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September 30, 2009

Optimizing the Design of a Warehouse- Part 1 of 3

In a world of longer and complex supply chains, automobile industry is faced with a challenge of framing competitive strategies which deal with customers demanding lower costs, greater product availability, increased product selection, value added services, and reduced delivery times.

 

Auto spare parts warehouses are often built to handle defined number of products and volumes, and limited unit loads. The recent boom in the spare parts business has often resulted in typical warehouses running out of space due to seasonal peaks, large discount buying, planned inventory builds for manufacturing shutdowns, or during slow sales period.

Then they are expected to be flexible in handling customer demands as well as being more productive over time. Apart from this, increased inventory references, decreased inventory turn ratio, increased product obsolescence and increased price and volume pressure make it mandatory for auto spare parts warehouse to be more robust and agile.

This makes it critical for auto companies to have a closer look at the way they manage their warehouses-and consider re-designing them if it makes for a profitable business case.

The potential benefits of a warehouse re-design can be- improved order turnaround time ensuring on time deliveries to the customer, optimal space utilization, reduced manpower requirements, improved stock accuracy, better matching of supply and demand and eventually more streamlined and responsive supply chain.

In the forthcoming posts, we shall be discussing in detail on the most common challenges in warehousing, propose an optimal warehouse layout along with material picking strategies and technical alternatives evaluation.

September 22, 2009

The Evolving Financial Consolidation Landscape (Part 2 of 2)

In my previous post, I introduced you to the new ‘financial controlling’ order and how SAP has evolved to keep abreast with the ever changing business requirements, especially the CFO’s office.

Moving ahead on the discussion of the evolution of financial consolidation tools, I have listed down some of the major pain points (Past-to-Present) of a financial consolidation process and the provisions of SAP offerings (Need of the hour/ Expected state).

PAST – TO – PRESENT

NEED OF THE HOUR/ EXPECTED STATE

Inefficient Processes
·  Duplication of computations at Corporate and unit level
Leaner Financial Processes
·  Systematically, eliminating all sources of waste using a root-cause analysis
Inaccurate Data
·  Huge variances between Forecasting, Planned and Actual data
·  Intercompany data discrepancies leading to added burden on the corporate team
Data quality checks and Process Governance at each stage
·  Multiple data validation options, through parameters and guidelines, to ensure data quality and accuracy
·  Intercompany reconciliation, before financial consolidation, thus shifting the responsibility from the corporate to the subsidiary
Manual Time consuming activities
·  Manually feeding accounting data
·  Tailoring the layout of Statutory and management reports
Automating Workflow for all consolidation activities
·  Automating data entry from multiple source systems (including NW). Manual Journal entries only for adjustments
·  Automated Process flows for carrying out all consolidation related tasks
·  In-Built reporting tool for all reporting and analytical needs (including built in templates)
Increased compliance pressure resulting in more inefficiencies
Deploying a consolidation system capable of increasing compliance efficiency
·  Multi-GAAP reporting
·  Performance enhancing implementation methodologies including audit reports for better audit trail and compliance
Slow Financial Closing process
·  Average annual Financial closing in Europe is 50 days as compared to 29 days in US (BPMi survey 2008)
Expediting the financial closing process
·  Some of the quickest financial closing is in less than 8 days in US and Europe (BPMi Survey)

Thus, in the mid-to-long term horizon, a consolidation system can drive down compliance costs through automation, increase efficiency by expediting the financial close (while ensuring the audit trail) and improve productivity of financial processes through workflow automation and multi-tasking. In addition to these capabilities, a consolidation system can also bring, the much needed, flexibility to the CFO’s office by bridging certain regulatory requirements especially in the short term -

     1. IFRS reporting alongside local GAAP until the operational/transaction systems are geared up for complete changeover to IFRS

     2. XBRL reporting to meet SEC requirements, until XBRL is adopted for management reporting as well

     3. Building synergies during an M&A or diversification ( or hive off) scenario, until the IT architecture is re-aligned to cater to the new/additional regulatory and business requirements

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