without fear of being apprehended.

It is a worrying to think that due to the size and rapid growth of the Deep Web there is pretty much no way of stopping it. However, it may not be as bad as we all might think, but there is definitely a large enough criminal element to warrant concern.

Collaboration in SCM

January 16, 2013

Over the years, many technologies have evolved to support both asynchronous and real-time collaboration. Most of the older technologies, such as teleconferencing, video conferencing, e-mail, etc., have major limitations that lower their value in product development environments. The newer and still-evolving technologies that enable PLM allow the management of product information and the processes that are used to create, configure, and use the information in a manner never previously thought of before.
We talk a lot about collaboration, but do we really understand what it means? In general, collaboration is an iterative process where multiple people work together toward a common goal. Methods of working collaboratively have existed as long as humans have joined together to accomplish tasks that could be done better by a team than an individual. Early man is probably the best example of collaboration when hunting for food for the village or the tribe.

There are two modes of collaboration: synchronous and asynchronous. Users working in an asynchronous manner carry out their assigned tasks and then forward the data to the next person. This way of working is serial in nature and only allows users to participate one at a time. Communication among collaborators is normally carried out using telephone or e-mail. Effective collaboration requires an area of storage for information from which product definition data can be shared with all those that require it. This shared area is commonly referred to as a data vault. Flow control and task execution is performed in an asynchronous way using workflow and project management tools. These tools allow data to be routed to users and progress to be monitored.

Synchronous or real-time collaboration enables users to view, work with 2D (e.g., specifications, drawings, documents, etc.) and 3D data (e.g., mechanical CAD models), and carry out interactive communications with each other in real-time. In addition, PLM-enabled collaborative solutions often support the ability to view, rotate, add notes and annotation pointers, and some also offer functionality to change the 3D design model data. This provides the same communication effectiveness as having all participants in the same room, at the same time, looking at the same data.
The following describes some of the processes commonly supported by PLM-enabled collaborative technologies.

Supply Chain Management—The move to a partnership-oriented supply chain means that suppliers, partners, sub-contractors, and customers are all involved in product definition. For companies to embrace the true potential of the distributed supply chain, collaborative tools can be used to manage data and processes across a distributed environment.

Sales and Bidding—Opportunities exist for sales, engineering, purchasing, and manufacturing to engage in collaborative sessions where product options, alternatives, and concepts are reviewed by each discipline at the same time. This is faster, more efficient, and can produce more accurate and cost-effective bids.

Maintenance and Support—The application of collaborative tools in maintenance and support activities is gaining acceptance in a number of different sectors such as aerospace and defense, automotive, process, and machine tools. For example, animation and simulation tools are being used to demonstrate how products are operated and maintained.

Change Management and Design Review—Adopting a different design review process, where project teams join a shared collaborative review session can result in significant benefits as potential conflicts and errors can be identified early in the product development lifecycle.

Senior Managers in the business world understand economic cycles are a known fact of life. The key to success is the way managers and organizations adapt to these cycles. Since they are a fact of life, we know that we can’t just ignore downturns and hope for a better day. So instead, those that are successful learn how to become more efficient while still ensuring that they deliver the best value to the markets they serve (i.e., making available the right product, at the right price, to the right market, at the right time, at the right quality, (The 5 Rights!)).

Vendor Rating and Management

December 20, 2012

Vendor rating is the result of a formal vendor evaluation system. Vendors or suppliers are given standing, status, or title according to their attainment of some level of performance, such as delivery, lead time, quality, price, or some combination of variables. The motivation for the establishment of such a rating system is part of the effort of manufacturers and service firms to ensure that the desired characteristics of a purchased product or service is built in and not determined later by some after-the-fact indicator. The vendor rating may take the form of a hierarchical ranking from poor to excellent and whatever rankings the firm chooses to insert in between the two. For some firms, the vendor rating may come in the form of some sort of award system or as some variation of certification. Much of this attention to vendor rating is a direct result of the widespread implementation of the just-in-time concept  and its focus on the critical role of the buyer-supplier relationship.

Most firms want vendors that will produce all of the products and services defect-free and deliver them just in time (or as close to this ideal as reasonably possible). Some type of vehicle is needed to determine which supplying firms are capable of coming satisfactorily close to this and thus to be retained as current suppliers. One such vehicle is the vendor rating.

In order to accomplish the rating of vendors, some sort of review process must take place. The process begins with the identification of vendors who not only can supply the needed product or service but is a strategic match for the buying firm. Then important factors to be used as criteria for vendor evaluation are determined. These are usually variables that add value to the process through increased service or decreased cost. After determining which factors are critical, a method is devised that allows the vendor to be judged or rated on each individual factor.

It could be numeric rating or a Likert-scale ranking. The individual ratings can then be weighted according to importance, and pooled to arrive at an overall vendor rating. The process can be somewhat complex in that many factors can be complementary or conflicting. The process is further complicated by fact that some factors are quantitatively measured and others subjectively.

Once established, the rating system must be introduced to the supplying firm through some sort of formal education process. Once the buying firm is assured that the vendor understands what is expected and is able and willing to participate, the evaluation process can begin. The evaluation could be an ongoing process or it could occur within a predetermined time frame, such as quarterly. Of course the rating must be conveyed to the participating vendor with some firms actually publishing overall vendor standings. If problems are exposed, the vendor should formally present an action plan designed to overcome any problems that may have surfaced. Many buying firms require the vendor to show continuing improvement in predetermined critical areas.

CRITERIA FOR EVALUATION

Vendor performance is usually evaluated in the areas of pricing, quality, delivery, and service. Each area has a number of factors that some firms deem critical to successful vendor performance.

Pricing factors include the following:

  • Competitive pricing. The prices paid should be comparable to those of vendors providing similar product and services. Quote requests should compare favorably to other vendors.
  • Price stability. Prices should be reasonably stable over time.
  • Price accuracy. There should be a low number of variances from purchase-order prices on invoiced received.
  • Advance notice of price changes. The vendor should provide adequate advance notice of price changes.
  • Sensitive to costs. The vendor should demonstrate respect for the customer firm’s bottom line and show an understanding of its needs. Possible cost savings could be suggested. The vendor should also exhibit knowledge of the market and share this insight with the buying firm.
  • Billing. Are vendor invoices are accurate? The average length of time to receive credit memos should be reasonable. Estimates should not vary significantly from the final invoice. Effective vendor bills are timely and easy to read and understand.

Quality factors include:

  • Compliance with purchase order. The vendor should comply with terms and conditions as stated in the purchase order. Does the vendor show an understanding of the customer firm’s expectations?
  • Conformity to specifications. The product or service must conform to the specifications identified in the request for proposal and purchase order. Does the product perform as expected?
  • Reliability. Is the rate of product failure within reasonable limits?
  • Reliability of repairs. Is all repair and rework acceptable?
  • Durability. Is the time until replacement is necessary reasonable?
  • Support. Is quality support available from the vendor? Immediate response to and resolution of the problem is desirable.
  • Warranty. The length and provisions of warranty protection offered should be reasonable. Are warranty problems resolved in a timely manner?
  • State-of-the-art product/service. Does the vendor offer products and services that are consistent with the industry state-of-the-art? The vendor should consistently refresh product life by adding enhancements. It should also work with the buying firm in new product development.

Delivery factors include the following:

  • Time. Does the vendor deliver products and services on time; is the actual receipt date on or close to the promised date? Does the promised date correspond to the vendor’s published lead times? Also, are requests for information, proposals, and quotes swiftly answered?
  • Quantity. Does the vendor deliver the correct items or services in the contracted quantity?
  • Lead time. Is the average time for delivery comparable to that of other vendors for similar products and services?
  • Packaging. Packaging should be sturdy, suitable, properly marked, and undamaged. Pallets should be the proper size with no overhang.
  • Documentation. Does the vendor furnish proper documents (packing slips, invoices, technical manual, etc.) with correct material codes and proper purchase order numbers?
  • Emergency delivery. Does the vendor demonstrate extra effort to meet requirements when an emergency delivery is requested?

Finally, these are service factors to consider:

  • Good vendor representatives have sincere desire to serve. Vendor reps display courteous and professional approach, and handle complaints effectively. The vendor should also provide up-to-date catalogues, price information, and technical information. Does the vendor act as the buying firm’s advocate within the supplying firm?
  • Inside sales. Inside sales should display knowledge of buying firms needs. It should also be helpful with customer inquiries involving order confirmation, shipping schedules, shipping discrepancies, and invoice errors.
  • Technical support. Does the vendor provide technical support for maintenance, repair, and installation situations? Does it provide technical instructions, documentation, general information? Are support personnel courteous, professional, and knowledgeable? The vendor should provide training on the effective use of its products or services.
  • Emergency support. Does the vendor provide emergency support for repair or replacement of a failed product.
  • Problem resolution. The vendor should respond in a timely manner to resolve problems. An excellent vendor provides follow-up on status of problem correction.

In an article produced by Supply Management states that while pricing, quality, delivery, and service are suitable for supplies that are not essential to the continued success of the buying firm, a more comprehensive approach is needed for suppliers that are critical to the success of the firm’s strategy or competitive advantage. For firms that fall into the latter category performance may need to be measured by the following 7 C’s.

  1. Competency—managerial, technical, administrative, and professional competence of the supplying firm.
  2. Capacity—supplier’s ability to meet physical, intellectual and financial requirements.
  3. Commitment—supplier’s willingness to commit physical, intellectual and financial resources.
  4. Control—effective management control and information systems.
  5. Cash resources—financial resources and stability of the supplier. Profit, ROI, ROE, asset-turnover ratio.
  6. Cost—total acquisition cost, not just price.
  7. Consistency—supplier’s ability to exhibit quality and reliability over time.

If two or more firms supply the same or similar products or services, a standard set of criteria can apply to the vendor’s performance evaluation. However, for different types of firms or firms supplying different products or services, standardized evaluation criteria may not be valid. In this case, the buying firm will have to adjust its criteria for the individual vendor. For example, Honda of America adjusts its performance criteria to account for the impact of supplier problems on consumer satisfaction or safety. A supplier of brakes would be held to a stricter standard than a supplier of radio knobs.

AWARDS AND CERTIFICATION

Many buying firms utilize awards and certification programs to rate vendors. Attainment of certification status or an award serves as an indicator of supplier excellence. Certification and awards-program recognition represents a final step in an intense journey that involves rigorous data collection under the total-quality-management-rubric as well as multitudes of meetings with suppliers and purchasing internal customers. Serious buying firms view these programs as an integral part of their overall efforts to improve the total value of the company.

The attainment of a supplier award usually serves as an indication that the vendor has been rated as excellent. Intel awards their best suppliers the Supplier Continuous Quality Improvement Award (SCQI). Other firms may utilize a hierarchy of awards to indicate varying degrees of performance from satisfactory to excellent. DaimlerChrysler awards its best suppliers the Gold Pentastar Award. Several hundred vending firms receive this award per year. However, only a handful (less than a dozen) of DaimlerChrysler’s vendors are good enough to garner the Platinum Pentastar Award.

For other firms, supplier certification is desirable. Supplier certification can be defined as a process for ensuring that suppliers maintain specific levels of performance in the areas of price, quality, delivery, and service. Certification implies that participating firms have reached a level of excellence that other firms were unable or unwilling to achieve. For example a quality certified firm maintains a level of quality such that customer-receiving inspection may be utilized with decreasing frequency up to the point where it is eliminated altogether. Theoretically, this will ensure that all of the supplier’s products meet the customer’s product specifications. In this case, the goal of supplier certification is quality at the source.

While it is uncertain whether individual firms are consistent in the manner in which they certify vendors, a quality certification would likely require that the vending firm be part of a formal education program, utilize statistical process control (SPC), and have a quality assurance plan (set written procedures).

BENEFITS

Benefits of vendor rating systems include:

  • Helping minimize subjectivity in judgment and make it possible to consider all relevant criteria in assessing suppliers.
  • Providing feedback from all areas in one package.
  • Facilitating better communication with vendors.
  • Providing overall control of the vendor base.
  • Requiring specific action to correct identified performance weaknesses.
  • Establishing continuous review standards for vendors, thus ensuring continuous improvement of vendor performance.
  • Building vendor partnerships, especially with suppliers having strategic links.
  • Developing a performance-based culture.

Vendor ratings systems provide a process for measuring those factors that add value to the buying firm through value addition or decreased cost. The process will continually evolve and the criteria will change to meet current issues and concerns.

For example, today the supplier evaluation must now reflect the strategic direction of the buying company’s environmental initiatives. As a result, some firms have recently developed supplier evaluation systems that place significant weight on environmental criteria. It is now an important criteria for the evaluation of suppliers that they have firm CSR programmes in place and that they are observant of governmental rules and regulations.

Embarking on the eBusiness Journey.

December 10, 2012

There are companies still today who are reluctant to embark on the eBusiness journey, why is this? It is my belief that eBusiness is perceived as an expensive and frightening experience, also that everybody wants to sell a solution without really educating the company in how it can transform the business, thus making considerable savings in time and money. Technology and Business processes have changed considerably in the last decade, making implementations and change much simpler to undertake.

However, it is important to understand the business environment that you are operating under. With this in mind there are at least seven questions that should be asked in any business prior to embarking on the eBusiness journey. Answering these questions will allow the business to either embark on the journey (or not).

Question 1. Do I understand my Business today?

How is my business conducted? Is it difficult to connect with my Suppliers? Where am I spending money and on what? Do I have Administrative Burdens in the way I conduct business today? What is stopping me from moving forward? Have I got an optimized organizational structure?

Question 2. Am I ready to change the way I do Business?

Has the business got the appetite for change? Do I have change management agents in my Business? Do I have an organization that resists change?

Question 3. Do I have a strategy in place for using eBusiness?

What are my Pain points? Do I want to be a business Shaper or a business Adopter? Does the Business understand eBusiness? Am I involved in any eBusiness forums?

Question 4. What are my competitors doing?

Who has embraced eBusiness and why? Can I benchmark my business with others? What etools do they employ?

Question 5. Do I have to build my own applications?

Do I have an Infrastructure that will enable me to implement eBusiness? Are my systems bespoke? Is ICT considered an overhead in my business?

Question 6. What are my strengths and weaknesses?

Is there time liberation in the Business? Is there systems proliferation? Am I firefighting in my business? Do I empower my employees?

Question 7. Do I have well defined processes in place?

Are my processes visible end to end? Are controls in place but are too rigid? Do I have standards in place? Have I got good content? Are there to many levels of authority?

I strongly believe that every company should ask these questions of itself not only to assist it in overcoming the perceived fears of eBusiness but also to evaluate itself in the business environment today. It may result in no actual change taking place as the practices and processes are fit for purpose in the business environment that the company operates under. However, without analysis who will ever know!

Automation will reduce risks in Accounts Payable Fraud.

December 7, 2012

This is a topic that I have blogged about before, but I still believe that the topic is as relevant today as it ever was due to the increase in the numbers of enterprises launching into the world of Supplier Relationship Management and looking at ways to streamline process and reduction of operational costs.

By the elimination of as many Human “Touch Points” in the Accounts payable process and adherence to strict business rules is a critical success factor in the reduction of Accounts payable fraud. In short, the solution to most of today’s current AP fraud risks and processing

Inefficiencies involve the implementation and proper management of automation tools.

A key issue in regard to most forms of AP fraud is that there are so many opportunities open in the manual process for dishonest employees acting either alone or in collusion with dishonest outsiders to defraud a company. Specifically, in a conventional manual AP function, enforcement of business rules is based on after the fact audits, whereas AP automation offers the opportunity to enforce these rules duringthe process.

Taking it a step further, automation of the AP business process eliminates most if not all of the non-value-adding manual activities that consumes time, driving excessive invoice costs and undermines vendor relationships resulting in the loss of discounts.

Here is a short summary of the more common AP fraud types in two categories:

 

EXTERNAL AP FRAUD

 

The most common forms of external AP fraud are those committed by dishonest vendors, by individuals or organized fraudsters posing as vendors. Invoicing schemes are the key “weapon” in the arsenal of fraudulent vendors. Typical schemes are:

• Double billing.  The Dishonest vendor will submit a duplicate invoice a month or two after the initial legitimate one was submitted and subsequently paid. The duplicate invoice will have a different date or a consecutive number, a clear red flag of fraud. This tatic is based on the vendor’s expectation that the organization’s AP processes lack controls to screen for duplicate invoices and that the second fraudulent invoice will therefore be approved and paid without  question.

• Creating False vendors. The basic idea behind most external phony vendor schemes is simple: Create a fictitious company name. Register it with the company, give it a false address  either that of the fraudster,  a friend or relative, or a P.O. Box, using a home PC to create false invoices with all of this vendor information plus a description of the items or service being invoiced. Set up a bank account in the “company’s” name and then wait for the payments to be made. If the victim company has strong internal AP processing controls, the false invoices will be flagged and rejected as fraudulent before they are paid. If not, the fraudster gets the payment and is encouraged by this success, will probably repeat the process using the same or a different vendor name. Unfortunately, many of these frauds go undetected for long periods of time, sometimes up to several years. That’s why AP automation which incorporates optimized preventive controls is such powerful anti fraud solution.

• Delivery of substandard goods at full price. Some of the goods and services an organization orders for completion of projects for clients, for its own operations, or both are ordered from vendors with which the organization has had a longstanding relationship due to good service, quality products, and favorable pricing. Other orders may be made based on competitive bidding. Either way, it’s a risk to assume that every vendor you do business with is completely honest. There is a handfuls that take advantage of weak controls within

procurement or accounts payable processes to deliver products that are below the quality

specified in a contract or purchase order and then invoice the organization for the higher quality

and higher priced goods. The difference in price will go straight into the dishonest vendor’s pocket.

INTERNAL AP FRAUD

 

Unfortunately, statistics show that the majority of fraud against large organizations is committed by their own employees. According to PricewaterhouseCoopers,  61% of all fraud is committed by company employees. Therefore, AP managers and senior managers should be familiar with the more common and costly forms of internal AP fraud.

• Invoicing schemes. The types of invoicing schemes commonly committed by outsiders as described earlier are also a serious threat internally tothe organization. Due to the fact that procurement, AP staff or managers are more conversant with the companies AP processes and procedures and its weaknesses it is easier for them to abuse their payment approval authority to execute these schemes. If an employee is notin a position with the authority to approve phony invoices, the fraudster may try to initiate a collusive scheme with a colleague that does have the authority.

Another fraud to be aware of is employee creation of phony purchase orders (POs) for goods or services the company buys on a regular basis. The only difference is that the “vendor” is a shell company set up by the employee rather than an outside fraudster. Once the PO is successfully falsified maybe with the use of basic home computing equipment the employee simply forges an authorized manager’s signature. The Fraudster will then generate the matching phony invoices for the shell company and gets paid. One of the most common internal forms of phony vendor fraud involves creating a shell company with a name very similar to a legitimate vendor the organization regularly issues payments, but with a different address. Another common form of Invoicing scheme involves employees making unauthorized purchases and diverting the goods. These schemes are often simple to execute if the employee is a professional in a specialized area and the manager approving purchase requests is not familiar with the nature of the goods being ordered.

Potentially the most dangerous employee Invoicing fraud is the called the “straw vendor” scheme. Also known as “pass-through vendor” scheme, these crimes occur when an employee with invoice approval authority sets up a bogus company and orders goods from a legitimate vendor that the company actually requires. Once received and paid for by the dishonest employee, the goods are then sold to the company at inflated prices. The fraudulent invoices are approved by the fraudster. The fraudster may even could even generate bogus refunds or rebates to the straw vendor, which is under the fraudsters control. The latest state-of-the-art AP automation technology eliminates this risk by automatically flagging potentially erroneous or fraudulent invoice information and routing it to an appropriate remediation expert.

• Purchasing card fraud. If the organization uses procurement cards, commonly referred to as p-cards, or corporate credit cards, it is probably not breaking news that these are abused for personal benefit. The key reason that organizations initiate p-card programs is to save money on the cost of processing business related purchases. Because it costs as much to process a $250,000 order as it does a $250 order using the organization’s normal procurement process.

With an automated solution, the human “touch points” involved in invoice processing are minimized, in turn minimizing the opportunity for dishonest employees to falsify invoice data or otherwise manipulate the AP process for personal gain. At the same time, the entire procure to pay process is streamlined, reducing the time to process individual invoices, improving relationships with vendors, and, of course, reducing overall AP processing costs.

Procure-to-Pay, tips for the Enterprise

November 12, 2012

As more companies are seeking to move beyond procurement into fully deployed supply chain systems, a key challenge for many companies is in the area of improving efficiency in their procure to pay cycle for many of their contracted services, especially in the area of facilities maintenance and on-site contract management. There exist multiple challenges in environments where field associates are working from manual or electronic systems, requisitioning on-site services for maintenance or other activities, and ensuring that this information is captured effectively. In addition, there exist significant challenges to ensure that the proper service level agreement is fulfilled, the correct price is charged, the purchase order is transmitted correctly, the invoice matches, and finally, that the supplier is paid the correct amount for the actual services delivered. While many enterprise systems claim that these elements are simply defined within their structural logic, the truth is that there are plenty of opportunities for error, and that without a planned process for managing the procure to pay cycle, the organization may be bearing significant costs due to non-compliance to system or process requirements.

So here are a few tips that should help

• Develop common processes and procedures for the P2P process, and roll-out training at site level to ensure that people are comfortable with the approach. Be prepared to modify minor elements the process to accommodate site-level requirements, but keep the essential elements of the process flow intact. Emphasize the importance of this approach to the entire P2P cycle, including accounts payable, invoicing, and blocked and parked invoices. Explain the impact of lack of adherence to process – and that the supplier will not be paid in a timely manner for their work if errors occur in the process.
• Improve master data robustness and integrity. Whether this involves ensuring proper audits of external vendor catalogs, or internal content management, clean master data is a mundane but critical element to supply management and P2P best practices. Minimise opportunities in the P2P process for keystroke and free text errors to occur, by error- proofing the system and mapping the process to identify where errors are occurring. Recurring training will also ensure that errors are reduced.
• Explore punch-out roundtrip and other approaches to exploit external content management approaches. This is especially important to ensure that the most efficient buying channel is selected.
• Exploit the use of procurement cards for high transaction volume, low transaction value purchases. Pcard technology has evolved significantly, and companies need to identify opportunities for hard dollar savings through this approach via rebates.
• Be sure to update master data and pricing rates on an on-going basis. In particular, attention should be paid to units of measure, appropriate industry-standard nomenclature, updating of labor rates based on market conditions, and on-going clarification of requirements against existing contracts.
• Establish how you are buying products and services, and document the buying channels through which these purchases are occurring. Inevitably, you will discover that purchases are occurring through improper or less- efficient channels, which is detracting from your team’s ability to engage in strategic value-added approaches. Get out of the transaction management business! To do this, you need to establish standard processes and procedures, and commit to a change management plant to ensure that people are using the right buying channels for the different types of spend.
As technology and business requirements evolve, the P2P cycle will certainly need to be re-visited from time to time to ensure it is meeting the needs of internal customers, and that suppliers are satisfied with the system.

Common Goals in Finance and Procurement

October 23, 2012

Procurement and Finance in businesses today are starting to realize and share the responsibility for both cost and risk reduction when it comes to reducing operating expenditures, cutting transaction costs, mitigating liabilities and identifying innovative ways to increase the Company’s profits.
The global financial recession is still with us, however many executives are beginning to listen and hear the bench¬mark performance numbers that show the types of savings that are possible from greater collaboration between Procurement and Finance.
Functional, Process automation and analytical initiatives such as e-Sourcing, P2P, Contract Management and Spend Analyses are making these returns possible. Take for example the types of returns that enhanced straight-through processing automation and change management can bring in the accounts payable function. By integrating tools and processes together in this area, procurement and finance can together reduce maverick spending, reduce potential fraud, better leverage existing contracts and lower operating costs.
Focusing on such strategies as procure-to-pay sav¬ings implementation, organizational (and supplier) compliance, overall spend visibility and supplier relationship management, Procurement and Finance are starting to increase their collaboration, taking joint ownership of opportunities to remove redundant time consuming functional and process inefficiencies.
Procurement and Finance share common goals: the need to achieve rapid savings, the need to monitor / control external risk factors also the need to take full advantage of technologies and processes that enable greater transparency and opportunity. To open up the relationship potential between procurement and finance, a number of organizations have already started to collaborate in a range of initiatives. Shared services and outsourcing being an example of assisting procurement and finance organizations to improve operating efficiency and effectiveness. However, companies that focus on the AP and P2P processes will achieve the greatest returns by first addressing and automating as much of these processes as possible before migrating to a shared services or outsourcing environment , Shared services requires extremely tight Procurement and Financial collaboration.

Procurement and Finance collaboration targeting P2P processes and systems will yield the most rapid, tangible savings results of any technology-based coordinated effort. P2P systems enable a plethora of hard dollar cost reduction benefits by reducing off-contract purchases, lowering purchase volume in general and improving operating efficiency. Such efforts will also help companies reduce risk by building greater visibility into purchasing and payment controls, enhance company-wide and supplier compliance
Without a shadow of doubt, procurement and finance collaboration will assist companies weather the storm through better cost reduction and risk mitigation strategies and approaches. However to maximize the likelihood for success, not to mention rapid returns, it is critical to target the right programmes based on organizational priority , potential savings and value they will create for the business. At the same time, it is important to enlist the support of all areas of the business in the initiatives so that finance and procurement are seen as a collective agent of positive change rather than an adversary. Internal marketing should ensure that everyone feels the impact through budget modification based on the results of the programme. It also requires definition of metrics and measurements to quantify programme returns. By far the most important factor is that it requires the technology and process automation that can drive rapid results versus the type of systems and process paralysis that we have seen in many ERP implementations for years.
In conclusion there have been many discussions on the Internet of late in various forums that have discussed the relationship of Finance and Procurement. However, it is important to realize that closer collaboration and the use of enabling technology will enable companies to weather the current economic storm.