5 Ways to Reduce Administration Costs

 

Despite the turn of the year, 2012 looks set to be another year of austerity and cost reductions. Several well known names from the UK high street have set the tone by reporting less than impressive Q4 results and some are even entering administration.

Here are five suggested ways to reduce operational costs through increased backroom efficiencies.

Administration costs, Smart Admin, e-Invoicing

  1. Adopt e-Invoicing
    By converting to digital invoicing, a business can make immediate savings on staffing, stationary, postage. Factor in slightly less tangible factors such as time and the argument for e-Invoicing is hard to ignore when investing to make greater savings.
  2. Create dynamic pricing and discounting structures
    Offering customers discounts for settling payments early may reduce profits, but a healthy cash flow and balance book is preferable to a sheaf of outstanding invoices. A scale of sliding charges and fees can require intensive intervention to oversee however, so companies introducing such a system should look at implementing our third recommendation simultaneously.
  3. Automate your workflow
    To combat costly human error, introducing automation can speed each step of the payment process by removing the need for manual intervention. The less manual processing that is required, the smaller the margin for error and the less workforce required for accounts payable.
  4. Centralise
    Bring your financial operations into one department. Managing finances across different departments is time consuming, and if time is money, delays in financial processing cost your business. Cut the delays by bringing financial control into a single centralised location and you will recognise associated cost savings.
  5. Digitise your paper
    Your clients may not have an electronic invoicing and payments systems and so they will continue to return physical paperwork. As a result you will need to find a way of capturing this information and getting it into your own accounts system.

Using an electronic invoicing platform like Celtrino’s Smart Admin can help achieve each of these goals and thereby slash costs as a result. Interested? Get in touch to find out more!


Posted on February 22, 2012 in Accounts Payable, Business Process Automation, Cash Flow Management, e-Invoicing by
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Masters of Supply Chain Management – Peter Durand

 

Like all of the best inventions, Peter Durand managed to create a device which not only helped to assist with shipment, but which was also of benefit to humanity as a whole. Durand’s creation? The humble tin can.

Masters of Supply Chain Management - Peter Durand and his invention tin can
Source: Wikipedia

Little is known of Durand’s early life, but by 1810 he had become a successful merchant, working from Hoxton Square near London. As a food trader, Durand knew only too well that his goods had a limited life span and would perish quickly. Using a technique he learned from the French inventor Phillipe de Girard, Peter Durand approached the then king, George III and was granted a patent for preserving food using sealable containers. Most importantly the patent covered the use of tin cans for preserving food.

Durand successfully tested his new method of preservation using tin cans by deploying a number of items for use by the Royal Navy. Six months after the food was shipped, scientists from the Royal Society opened the tins and found that the food was perfectly safe to eat.

The Royal Navy found that preserved food was only one of the benefits of the new tin cans. Firstly, tin cans were robust and easy to store; previously food had had to be stored in large wooden barrels which were bulky and space inefficient. Secondly, food which could be stored for at least six months meant that voyages could be extended, reducing the need to make landfall to secure supplies.

Despite the success of the tin can, Peter Durand chose not to take the invention any further himself and sold the patent just two years after it was granted. The new owners of the patent turned the idea into a commercial success and the storage of food was changed for ever.

Durand’s story did not end there though. In 1818 Peter Durand managed to secure the US patent for his tinned food invention and so began the globalisation of the humble tin can.

 


Posted on February 21, 2012 in Supply Chain, Supply Chain Management by
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Two Supply Chain Management Predictions for 2012

 

As seems to have been the case every year for the past half decade, 2012 is predicted to be the year that cloud computing finally takes off.  Analysts believe that Software-as-a-Service (SaaS) has finally reached the requisite level of maturity to ensure that manufacturers will finally be able to outsource many of their ERP functions.

Supply Chain Management Predictions for 2012

SaaS providers have managed to extend the functionality of their systems to mimic and replace those available in onsite equivalent ERP platforms immediately negating many of the concerns of business decision makers. Attention to improving platform and data security has also led to increased customer confidence further helping to boost uptake.

Ray Wang, principal analyst for the Constellation Research Group reckons SaaS for manufacturers will also need to demonstrate a high degree of interoperability to facilitate integration with existing on-premise systems. By hooking directly into the existing computer systems, manufacturers can extend and expand their systems without the usual costs associated with an in-house deployment or upgrade. As a result Wang believes that SaaS will reach a natural tipping point this year leading to an explosion in uptake.

James Leibel of technical consultants Cap Gemini is also expecting to see an explosion in embedded wireless tracking throughout the supply chain. These tracking devices, such as RFID and Near Field Communications (NFC) smart tags will help manufacturers keep an accurate inventory at every point of contact with minimal manual intervention, thereby reducing the potential for human error creating stock level issues. NFC and RFID tracking does however require additional investment in hardware for tracking the tags but Ray Wang reckons “Manufacturers will be applying sensor data to anything from predictive maintenance to improved demand forecasting.”

Finally all of the analysts appear to agree that manufacturers will make “healthy” investments in technology to underpin their operations and provide future-proof capacity. Analysts have been wrong in the past, but this year their claims seem highly credible.


Posted on February 17, 2012 in Cloud Computing, ERP, SaaS, Supply Chain Management by
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Electronic Invoicing – You Have to Go the Whole Hog

 

Electronic Invoicing – You Have to Go the Whole Hog he flexible nature of electronic invoicing allows for a phased approach, moving a tranche of accounts at a time and creating a hybrid system of physical and electronic accounts paperwork. For the small to medium business, such a system is workable but for the larger enterprise completely impossible.

For any business running physical and electronic invoicing systems in tandem, the overhead of managing such a workflow places a huge additional burden on accounts staff and thereby reduces many of the cost benefits associated with e-Invoicing. The greatest single motivator for migration to electronic invoicing tends to be the promised financial savings of the medium; if these savings are being reduced because of inefficiencies, your business loses out.

Electronic invoicing also provides a way to centralise accounts records, drawing information which would normally be held on a departmental basis into a single repository. Cash flow information can finally be retrieved immediately easing business decisions and allowing for a more agile trading model.

So although the hybrid system may work for a while, the overall goal must be a total switch to electronic invoicing. This goal may be easier to achieve in some industries than others, but with careful planning and by securing the agreement of suppliers and customers, any business can eventually manage total migration.

Unfortunately there will always be a level of resistance to change from certain key suppliers, much of which is caused by ignorance of e-Invoicing and the fact that suppliers also stand to reap benefits from electronic invoicing. Successful supplier on-boarding should therefore be a consideration when choosing a platform for electronic invoicing; if the supplier of your invoicing system can assist, so much the better.

Fortunately Celtrino are masters of outsourcing electronic invoicing services and uniting supply chains for the mutual benefit of all involved. If you need help going the whole hog with your e-Invoicing roll-out, please get in touch – we’re happy to help!


Posted on February 15, 2012 in Cash Flow Management, e-Invoicing, EIPP, Supply Chain Management by
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What is PEPPOL?

 

Since the announcement of the e-Invoicing & PEPPOL project last week by Minister Brian Hayes, the Minister of State with special responsibility for the Office of Public Works there has been much online and offline discussion about the nature and origin of the project itself. In my last post on the subject I stated that e-Invoicing isn’t new to Ireland. Indeed, Celtrino has been helping Irish companies do it for more than 20 years. But PEPPOL is new to Ireland and the purpose of this post is to provide a brief overview of PEPPOL.

So, what is PEPPOL?

PEPPOL stands for the Pan-European Public Procurement Online project.

At a high level, PEPPOL is an EU initiated and funded e-Procurement project to enable seamless cross-border e-Procurement, connecting communities through standards-based solutions.

In particular, PEPPOL will enable any company in any EU member state to respond to any tender across the EU. Therefore, any Irish or EU company will be able to tender for government projects in any EU member state.

Why PEPPOL?

Government inefficiency, particularly government procurement inefficiency is the focus of PEPPOL. Less than 5% of total procurement budgets are awarded electronically and only 1.6% of contracts are supplied by an entity in another Member State. It is estimated that if e-Procurement is adopted by all European contracting authorities, annual savings could exceed €50B.

How will PEPPOL work?

PEPPOL will remove the technical and procedural barriers to public procurement by enabling European businesses to deal electronically with any public buyers in their procurement processes.
PEPPOL is a document exchange service enabling e-Delivery of business documents between government agencies and private companies.

Is PEPPOL Live?

The PEPPOL project was set-up in 1998 and  is currently in test phase in 12 EU member states.
Ireland is an active participant along with Austria,  Denmark, Finland, France, Germany, Italy, Norway, Greece, Portugal, Sweden and the United Kingdom.

Celtrino is a key member of the Irish PEPPOL project and our public sector project partner is the Health Service Executive (HSE).

What is PEPPOL / Pan-European Public Procurement Online

View more presentations from Celtrino

 


Posted on February 14, 2012 in e-Invoicing, eProcurement, EU, European Union, PEPPOL, Private Sector, Procure-to-Pay, Public Sector by
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Seasonal Supply Chain Disruptions

 

The traditional Christmas wind-down often allows time and opportunity to observe businesses which have prepared their supply chain properly to deal with the demands of their customers. One of the easiest places to see successes and failures is at your nearest restaurant.

Seasonal Supply Chain Disruptions

A recent family trip to an Italian restaurant, one of a major UK-chain, quickly became a catalogue of embarrassing failures. Our party of nine had booked a table in advance and informed the manager that we would be ordering from their highly publicised festive menu on the day.

Upon our arrival however the waiting staff informed us that the Festive Menu had been cancelled. Permanently. Worse still the ingredients required for the advertised dishes were unavailable and we would therefore have to order from the a la carte menu instead. The issue was really brought to a head when the waitress admitted that the dessert chosen by half our group was also out of stock.

Apart from immediately creating nine dissatisfied customers, the restaurant demonstrated a definite supply chain management failure by not having the ingredients required for their most popular recipes as advertised. Although Christmas closures at suppliers can cause severe knock-on effects, careful supply chain management and stock level forecasting can easily prevent such problems, particularly when customer orders are placed in advance. The restaurant had 9 orders on their books before the Christmas shutdown, making an ingredient shortage inexcusable. The fact that Christmas comes around on the 25th of December every year should also make long term planning all the easier.

Whether the issues at this particular restaurant were caused by human error or a computer system failure is unclear but the underlying supply chain failures are totally transparent. We would hope that the restaurant described learns their lesson in time for this coming December. This tale of woe should also serve as a cautionary tale for other businesses, in all sectors, next Christmas.


Posted on February 10, 2012 in Supply Chain, Supply Chain Management, Supply Chain Upstream and Downstream by
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Irish Government Announces e-Invoicing Project via PEPPOL and Celtrino

 

Today was a landmark day for Celtrino and for Ireland. I had the privilege of meeting Minister Brian Hayes and other interested parties to formally launch the first Government and public sector e-Invoicing project. The objective of the pilot is to establish a proven interoperable network of trusted service providers capable to accepting, routing and delivering e-Invoices on behalf of selected current suppliers.

e-Invoicing Launch for Irish Government. Brian Hayes TD, Minister of State and Ken Halpin, MD Celtrino

Ken Halpin, MD Celtrino presents ‘Ireland is About to Become a Whole Lot Smarter’ white paper to Brian Hayes TD, Minister of State at e-Invoicing Launch

e-Invoicing isn’t new to Ireland. Celtrino has been helping Irish companies do it for more than 20 years. Last year alone, we routed more than 7.5 million e-Invoices worth more than €4 billion.  What is relatively new is that the entire Irish public sector, being the largest buyer in Ireland, is now ready to revolutionise how Irish companies do business with the State. This initiative will impact on every Irish company selling goods and services to the State.

Irish companies are about to become more competitive and Irish tax payers are going to see more done with less tax. Celtrino estimates that e-Invoicing alone can reduce the costs of doing business in Ireland by €250 million annually.

Besides reducing the transactional cost of doing business for Irish companies (it’s a well-established fact that an e-Invoice is cheaper than its paper equivalent – and greener as well), the process that Irish industry is about to engage with goes far beyond the Accounts Receivable Department and fall beyond our shores.

To substantiate these assertions, I need to share some separate but related information and join up the dots.

Accounts Receivable is a critical function within any company but it’s not an isolated activity. As every business person knows, billing is part of an integrated process that starts with procurement and ends with getting paid promptly for the combination of raw material inputs and unique added value that every successful company brings to the table. So before signing-up with the first service provider that knocks on your door, have a think about the long–term value that it can bring to you across your entire supply chain.

eInvoicing Launch, Irish Governement

eInvoicing Launch 09 Feb 2012

What makes this particularly relevant is that the Minister and his team in the OPW appreciate this. The public sector has been taking costs out of public procurement for several years by using successful sites such as e-tenders as a vehicle for identifying and selecting suppliers. Having agreed the supply contracts (big and small), the next push is to take the paper and manual effort out of the supporting transactions from ordering to delivery and on to invoicing and payment. The good news is that today is e-day!

There’s even better news coming down the track for Irish suppliers as the standards on which these initiatives are based are pan European. All the Governments within the EU have agreed to ensure commonality across the entire EU. They’ve done this under the umbrella of a project called PEPPOL. If you haven’t heard of it yet, don’t worry, it’s been a well-kept secret.  PEPPOL stands for Pan European Public Procurement Online. Celtrino got involved back in October 2009 when 3 of us visited a chilly Copenhagen to hear first-hand what was happening internationally. We’ve been preaching the gospel ever since to every public body we could get an audience with.

Irish suppliers that engage with PEPPOL will have a huge export growth opportunity opening up to them – the biggest in the World. The Irish PEPPOL infrastructure will help them leverage their ability to win export business. The engine of growth in Ireland is export led. It is estimated that e-procurement can save the EU €50 billion per year. This translates into fewer taxes for everyone across Europe.

It might take a while but in this case, you can believe the hype! Get e-ready.


Posted on February 9, 2012 in B2G e-invoicing, e-Invoicing, EU, PEPPOL, Public Sector by
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Beating the Bullwhip

 

The Bullwhip Effect describes the problems of trying to cope with fluctuating customer demand and the need for holding an inventory to cover the changes. J Forrester observed that the further up the supply chain one goes, the greater the inventory contingency required, and the greater the costs associated.

Bullwhip

Source: Wikipedia

Theoretically beating the bullwhip is simple – all that is required is to ensure that orders match demand precisely in any given operating period. Clearly this almost impossible in reality, so instead the accurate management of safety stock levels and precise forecast calculations are essential to reduce the impact up the supply stream.

Experts suggest that moving from forecast-driven to demand-driven supply chain methodology will be more successful than statistical analysis, as goods are manufactured to order based on up-to-the-minute data directly from the retailer. Known as ‘Kanban’ within manufacturing industries, demand-driven supply chains gather sales data from the Point of Sale (POS) terminals in an organisation’ stores, allowing collection of highly accurate customer demand data which can then, according to business policies, be made available for use by any partner within the supply chain.

The genius of Kanban-based supply is that information sharing allows every link in the supply chain access to the customer demand data which can then be used to inform their internal inventory buffers. This open data dispensation actually benefits business up and down the supply chain, adding an additional layer of financial protection to each by avoiding the costs associated with an oversized safety buffer of stock.

Implementation of such a demand-driven system can be fraught with difficulties, both technical and political, but the use of externally hosted cloud services such as Celtrino’s Smart Admin platform can help address many of these. Smart Admin allows businesses to retain their own in-house systems whilst providing a data sharing interface for accessing the relevant data from their supply chain partners.


Posted on February 8, 2012 in B2B Platform in the Cloud, B2G e-invoicing, Business Process Outsourcing, Celtrino Platform, Cloud Computing, Supply Chain, Supply Chain Performance by
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Masters of Supply Chain Management – Léon Theremin

 

One of the most talked about technologies, Radio Frequency Identification (RFID), uses tiny passive electronic tags to track goods through the supply chain. Although RFID has found many uses in the modern age, the concept was originally designed by Russian inventor Léon Theremin as an espionage device.

Leon Theremin

Source: Wikipedia

Born in 1896, Theremin was a prolific inventor whose devices ranged from electronic musical instruments, such as the Theremin which bears his name, to the concept of interlacing which is still used today for improving the quality of broadcast video signals. From the age of 7 Theremin had developed a fascination with electricity and by 13 was demonstrating advanced optical effects using high frequency circuitry to his peers.

However it is Theremin’s passive listening device nicknamed “The Thing” which will probably prove to be his legacy. Designed as a tiny “bug” for use against American diplomats based in Moscow, “The Thing” relied on electromagnetic energy from an external source in order to transmit audio; the genius behind the idea was that the energy required was not obtained from a battery, but by a remote radio beam at the correct frequency. When activated, The Thing would then retransmit audio back to the sender who could eavesdrop on conversation taking place near to the covert listening device.

“The Thing” was a great success, allowing the Soviets to spy on their American counterparts undetected for seven years due to almost undetectable nature of the passive circuit. In fact the device installed in the Moscow embassy was discovered accidentally when a British radio operator overheard the broadcast from the device.

Despite his work for the Soviet cause, Theremin was interned in a gulag prison camp for several years before joining the KGB where he worked until 1966. He would later work at the Moscow Conservatory of Music where he developed the electronic instrument which still bears his name today. Theremin died in Moscow in 1993 at the age of 97 after a long and varied career.

The passive circuitry used by Theremin went on to form the basis for other similar devices which could be activated and powered remotely by radio waves and formed the inspiration for modern RFID and Near Field Communication (NFC) tags. The future of contactless payments, electronic inventory control and touch travel passes, such as the London Underground Oyster card are all direct descendants of “The Thing”.


Posted on February 7, 2012 in Supply Chain, Supply Chain Management by
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What is the ‘Bullwhip Effect’?

 

First coined by J Forrester in his seminal paper Industrial Dynamics back in 1961, the phrase ‘bullwhip effect’ is used to describe the knock on effects of a single product and its demand on the wider supply chain. Forrester found that in forecast-driven distribution channels, a change in demand had an ever increasing effect the further back into  the supply chain he went. When graphed, these oscillating changes in demand appear as a series of waves which get greater in size, reminiscent in appearance of a cracking whip. Because Forrester is credited with documenting the bullwhip phenomenon, it is also known as the Forrester effect by some.

Bullwhip Effect and the Supply Chain

Source: Wikipedia

The effect is created by statistical demand by suppliers attempting to forecast customer demand to properly position stock and raw materials at the correct points for timely delivery. Forecasting provides some degree of statistical accuracy, but the vendor must carry an inventory buffer to cover unforeseen fluctuations. Moving further up the supply chain, manufacturers and suppliers of raw materials must also maintain an inventory buffer to satisfy the demands of their own customers; because these demands can shift to even greater degrees, the “safety stock” levels must also be greater. Should downstream demand fall, the supplier is left carrying inventory which they are unable to shift, creating the “bullwhip effect”.

Forrester also observed that the bullwhip effect can be caused by a number of factors relating to human error or operational problems. Misapplication of statistical forecasting techniques or internal and external communication issues all play a part in oversized inventory buffers. So too do perceptions regarding supplier’s ability to meet demand and fulfil orders for a variety of reasons.

The bullwhip effect has an effect on an organisation’s bottom line, through inefficient production or stock short falls. The obvious knock-on effect is a reduction in customer service and satisfaction levels which has a definite negative, and therefore costly, impact on a brand’s reputation.

 


Posted on February 3, 2012 in Supply Chain, Supply Chain Management, Supply Chain Upstream and Downstream by
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