Month: January 2022

Most of us are aware of what an ERP is – a software solution that comprises a suite of integrated apps that help to manage business processes efficiently and smoothly.

Data from across the organization is centralized in a single database; repetitive and cumbersome tasks are automated; this means fewer errors, no duplication of data, easy access to relevant information for all departments, and so on.

A robust ERP like Tranquil streamlines business processes boosts productivity and eventually, profitability.

In the early days of ERP, only generic solutions were available – a one-size-fits-all system that was used by all kinds of businesses across industries.

However, ERP software has now evolved to a great extent, with solutions available according to industry, size of business, and method of deployment.

Each of these ERP solutions has specialized functionality as necessitated by the business.

One of the specialized ERPs is retail ERP – for retailers.

Why Do Retail Businesses Need ERP Software?

Conventional retailers today face still competition from online stores – which means low margins.

They have to pay wages to multiple employees, handle continuously moving stock, monitor discounts and loyalty points applied to numerous products, and so on.

Managing a retail business, especially with multiple stores, is indeed a tough job today.

It has become imperative for business owners to innovate and improve the way they do business, and streamline their processes in order to keep up with or beat the competition.

However, it is not really possible to achieve this through conventional methods like spreadsheets and manual data entry. Hence the need for retail ERP.

ALSO READ: How ERP Software is Playing Role to Improve Business Productivity?

Role of ERP in Retail

The number of mobile and social media shoppers is increasing by the day, and retailers have to adapt or sink.

Of course, customers still like to occasionally visit a physical brick and mortar store as well – and they expect to see the same or very similar products and pricing, and get the same experience at the store.

Yes, there is no doubt that customers today have become extremely discerning.

ERP for retail industry comprises across-the-board capabilities that link all the channels that provide the omnichannel experience to shoppers, automating the navigation and rendering it smooth and seamless.

It ensures that data moves rapidly to empower decision-makers with the right information to ensure optimal outcomes.

This shows that ERP software for retail bestows numerous benefits not just for your business, but also for your customers.

It leads to satisfied customers, and a productive, profitable organization.

ALSO READ: Influence and Importance of ERP System in Different Industries

Let us now examine in some detail what the exact benefits offered by ERP for retail business are:

Benefits Offered by ERP for Retail Business

1. Customer Management

The saying, ‘The Customer is King’ applies to the retail business more than any other – which makes it essential for a retail business to be able to serve customers exceptionally well.

A specific module for customer management is, therefore, an essential part of retail ERP.

This module helps retail business owners to have an integrated view of their customers, and overcome all hurdles related to customer service.

It collects and stores information on customer purchases, allowing you to detect patterns and offer personalized services.

You can also pinpoint your high-value customers, and offer rewards through loyalty management incentives.

All your promotional material and marketing schemes can be tailored and targeted so that customers only receive messages that are relevant to them.

A customer management module also enables businesses to respond swiftly and smoothly to customer complaints, returns, and so on.

ALSO READ: ERP Software to Enhance your Purchase Management

2. Demand Forecasting

Customer footfall can be pretty high at retail stores – and most of them are fickle, impatient, and demanding.

They want great products at low prices, the best customer service, and they want it right now.

Retailers have to go to great lengths to ensure that they meet these expectations so that they can retain customers rather than send them running into the arms of the competition.

They have to ensure adequate inventories of popular products – and for this, demand forecasting is extremely valuable.

Retail ERP software can do this with precision, based on past history of sales, customer purchase patterns, and so on, helping you ensure that your customers get what they want when they want, and keep them happy.

Demand forecasting can help you maximize sales, decrease the carrying cost of inventory, and positively impact your bottom line.

ALSO READ: Procurement Challenges

3. Inventory Management

Managing inventory appropriately is a critical activity for any business, including retail.

An effective inventory management module helps you maintain the optimal levels of stock of products, and a steady flow of items to and from your current inventory, and ensures you have adequate stock to fulfill customer orders and execute the transactions.

The software can also help to track the expiry of perishable products, by notifying you whenever items in inventory approach the date.

This allows retailers to offer such products at discounted prices and clear them before expiry, rather than throwing them away after the expiry date.

ALSO READ:  Benefits of Business Intelligence in ERP

4. Store and Warehouse Operations

Retail ERP can streamline store and warehouse management operations as it supports creating multiple stores and storehouses.

These are linked to one another and warehouses are divided into zones to handle materials management process, as merchandising, market analysis, managing inventory, and a whole lot comes under store operations, they are a critical component of retail chains, and all of these activities and a whole lot more is efficiently handled by the software.

5. Purchase and Vendor Management

A robust ERP system will enable you to set rules for procurement, set up suppliers for the same products based on area, manually generate a requisition, or configure the system to generate it automatically.

With a retail ERP, you can define purchase approvals for different levels, and handle multiple price lists for purchases.

Retailers can ask suppliers to submit quotations and once these are entered into the system, it will make comparisons with a tool, letting you see which vendor to choose.

6. Financial Management

The finance management module of ERP software for retail businesses can implement and handle the overall budget planning tasks of your organization.

It can manage budgets from the point of view of the department head, project manager, or the accountant actually performing the task so that each of these employees gets to view information relevant to their role and responsibility.

7. Profit Tracking

This feature can be included in retail ERP to afford a bird’s eye view of how efficiently or otherwise the business utilizes its financial resources and information about the general financial health of your business.

ALSO READ: Importance of ERP Software in Textile Industry

8. Risk Management

No business is free from risk; the risks are of numerous types – internal and external.

It can be theft of products, financial fraud, data breaches, and more.

ERP software can help you protect your business from such risks.

9. Supply Chain Management

Managing a supply chain is very important to ensure that there is smooth transit of products from your vendors to you, from your warehouse to your stores, and from your stores or warehouses to your customer’s doorstep if you are shipping from your online stores.

With inventory and supply chain integration, it will allow you to see where products are, and fulfill customer orders from any warehouse.

10. Distribution Management

This feature takes care of the different steps involved in distribution like delivering customer support, tracking inventory, placing orders, and purchasing.

The software measures profitability categorized by location, product line, business unit, and warehouse, in real-time.

ALSO READ: ERP in Production Planning

11. Purchase-Order Process Management

Maintaining stock levels steadily, improving the quality of merchandise, and reducing costs of your purchase department can be achieved with the tools provided by this module.

You will also be able to better handle issues of partial or combined shipments, delayed invoices, delayed deliveries, and so on.

12. Employee Management

Any retail outlet employs a good number of staff, which makes employee management an important element of a successful retail business.

Employees can be managed efficiently with the help of retail ERP software, which handles and tracks things like scheduling shifts, hours worked, time clocks, sales made and revenue earned for the company, commissions to be paid, leaves, time off, and so on – basically, everything related to employees and their work in the store.

ALSO READ: Benefits of ERP Software for Healthcare Industry

13. Sales Reporting and Analytics

This module allows you to see orders, sales, product-wise and total revenue, and a whole lot more on an actionable dashboard.

Identification of your biggest selling items and revenue earners becomes easy, as does discover the slow-moving products.

Crafting your marketing and sales strategy to maximize sales becomes not only possible but more data-driven, and hence, more likely to get you the desired results.

Retail ERP empowers you to make the best decisions for your business, supporting your choices on pricing, product portfolio, etc.

ERP for retail which includes reporting, analytics, and dashboards is an extremely valuable tool for retailers.

ALSO READ: Important ERP Modules and Functions 

14. Point of Sale (POS) System

In today’s times where most people use credit and debit cards to make payments for purchases, every retailer, small and large, has POS systems in their stores.

It is a good idea to integrate your POS system (which comprises hardware and software) with your ERP software.

This makes it easy to record sales and revenues and supports inventory and customer management.

POS hardware includes card readers, barcode scanners, register screens, cash drawers, recipe printers, and so on; these are placed at the checkout and execute transactions once the customer has finished shopping.

ALSO READ: Key Factors for Choosing an ERP for Food Industry

15. Integration of e-commerce with ERP

In this digital era, retailers who do not also provide online shopping through their eCommerce stores will be left behind by the competition.

More and more people prefer to shop from the convenience of their homes, and the pandemic has only reinforced this habit.

However, maintaining an eCommerce store is not a simple task-it can be pretty convoluted.

Integrating it with your ERP is an excellent way to function more effectively, reduce data redundancy, avoid errors, boost productivity, decrease costs, improve customer service and satisfaction, and get real-time financial data, analytics, and reports.

All these factors combined, will give you a clearer picture, and afford greater control over your retail business.

Conclusion

Unlike what many think, retail ERP is no longer a luxury, but a genuine necessity – that is, if you are serious about beating the competition and growth. From executing sales transactions to dealing with the management of inventory, employees, and all other relevant departments within your business, forecasting demands, and delivering exemplary customer service, retail ERP helps in every phase and adds immense value to your business.

If you are curious about how Tranquil ERP can help your business gain a competitive edge, schedule a demo to see how it actually works.

HRMS or Human Resource Management System is a software solution that is used for the automation of all HR functions in a company.

Human resources professionals have to handle numerous activities like hiring, onboarding, training, performance tracking, appraisals, promotions, firing, exit, and procedures.

A robust HRMS will help them carry out all these tasks efficiently and smoothly.

The monotonous and time-consuming tasks that they had to do manually till now, like dispatching invitations for onboarding to new recruits, monitoring the leaves taken and holidays given, and more, can now be taken care of by the HRMS software modules.

There is no doubt that HRMS is one of the most useful and important software tools that businesses have adopted in modern times.

They provide much-needed support to the HR department and improve their efficiency.

HRMS software helps companies reduce expenses, and frees HR professionals from mundane tasks, enabling them to focus on more important matters like the development of human capital and strategic planning of the workforce.

ALSO READ: Need of Having HR & Payroll Management Software in SMEs?

Benefits Of HRMS

HRMS software provides several benefits, with the overarching benefit being improving the efficiency of HR activities.

A robust ERP system like Tranquil has integrated HR modules that do everything that an HRMS does.

Workflow Automation

Automation eliminates the need for manual data entry, thereby bringing down the chances of errors and inefficiencies.

HRMS software is capable of creating custom workflows to help the HR department execute its processes smoothly and quickly.

Secure Storage of Your Data

With an HRMS in place, you can be sure that your employee information stays confidential and secure. When data is breached, you can lose the trust not only of your employees but other stakeholders like customers and vendors.

However, the multi-layer security protocols, controlled access, dual-factor authentication, etc., in a cloud-based HRMS ensure that you meet the regulatory compliance requirements regarding data privacy.

ALSO READ: How Do ERP Systems Work?

Enables Employee Self Service

HRMS solutions include self-service portals that allow employees to manage their personal information so that HR professionals need not spend time in this routine activity.

Employees can access income statements and payslips, update their data when required, apply for leave like sick days and vacations, and more.

HR professionals can instead focus on more critical tasks like performance evaluations, benefits packages, onboarding, and similar tasks.

13 Key HRMS Modules You Must Have for your Business

Now that we have understood what an HRMS is and how it benefits a business, let us look at the most important and essential HR modules that your business needs.

1. Employee Information Management

With data becoming more and more important by the day, the threats to this data also become more complex and frequent. Ergo, managing and controlling that information gains paramount importance.

Employee Information Management is therefore one of the employee management system modules that must be included in your software.

Every company maintains volumes of information about employees, and some of it is sensitive and confidential as it is related to the business.

Governing and managing the data in a systematic manner is therefore extremely important.

ALSO READ: Important ERP Modules and Functions 

A cloud-based HRMS system does exactly that by providing you excellent protection from data loss, unauthorized access to data, and security threats to your data with stringent security protocols.

HRMS software centralizes data, making it easy for the relevant team members to access the database once they are logged on to the system.

It is easier to protect data and prevent unauthorized access when it is in one place, rather than when it is stored all over the place in various files and spreadsheets; it can often lead to data duplication as well.

Thanks to this well-organized and centralized database, the HR department can get real-time information as well as reports about employees, even filtered by various factors like by those on leave, their joining date, department, age or salary-wise, and so on.

The self-service portal for employees is also a very valuable component of this module, as it allows employees to access their information and update it if necessary.

Access is strictly controlled so that an employee can only view their personal information after logging in with two-step authentication.

2. Payroll Management

Managing payroll in a company is a complex task; the larger the company, the more complicated it gets.

If you don’t have a proper system in place, your payroll could be in a mess, and your employees will be unhappy – and you may also face compliance or legal problems.

This is why payroll is one most critical HRMS features.

You can’t afford to pay more or less than what is due to your employees; the payroll management module of a robust HRMS will help ensure that, and help to overcome the challenges of payroll, as it will be seamlessly integrated with other modules like leave management, evaluation, and so on.

Not only does the HRMS online software fulfill requirements of accounting and payroll management within a company, it speeds up the process, including reimbursement of expense claims, disbursing loans, viewing, accessing, and printing of payslips.

It also facilitates views, and customized reports according to your needs, including benefits like pension or gratuity, final settlement, or other factors.

ALSO READ: Benefits of Public Cloud Computing

3. Recruitment and Onboarding

Without a proper recruitment and onboarding plan, there could be utter chaos during the recruitment process, and attrition could become a major problem for you.

But if you have a well-structured plan in place, you can boost retention of new recruits by over 80%, according to experts.

Labor, is the one biggest expense for any business.

Naturally, it is vital that you optimize recruitment efforts – and a good HRMS system comes in very handy in this matter.

Cloud-based systems are super speedy, and simplify the work of the HR team for post recruitment requirements.

It is capable of sorting applications so that the HR department can focus on more critical tasks.

The system can automatically progress candidates to the next phase of the hiring process based on assessment reports.

This helps significantly to save time and cost.

ALSO READ: Interesting Facts about Cloud ERP

4. Managing Attendance and Tracking Absenteeism

For your HR strategy to work successfully, it is imperative that you track the time and attendance of your employees accurately; in large companies with a gigantic workforce, this task can become very tedious without a proper, state of the art system in place.

There could be utter confusion and have with the wrong information flow.

Time and attendance management is automated in HRMS software so that such confusion is eliminated, and the possibilities of errors are eliminated.

Biometric identification is integrated into the system to track absent employees and prevent colleagues from punching in for their absent friends.

5. Employee Benefits Administration

This human resource module deals with matters like managing the life cycle of benefits, open enrollment, sending automated emails regarding enrollment options, and statutory compliance.

This saves the HR department a great deal of time, and also costs.

ALSO READ : How ERP Software is Playing Role to Improve Business Productivity?

6. Workforce Management

It is important to enabling employees to make the right decision in a given circumstance, and for that, you need to ensure that they have access to the right information when they need it.

Workforce management plays an important part in handling and overseeing healthcare, tracking enrolment options, employee benefits, welfare, pension packages, and more.

Breakdown of contribution, automatic management of events, legislative compliance, and tools of comparison that helps employee decision-making, are all included in this module.

7. Performance Reviews & Appraisals

This module helps employers to see how their employees are performing and contributing to the achievement of organizational goals.

The performance management module enables management to oversee, track, and review the performance of employees; this information can be used to boost overall efficiency across the organization, and also give employees feedback regarding their performance, and how they can improve.

Performance review as a module in your HRMS will enable you to set as well as manage goals, set up performance review meetings, and afford overall performance feedback.

ALSO READ: Benefits Of Software As A Service

8. HR Analytics

HR analytics is nothing but measuring the effect of KPIs or metrics of the HR department like training efficiency, offer acceptance rate, turnover rate both voluntary and involuntary, absenteeism, revenue generated per employee, training expenditure for each employee, human capital risk, time to hire and fill, and whatever else the company may deem necessary.

The analytics module integrates smoothly with other HRMS modules to churn out reports which offer an all-around view of the overall performance of your employees, giving you actionable insights.

9. Employee Scheduling

Scheduling employees is hardly a fun activity; Human Resources personnel and managers spend a great deal of time to draw up schedules for the coming few weeks, especially where the workforce is large, and there are complicated shift patterns.

It can often lead to scheduling problems, leading to either poor productivity, or poor quality in the work put in, along with a lot of time getting wasted.

Employee scheduling module in HRMS has inbuilt scheduling software, ensuring that such confusion and problems don’t crop up, and it can lead to greater efficiency, and increased productivity.

ALSO READ:  Benefits of ERP for Accounting and Financial Management

10. Learning And Development

Training employees is a crucial HR function; the learning and development module in an HRMS solution facilitates the quick and easy uploading, management, and distribution of documents and training material via web-based software.

This module is integrated with employee performance goals and includes a calendar feature as well.

This helps trainers to schedule sessions and assessments, which can be easily accessed by employees undergoing training.

It makes communication with trainers and other trainees easy.

This portal usually includes features like a learning portal, goal setting and management, learning plans for individual users, training suggestions linked to employee skillset, roles, and goals, and streamlined learning administration.

ALSO READ: What is Negative Inventory?

11. Talent Management

Identify your smartest employees or those with the most potential with this module.

You can configure talent pipelines with precise roles, keeping in mind succession and promotion plans.

It helps you watch out for fresh talent, to not just attract them but to retain them as well, along with skilled employees.

12. Disciplinary Action Management

This module can help the HR department to ensure compliance with the disciplinary policy of the company, and create steps to escalate matters in disciplinary issues.

It also helps with the levying of penalties, tracking ongoing cases, and to refer to past instances of disciplinary issues.

ALSO READ: What are Backorders and How to Manage or Avoid Them?

13. Exit Management

Employees may leave your company due to several reasons – they may have been fired by their managers, they may have found a better paying job, offered a promotion, or because they have to move to another place for whatever reason, retiring, and so on.

Conducting exit interviews, furnishing all relevant documents, executing a proper offboarding process, can all be done smoothly with an HRMS implemented in your company.

You can also create your own exit procedures based on company policies.

HRMS, without a doubt, is an extremely valuable asset for any company that wants to conduct its HR processes smoothly, efficiently, and quickly, and save time and money in the process. Tranquil ERP has an integrated HR module that includes a number of useful modules that can help your business. What’s more, this cloud-based software is extremely flexible, and we can tweak it to include the features or modules that you need. Schedule a demo with us at a time of your convenience, and we can discuss customization once you’ve seen what our software can do for your business.

 

There is suddenly a lot of buzz about e-Invoicing, especially so in Saudi Arabia.

Before we learn the benefits of e-invoicing, let’s understand what it is, and why the authorities introduced it.

What is e-invoicing?

E-invoicing or electronic invoicing is simply a process where invoices are generated, issued, and stored digitally.

In KSA, the ZATCA, or the Zakat, Tax and Customs Authority announced the regulations that made it mandatory for businesses to shift to e-invoicing.

The process will be two-phased, with the first phase rolled out on December 4, 2021.

For those who pay VAT in KSA, the format of e-invoices will be similar to the VAT invoices issues but will be created online.

Scanning or copying a manual paper invoice will not be deemed to be an e-invoice.

It is not possible to alter an e-invoice after it is issued; however, electronic notes – debit or credit – can be issued.

These have to be electronically generated and must be compliant with VAT, and have to be issued referring to the e-invoice that was originally issued.

Let’s suppose your customer returned the product in full or part – you cannot edit the invoice, but you can issue debit or credit notes online.

All invoices and notes have to be issued through the e-invoicing system and have to adhere to ZATCA regulations.

This helps in the standardization of transactions and ensures that there is uniformity in everything.

It also ensures the secure storage of information.

E-Invoices have to be issued for domestic sales, exports from KSA to other nations, and for advance payment for the impending sale of goods and services.

Imports coming into KSA supplies are not subject to VAT and relevant payments, supplies liable to reverse charge procedure, etc., do not require e-invoice.

ALSO READ: What is Negative Inventory and How Can you Prevent it?

Why is e-invoicing being Introduced?

The primary purpose of e-invoicing is to help businesses function more securely and effectively.

The ultimate goal of this initiative is to incorporate business data of sellers with ZATCA; this will help bring in greater transparency and make trade seamless.

Invoices will be in a common format, easily read by machines; this helps standardization of reporting invoices to the system.

It will also help to stay up to date on transactions that are posted to the official portal. With the phasing out of hand-written invoices and storing paper, and authentication of all invoices on ZATCA’s portal, the authorities will be able to detect fake invoices and other fraudulent activities quickly.

A common database can also be created for audits, thanks to e-invoicing, helping tax authorities to reduce the frequency of conducting audits.

ALSO READ: What are Backorders and How to Manage or Avoid Them?

Benefits of e-invoicing for Taxpayers

There are innumerable advantages of e-invoicing for taxpayers, and it’s important that you know what they are.

This will make it easier for you to accept the new system and adapt to it smoothly.

• Invoices can be issued online quickly and in real-time, and input tax credits can be processed faster, offering an improved experience for you and your buyers.
• As you can send the e-invoice to your customer immediately, and paying it is also easy and quick, you can get your payment faster.
• Electronically stored data is more secure and prone to fewer errors compared to manual records. Trade can be significantly improved and fair competition can be facilitated with the right system to validate invoices; it will also reduce the scope for fraud.
• The invoicing process can be streamlined, making it smoother and trouble-free for entrepreneurs. It will reduce your workload and the time taken to get paid. Retrieving documents is also super easy when they are stored digitally.
• The invoicing process is simplified, saving time for both you and your customers. No more using templates or sending PDFs by email.
• With digital invoicing, you save costs on paper and postal fees, and it’s better for the environment when you use less paper.

         ALSO READ: What Are the Challenges Facing Purchasing and Supply Management?

• Greater automation means minimal human intervention, which leads to fewer mistakes and typos.
• By saving significantly on processing costs, e-invoicing offers more convenience to your customer, and ensures quicker deliveries; this also enables customers to avail early payment discounts.
• When you generate an electronic invoice online, you can get visibility into when it gets sent, when the customer views and pays it, thanks to the e-invoicing software. You can ascertain when the invoice is received and viewed – which means you can keep a check on when the customer is paying.
• By using online invoicing software, all the information is saved on a single platform which can be accessed from anywhere and on any device. You can get a bird’s eye view of your invoicing with automated reports and BI and analytics.
• Electronic invoicing is being promoted globally in several countries – EU nations, Mexico, Brazil, US, etc. Therefore, it’s a good idea to follow globally accepted practices.
• You can generate invoices with a professional look without spending a great deal of time or editing spreadsheet modules – it’s easy to customize.
• E-invoices render fraudulent bills almost impossible as the authenticity is validated automatically on the official platform.

Rules for e-invoicing in KSA

• E-Invoicing regulations are applicable to all the goods and services that are taxable and that attract VAT, regardless of whether it’s zero rate or standard rate.
• With the exception of taxable people who are not residents, all business owners with VAT registration in Saudi Arabia who sell both within and outside the nation, have to shift to electronic invoicing. Third parties in Saudi who issue tax invoices in the name of taxable persons have also got to adopt electronic invoicing: for example, if it is an accounting agency issuing invoices in the name of a retailer.
• E-invoicing is mandatory for all B2C, B2B, and B2G transactions; you also need to issue a printed version along with the issued e-invoice.
• The language of the invoices has to use Arabic; you can translate or have an additional language, but the electronic invoice must be primarily in Arabic.

E-invoicing Regulation Phases in Saudi Arabia

Phase 1 (December 4, 2021): Issue and Storage of e-invoices

It became mandatory for taxpayers to issue and store electronic invoices and notes in place of paper invoices and debit or credit notes from this date.

It became mandatory to implement an e-invoicing system with internet connectivity that complied with ZATCA.

E-invoicing software on your business computer, an online cash register, or a cloud-driven e-invoice solution – businesses can choose any of these systems.

When issuing electronic invoices, you must include every important element and compulsory fields of the tax invoice, like the name and VAT registration number of the seller, VAT total, overall amount of invoice including VAT, and time of issue of the invoice.

ALSO READ: What are the Challenges in ERP Implementation?

Phase 2 (January 1, 2023): Integration with the ZATCA System

There will be the multi-stage implementation of this phase for different groups of taxpayers.

Business owners will need to integrate their e-invoice system with ZATCA, enabling the routing of generated e-invoices for verification and validation.

Different groups of people will have to affect the integration at different times; to smoothen the transition, ZATCA will inform you of your integration date 6 months prior to the date.

From that date, you will need to ensure that your e-invoices are issued in XML or PDF/A-3 with embedded XML or other specific formats as mandated by ZATCA.

This phase is also likely to have several technical requirements; all the more reason to implement a system that is compliant with ZATCA requirements.

It is necessary for your system to connect to outside systems via APIs and generate a UUID, a cryptographic stamp, a hash, a digital signature, and a unique sequential number for identification.

It should also have a built-in anti-tampering system.

ALSO READ: Benefits Of Software As A Service

Types of e-invoices

1. Tax e-invoice (Standard e-invoice)

Tax e-invoices are necessary for all B2G and B2B transactions and are normally used by buyers to claim input VAT deduction.

While it was necessary for phase 1 that e-invoices be issued to buyers in the stipulated format, the e-invoices in phase 2 can be issued to buyers only after ZATCA clears and affixes the cryptographic stamp on them.

Buyers with VAT registration will need to have their registration number also printed on the invoice; you can choose to include a QR code as well.

2. Simplified e-invoices

These are issued at the POS in B2C transactions; with these, the buyer doesn’t require to use the invoice to deduct input VAT.

It is mandatory to generate a QR code in the simplified B2C e-invoice, as it helps invalidation.

In the second phase, within 24 hours of the issue of the e-invoice, you need to report it to ZATCA.

Both types of e-invoices can be billed by yourself if the tax authority has approved it, or by a third party.

Regardless of who bills it, you as the seller will be responsible for the accuracy of details in the generated e-invoice.

An electronic marker on the invoice specifies if the invoice is self-billed or third-party billed.

ALSO READ: How ERP Software is Playing Role to Improve Business Productivity?

Transaction Types and E-Invoice Type

Taxable goods and services of SAR 1,000 and above sold to the taxable or non-taxable legal individual – standard e-invoice

Taxable goods and services apart from exports of value under SAR 1,000 sold to the taxable or non-taxable legal individual – standard or simplified

Taxable goods and services apart from exports sold to non-taxable persons – simplified e-invoice

Zero-rated supplies sold to the taxable or non-taxable legal individual of value SAR 1,000 or above – standard e-invoice.

For export of goods, supply within GCC region, and nominal supplies not issued to the customer, standard e-invoices apply.

ALSO READ: Influence and Importance of ERP System in Different Industries

How Does the e-invoicing Process Work in KSA?

The E-invoicing process is similar to the normal process, only that it’s more secure and efficient.

Implement a system compliant with ZATCA to generate e-invoices with the necessary fields, and send a copy to your customer.

Once you are included in phase 2, route the invoice to the ZATCA portal for validation before issuing it to your customer.

Store the e-invoice in your system for future purposes, and implement a cloud-driven system that offers simplified and automatic compliance.

Do

• As a taxpayer in KSA, select an e-invoicing system or a provider with e-invoicing solutions compliant with ZATCA.
• If multiple people handle your accounts, ensure that they are all properly trained in the new system to facilitate the smooth running of transactions.
• If there is an in-house IT team in your business, make sure they are on top of technology and security requirements.
• Cloud-based accounting solutions can simplify the process by handling VAT compliance and staying updated with the latest changes in government regulations without putting in additional work.

Don’t

• Don’t issue manual invoices after e-invoicing is made mandatory.
• Edit invoices after issuing; issue debit or credit notes instead, and link to the original invoice.
• Don’t delete any e-invoice you issue.

Don’t choose a system with:

• Anonymous access enables
• Improper user management features
• Ability to create multiple e-invoice sequences
• No tamper-proof capabilities

At Tranquil, we have smart accounting software and an e-invoicing platform that is approved by ZATCA, making it simple for you to switch to e-invoicing. Go paperless, and ensure compliance with ZATCA regulations with our cutting-edge e-invoicing software. Contact us for a demo and to know more.

 

It goes without saying that proper inventory management is crucial for a business – ensuring adequate stocks of raw materials, accessories, equipment, and finished products, and keeping accurate records of your inventory.

With real-time information about your inventory, you will be able to ensure smooth and uninterrupted production and on-time delivery of products to your customers.

Without a proper system to record the inventory of each item, you may get stocked out and production may be hampered, leading to delayed deliveries and dissatisfied customers.

Another huge problem you may face without a proper system for managing your inventory is negative inventory.

ALSO READ: ERP software in Warehouse & Fixed Asset Management

What Do We Mean by Negative Inventory?

As the name suggests, the term negative inventory means having less than zero stock of that particular item.

Obviously, you cannot actually, in physical terms, have less than zero of an item. It shows up like this in your system because you have a poor system to manage your inventory.

Of course, it’s not impossible to fix this problem – and unfortunately, this gives many companies the excuse to overlook the messy method or system of inventory management; however, it is always better to be proactive and ensure that you don’t find yourself in this situation in the first place.

What Causes Negative Inventory?

There are many factors that can cause negative inventory – these factors may not only differ from industry to industry but also from company to company in the same industry. Timing, warehouse location, unclear invoices, multiple warehouses, erroneous recording – and more.

ALSO READ: ERP Software to Enhance your Purchase Management

Let us look in some detail at the reasons for negative inventory:

Reasons for Negative Inventory

1. Timing

Timing is quite likely to be the most common reason for the occurrence of negative inventory.

Let’s say that a customer places an order for product A.

You are expecting a fresh batch of the product to complete production and be rolled out from the floor to your warehouse soon, and hence you open a backorder for the product.

You make a sales order for the product, even though inventory shows zero. So here, you will get a negative inventory.

This can be easily fixed, as you can make the requisite adjustments once production is completed.

2. Production

It is essential to take into consideration scrap, batch tracking, byproducts, and production statistics in the process of manufacturing.

This should be done to verify that actual production and the production records show the same quantitates.

If you create duplicate manufacturing orders or don’t record them properly, you could end up with over or under manufacturing, and this can also cause negative inventory or ghost inventory.

It is crucial that you identify the mistakes in your production process.

ALSO READ: What are the Challenges in ERP Implementation?

3. Multi-Location Inventory

Negative balances can also popup when the same type of inventory is maintained at different warehouses and there are multiple location stores.

If sales are recorded from the incorrect store or products are sent to the wrong warehouse, it can cause negative inventory; this can cause some panic and confusion, as it may show a particular warehouse missing X units of a particular product, and another warehouse having X more units of a product than they are supposed to have.

4. Negative Item-Level Stock

Negative stock at the item level can occur if you want to manufacture a product on made to order basis, only when there is demand.

It can also be caused by backflushing – the process where a manufacturing order is generated and completed after completion of batch production, allowing you to update your inventory levels at present.

ALSO READ: What Are the Different Ways to Improve the Procurement Process?

5. Incorrect on-Hand Inventory

You may begin with more inventory than is registered in your system, and your picking staff may scan items they have with them, or override the system, mentioning that they are shipping something the inventory system does not show as being present in that location.

6. Picking Mistakes

Negative inventory is often a picking team error; if you track it, it will enable you to account for the transaction without having to prevent them from fulfilling the order (slowing the process down) or releasing the inventory to be sold to another person (overselling).

ALSO READ: Important ERP Modules and Functions

How Does Negative Inventory Impact Business?

If this situation continues unchecked for some time, the below-mentioned impacts of negative inventory may cause several problems for your business.

Chiefly, you would be:

• Selling to customers products that you don’t have in store
• Selling to customers products you don’t have in production
• Transferring stock with insufficient stock
• Ordering materials unnecessarily in spite of having the same in production

How badly can negative inventory impact your business?

It is possible that the next order for the product cannot be completed; this means unhappy customers, as they have to wait till your inventory is restocked with those products.

Most people are not ready to wait – especially if they are generic products that they can get from other companies much quicker.

This means you lose your competitive edge, and that is not a good thing.

Negative inventory balance can also cause serious issues with accounting and render record-keeping erroneous.

ALSO READ: Benefits of ERP for Accounting and Financial Management

You could even end up with too much of a product in stock.

Let us say that there was a delay, and something went wrong with the paperwork, but they could still be on the way to your warehouse.

An employee may place an order for the same item again thinking that there is no stock of that item.

After a couple of days, you may find that you have double the quantity of an item in your inventory, and your holding costs increase.

You may face several issues, and they may impact your business and your profitability, and eventually, customers may lose trust in you.

It is therefore imperative that you avoid the negative balance issue altogether, or take remedial measures to resolve them the moment they pop up.

ALSO READ: Influence and Importance of ERP System in Different Industries

Preventing Negative Inventory in Your Warehouse

Being proactive and taking the necessary steps to prevent the occurrence of negative inventory balance is a much better policy to have, rather than take corrective measures once it happens.

There are some tips to help you do that.

Identify areas in your process or workflow that could give rise to negative inventory balance, and work out how you can prevent them.

An efficient way is to implement a robust ERP like Tranquil; its inventory management module will help you manage your inventory effectively, and with precision, giving real-time information into your inventory, alerting you to low stock levels, enabling replenishment of essential items so that you can have a smooth and continuous flow of production.

If the negative inventory does happen, investigate what happened, and how?

In 2018, Amazon launched Echo and it was an instant sell-out.

The orders didn’t stop coming in, and the company accepted orders though they didn’t have ready stock.

They informed customers that their orders would be fulfilled at the earliest.

ALSO READ: Factors for a Successful ERP Implementation

What is Backordering?

The Amazon Echo incident is one of the most famous examples of back ordering in the world.

It is simply the practice of accepting orders from your customers for a particular item even if you don’t have adequate stock of that particular item.

An unprecedented spike in sales or orders means that that item is popular and selling rapidly; as such it would be foolish to tell customers that you don’t have the item.

The smart thing to do would be to accept orders and inform customers about the expected delivery time.

Some companies follow an inventory management tactic where they stock minimal quantities and often receive the goods only when demanded.

This ‘just in time’ strategy helps reduce holding costs, and items are regularly backordered; but of course, this requires an accurate forecast of customer demand within a certain time period.

Backordering is a critical element in operational success in such businesses.

ALSO READ: Ways to Improve the Procurement Process

Why is Backordering Important?

The system of back ordering helps increase sales and also stops customers from buying from your competition.

Some other advantages it offers:

1. Customization

Backordering enables customization as you pass the customer order to your supplier; the customization can be included in the order, which is not possible when you use a standing inventory.

This increases the appeal for your customers.

2. Reduced Expenses

Thanks to backorder inventory, you don’t have to stock too much product, and this brings down warehouse expenses.

This is especially useful for new businesses, as it can free up capital that would have been used for inventory and holding costs.

This system also poses less risk to businesses where excess inventory storage is concerned.

ALSO READ: Influence and Importance of ERP System in Different Industries

3. Less Wastage

Inventory wastage can be avoided with backordering – the turnaround time is quicker, with less time for goods to become obsolete or spoilt.

Let’s say you deal in-room heaters; demand for your product will spike in the winter, but will sharply go down in the summer. And you don’t want to be left with unsold heaters in the summer – they could get damaged, or newer, better models may be rolled out next season, rendering these irrelevant.

With backorders, you can fulfil your orders at a much lower risk.

4. Higher Product and Brand Value

Tech-intensive companies often use backordering as a marketing strategy to boost the product value in the consumers’ minds.

For example, a mobile phone company may create hype about their latest flagship model and accept backorders even before they actually launch the product – they usually offer special discounts to those who ‘pre-order’, increasing customer curiosity.

ALSO READ: Common ERP Challenges in 2022 

How Does Backorder Work?

We can easily understand this by comparing two order fulfillment processes:

1. Where Items Ordered are already in Stock

• Customer orders item B
• Sales order is generated for item B
• Item B is fetched from the inventory and checked against sales order
• Item B is dispatched to the customer to fulfill the order

2. Where the Item is not in Stock

• Customer orders item Z which is not in stock
• Backorder for item Z is opened
• Backorder is converted into a purchase order
• It is sent to your vendor
• Vendor fulfills your order, sending you item Z
• You receive item Z at the warehouse
• This is packed and shipped to your customer

This all sounds very simple – and it is when you have just one or two items that are out of stock.

But if several items are stocked out and you rely on backordering as your primary inventory strategy, you will have to make sure to match every purchase order with the right sales order before you begin fulfilling customer orders.

To help you manage the incoming items and outgoing sales at the same time, you need a robust ERP solution like Tranquil with an effective inventory management module.

ALSO READ: How Do ERP Systems Work?

Backorder management helps companies to retain their customer base and ensure that they have good sales whether they have ample stock or not.

It reduces wastage and expenses, boosts the value of the product, and enables customization of orders, thereby eventually benefiting the business.

Combine the robust inventory management system with excellent customer service, and you can make backordering a very successful tactic for your business.

Backorder in supply chain can cause more problems to distributors and manufacturers as they have to produce or purchase more stock over their usual inventory; this burden is passed on to the supply chain if there is an inadequate product, and retailers could be forced to cancel backorders.

ALSO READ: Challenges in Procurement and Supply Chain

Backordering Best Practices

You are facing unprecedented demand but have no products in hand – your warehouse is empty! What do you do now?

You have two choices – open backorders, or say sorry to your customers.

In today’s world, meeting customer expectations is everything – regardless of whether you’re a mom-and-pop store or a multinational giant.

The general rule is that the more valuable the product, the more the customer is willing to wait to get it – the higher the ‘delivery tolerance’.

1. Managing Stock on Backorder

It is not practical or feasible for small businesses to purchase more stock and overstock; with the proper analytics like in Tranquil ERP, you will be able to forecast sales of an item; however, you may still face unexpected spikes in demand, and you could get stocked out.

While everyone wants to sell more, it is possible that you may be selling something you don’t have in your inventory, and end up disappointing customers if you don’t inform them at the outset about the delay in delivery.

You can avoid this by creating a backorder sales page and listing all backorders.

This has two benefits: you can accept backorders, and customers stay informed about possible delivery times.

ALSO READ: Guide on ERP in Production Planning

2. You have No Stock

You can successfully run a business with backorders – provided you have a reliable supplier.

You can save a great deal on carrying costs, and can start accepting orders for products on your site; once you have sufficient orders, you can place orders with your supplier.

By not having to spend on additional storage and service costs for your inventory you can offer a greater variety of products at a lesser price.

You can also ‘dropship’ your backorders – which means your customers will get their products directly from your vendor; instead of sending them first to your warehouse, they will ship to your customers.

ALSO READ: Benefits Of Software As A Service

Backorder in inventory management is especially beneficial when your products are big in size and bulky, as the carrying costs for such items is pretty high.

In such a case, you can inform your customers that delivery times for different items are likely to vary – and make sure you do have adequate quantities of the most popular items that can be shipped immediately.

When you mention at the outset about likely delays, customers are more likely to accept, especially for high-value items.

While this may sound like pre-ordering, there is one major difference: preorders are advance bookings that have a specific shipping date – the release date – but backorders are shipped as soon as they are available, and there is no set date for shipping.

ALSO READ: How to Choose an ERP Software to Enhance your Purchase Management?

How to Manage Backorders Appropriately

The first step in this is to understand what causes backorders so that you can take action to minimize them.

• Sudden demand spikes due to unforeseen circumstances like drastic weather changes, pandemic, etc
• Improper forecasting leading to stockouts
• Shortage of raw material or factory shutdowns
• Erroneous recording of backorders as sales orders or vice versa
• Improper warehouse management

ALSO READ: ERP software in Warehouse & Fixed Asset Management

Opening backorders could mean anxious customers, even if it means more sales; you are basically asking customers to pay in advance for an item you are not really sure when you can deliver.

Naturally, they will want regular updates, and you have to communicate regularly to keep them in the loop.

Let’s say you have given a particular date as the shipping date; every backorder customer will want regular updates starting from that date.

Always keep customers informed and don’t give them room to complain.

1. Communicate Openly with Your Fulfillment Partners

It is crucial that you communicate properly in your supply chain, as it can significantly help the need for backordering.

Make sure your vendors stay informed of stock levels and turnover times so that you can maintain steady stocks.

Both bits of information are equally important; with open communication flow, you can maintain the right amount of stock – not too much or too less.

ALSO READ: Difference Between Business Intelligence and ERP

2. Implement a Robust Warehouse Management System

An up-to-date warehouse management system will be able to handle large data volumes and save you the trouble of manual data entry; it will display stock levels in real-time and will automatically alert you to low inventory levels so that you can replenish it in time.

A robust ERP solution like Tranquil will also have the feature to perform inventory reconciliation, thereby ensuring there is no incorrect inventory data.

3. Ensure Forecasting Feature in the Warehouse Management System

Configure your system to have alerts to not just notify you when stock levels reach a specific low, but also to forecast when the products would run low.

Some systems can also place orders automatically, without human intervention, when stocks reach a certain level so that there is no disruption in production or sales – thereby preventing backorders.

This will also help in preventing over-stocking.

The alerts will help you see exactly how much inventory you need and how quickly the products are selling.

You also need to know how much time it takes to restock products; combining the time taken for the stock to reach a particularly low and the time it will take for the product to arrive at your warehouse, you will know when and how much to order so that backorders can be avoided.

ALSO READ: Ways to Improve ERP with AI

4. Proper Training

If you want to eliminate or quickly fulfill backorders, you need to train your warehouse employees and ensure they know how the warehouse management system works.

This can help prevent incorrect reporting of stocks that are not on hand, or reporting stockouts when they are in the warehouse.

In both cases, it eliminates opening backorders.

ALSO READ: ERP vs CRM

5. Manage and Update All Order Channels

Ensure that your inventory data is updated across all order channels, to prevent an order channel to show a stocked-out product as available.

Displaying the stock can also help create a sense of urgency.

For example, ‘only 2 left in stock’ displayed under the product image could convey to the customer that this is a coveted product, and can prompt them to buy it.

Final Thoughts

It makes more sense to limit or altogether avoid the need for backorders by leveraging robust ERP systems like Tranquil, proper employee training, and maintaining open communication with all stakeholders.

There could still be unavoidable delays due to external factors like weather, pandemic restrictions, and so on – but keeping customers informed is key to ensuring their satisfaction.

While it may be necessary at times to reduce your holding costs, backordering as a continued strategy could land you in trouble if not managed appropriately.

We invite you to schedule a demo of Tranquil ERP at your convenient time and date so that we can explain to you and show you how exactly our ERP solution will help your business to gain rapid growth. Our team will be happy to answer all your queries. Contact us.

 

 

Procurement as a function has been evolving tremendously and has gained immense credibility not just within the business but with stakeholders as well.

However, it has also opened the doors to new challenges, while retaining most of the existing ones.

The supply chain management has also undergone a radical transformation, again bringing its own set of issues.

While it’s true that different industries face different challenges, there are a few challenges facing purchasing and supply management common to all industries, and sometimes even all businesses.

Without further ado, let us look at the procurement challenges first:

Major Procurement Challenges

1. Pandemic Initiatives

The COVID-19 pandemic is forcing procurement managers to think outside the box; without innovative strategies, it would be impossible to manage sourcing, suppliers, and supply chains.

Buying from suppliers located far away can be problematic, with lockdowns and other restrictions; this would necessitate inculcating better negotiation skills to get good deals from local suppliers, and ensure adequate supplies to meet production demands and so on.

ALSO READ: How to Manage Your Business from Home in Pandemic Situation?

2. Risk Management

Many theories were laid to rest by the pandemic, especially the risk management protocols followed previously, as they proved to be woefully inadequate.

Procurement and supply chain management today needs to focus on a wider scope of risks including:

• Financial stability of important suppliers
• Issues that can impact reputation negatively
• Violation of data protection regulations like GDPR
• Bribery, corruption, and so on
• Reliability of supply chain

3. Sustainability

With awareness regarding sustainable growth, ethical production, and so on growing among consumers globally, these challenges need to be addressed appropriately:

• Sustainable and ethical sources of materials
• Sweat-shops and other modern manifestations of slavery
• Stopping corruption and bribery
• Minimizing CO2 emissions
• Judicial use of water and energy

ALSO READ: Factors for a Successful ERP Implementation

4. Diversity

This is yet another of the purchasing challenges gaining importance across the world.

Procurement today attempts to level the playing field for diverse suppliers to compete with one another, and this fosters innovation and competitive pricing.

Identifying the vendors who fit the diversity criteria, especially in the absence of specific policy with regards to diversity identification in company reports or public documents.

5. Working Capital

Companies are modifying policies regarding terms of payments so that the agreements are optimized for vendors.

Options to finance the supply chain and offering discounts on invoices are preferred over longer payment tenures.

These steps need to be taken to ensure that the supply base stays with you so that you can have uninterrupted production or trading.

Managing relationships with vendors is one of the most effective ways to maintain your working capital.

ALSO READ: Benefits of ERP for Accounting and Financial Management

6. Innovation

Forging bonds with suppliers has enabled them to coax innovation from the supply side. Startup suppliers are one such group.

Thanks to the reduced terms and conditions several startups have been encouraged to get into the business.

To integrate innovation, these steps need to be focused on:

• Aligning with the company goals throughout the procurement cycle
• Engaging with the market in the early stage with honest, impartial, and transparent action, and definite guidelines on managing communication, information, etc.
• Encouraging innovation with pilot projects, rewards, workshops and seminars, risk-sharing, and other means
• Engaging with suppliers and building relationships at the outset, and leveraging the information gleaned from this early rapport building

7. Digitalization Projects

The pandemic helped organizations to realize the importance of going digital to boost overall efficiency, reduce expenses, and increase revenues.

ERP systems like Tranquil have successfully helped numerous businesses to enhance productivity through automation and streamlining of processes.

Cloud-based apps including ERP are less expensive than conventionally deployed apps, adding to the convenience of businesses.

Other tools include data visualization tools, BI and analytics, CRM, robotic process automation or RPA, and others.

ALSO READ: BI vs ERP

8. Stakeholder Management

Appropriate communication is important in keeping internal stakeholders on your side so that they are convinced about the procurement strategy, vendor, pricing, and so on.

Without proper stakeholder management, your procurement strategy could fail.

Developing and maintaining relationships is important; to achieve this you can utilize techniques of stakeholder analysis to identify the important ones, and follow these steps to foster strong relationships:

• Review the status of stakeholders and categorize them according to their influence and interest in the project – are they supporters, neutral, advocates, critics, etc.
• Define what kind of support or advice you need from individual stakeholders, what level, and for how long, and the reasons for those as well.
• Encourage stakeholders to support the project and be involved by showcasing the benefits the organization would get, and concentrating on performance drivers like enhancing profits or delivering improvements.
• Identify the actions and strategy required for stakeholder communications by focusing on the most important ones first. Craft an effective communication plan and disseminate adequate information at the right time. Think about how frequently and in what form individual stakeholders would want to get updates; also plan how to handle opposition to your project.
• Deploy and review the plan to manage stakeholders, and integrate the management as a part of the project instead of a corollary task. Cut the task into bite-sized steps, and assess regularly – and you have a greater chance of success.

ALSO READ: Important ERP Modules and Functions

9. Delivering Value Beyond Savings

It is critical that the procurement team inform the rest of the organization about its successes – and it can do it with case studies, dashboards, and storytelling.

Procurement is perfectly poised to be the intermediary between the vendor and the company and will be able to manage the relationships properly.

The future of the supply chain is not just about getting goods at a lower cost and within time deadlines.

It also has to now take note of a dynamic and complicated landscape, with increasing regulatory compliance, concerns about sustainability, and ethics, that can affect the brand value in addition to revenues.

Ergo, procurement leaders are now expected to deliver beyond the expected.

Here is a look at the modern challenges facing supply chain:

Modern Challenges Facing Supply Chain

1. Risk

One of the biggest challenges will be to adopt a comprehensive risk strategy including reducing the total risk exposure, transferring risk, and investments to mitigate risk.

The need of the hour is category managers with in-depth knowledge of next-gen vendor risk management; they are aware of the significance of thoroughly vetting suppliers before onboarding, and of continuing to monitor them after.

2. Sustainability

Businesses will have to shift to a circular economy based on recyclable opportunities as opposed to the linear economy where resources were exploited.

The new generation of professionals embrace the sustainability model easily – and this will ignite the part of economic growth.

ALSO READ: Ways to Improve the Procurement Process

3. Finance

The scope of finance will go beyond the Finance Department itself, with leaders looking to find new potential and transactions going increasingly cross-departmental.

Intense collaboration between procurement and finance will give a strategic advantage over the competition, and gain prominence in the market.

4. Information

To ensure high performance, the procurement department has to perform advanced mining of data sets and analysis of big data.

The data landscape will be even more convoluted than the present, and preparing to sustain in the coming years would require you to concentrate on emerging big data technology and strategy.

ALSO READ: Common ERP Challenges in 2022

5. Technology

Technology has already pervaded all aspects of business, and the supply chain is no different.

The procurement and supply management module of ERP software like Tranquil will automate time-consuming and cumbersome processes and make the whole process more efficient, and faster.

The speed at which you adopt technology and how well you use it for your supply chain will determine how well you cope.

6. Transparency

Regulatory compliance mandates that there is transparency in your procurement and supply management; in the absence of a robust set of practices in place, your procurement could become vulnerable, and you could stand to lose money even.

Information related to suppliers should be easily available to teams; without this data, your business could face bottlenecks like delayed deliveries, violation of compliance requirements, excessive expenditure on procurement, and so on.

Creating a standardized procedure should be a top priority for your business, and importance needs to be given to effective collaboration with vendors and having all stakeholders in the same way.

ALSO READ: How to Choose an ERP Software to Enhance your Purchase Management?

7. People

You may have everything else in place – but without the right people, it can all still fail.

Procurement managers should be involved in the hiring process so that there is new blood infused in the system, new cultures, a progressive outlook, and radically different thinking.

If we are to recap the challenges faced by supply chain management and procurement leaders for greater clarity, they can be summarized thus:

Build Strong Relationships

It is important to build trust and foster strong relationships so that the procurement is able to make the appropriate impact.

Procurement can create a collaborative and mutually respectful environment to speed up delivery paths, introduce innovation, improve sustainability and increase revenues via supplier-led initiatives, to achieve credibility.

Increase Agility

Most supply chain businesses depend on ERPs like Tranquil to handle data and important processes.

ERP software plays a crucial role, but may not deliver sufficient visibility for teams to enjoy exceptional success.

Software designed to handle specific workflows may not be sufficient as they are generally not flexible enough for individual requirements.

In such a case, it makes good sense to bring agility by layering capabilities on top of ERP systems that enable teams to fortify their procurement tactics, resolve issues rapidly, and reduce expenditure as well.

At Tranquil, we have already performed this tweak for a number of our customers.

Adapt Quickly to Change

The pandemic coerced procurement leaders and supply chain professionals to constantly handle new challenges.

The tiniest of disruptions can become huge crises if only outside consultants can make the requisite intra-organizational adjustments.

If IT issues necessitate high-level tech expertise, you can lose precious time waiting for new solutions.

Savvy organizations are bypassing this problem by empowering relevant employees with robust and intuitive tools for making the required changes themselves without waiting for anyone else and avoiding disruptions.

Final Thoughts

There is no doubt that innovation and change are what will distinguish a successful and high-performing company from ones that are mediocre.

It is not a one-off thing, but a continuous process.

As an organization, you have to be prepared to adapt to rapid changes in the procurement and supply chain environment – and one of the best tools you can leverage for this is a robust and effective ERP application, like Tranquil.

You may wonder why you should trust us when there are several other ERP systems available in the market? We would like to show you exactly why: in a live demo. Do schedule a demo at your convenient date and time, and we will explain how it works and how you benefit. Feel free to ask any queries to resolve your doubts. Our representatives will be more than happy to answer them.

 

ERP and BI – we hear these terms being bandied about quite a bit; sometimes they are interchanged because not everyone is aware of what they exactly mean and do.

Both are important for a business that is serious about growth and expansion.

In this blog, we’ll see why, and what the two do, and how they differ.

ALSO READ: Influence and Importance of ERP System in Different Industries

What is Enterprise Resource Planning (ERP)?

Most departments in a business have their own software, optimized to streamline its specific functions and simplify the operations there.

However, disparate systems often lead to confusion, and having data all over the place makes it difficult to collect, not to mention, the chances of redundant data are pretty high too.

An ERP application like Tranquil is like a combination of multiple systems in a single, unified solution, with modules to handle the operations of various departments.

ERP software automates business processes and centralizes data, providing real-time visibility into the entire organization and providing clean, up-to-date data, reducing human error, frees employees from monotonous tasks, eventually improving productivity and revenues.

The centralized database provides quick, controlled access to employees who need information – from procurement to HR to sales.

They can also get cross-departmental information which helps them in strategic planning and cost reduction.

ALSO READ: How ERP Can Improve Business Efficiency?

What Is Business Intelligence (BI)?

Business Intelligence or BI provides a comprehensive view of business operations, enabling managers and entrepreneurs to make data-driven decisions to improve business.

It plays a critical role in the formation of strategic and tactical responses to market demands and helps organizations to be more efficient in operations, concentrate on their competitive edge, and eventually, enhance profitability.

The business intelligence data management software generates reports, provides dashboards, IT systems at the customer end, and external sources to present an in-depth and comprehensive view of the current status of the organization.

This is done by collating data from a central database.

BI provides detailed evaluations that help managers and owners improve their operations in the front as well as back office.

Let’s say a retailer is facing problems in the supply chain; BI analysis can be done to reveal where the bottleneck is being caused.

Plans can be made to remedy those bottlenecks or to reroute shipments through better routes, as the case may warrant.

ALSO READ: Common ERP Challenges

Key Differences Between ERP and BI?

ERP and BI have quite a few similar functions and overlap in some ways but there is also some notable difference between ERP and business intelligence.

Let’s examine what they are:

ERP software essentially integrates disparate, siloed systems in your business, and creates a unified and central data repository.

It collects, stores, and manages data relating to business activities – in other words, it collects enterprise data.

BI, on the other hand, interprets and analyzes this data, and presents it in the form of intuitive dashboards and reports, helping managers and owners to make sense of the collected data, and to help them make decisions to aid in the growth of the company.

In fact, you could say that BI means gathering, storing, and analyzing business information – knowledge management.

They are built to mine datasets, aimed at discovering opportunities that would not be ostensible otherwise.

Robust ERP solutions like Tranquil automate repetitive and monotonous activities, streamline operations, and organize the overall admin functions in a business – which BI does not do.

ERP software is at its core, a unified process management software that helps optimize operations of various departments like Purchase, Production, Supply Chain, HR, Finance, Sales, and so on, to usher in greater efficiency, reduce overheads, and improve the bottom line.

Whereas business intelligence for business works on this data and helps businesses to organize, examine and contextualize the data to provide actionable insights.

ERP and BI also support varying levels of decision-making.

ERP is at its most valuable at the operational level as it affords an accurate view of how every function is performing in real-time.

BI studies all of that data, enabling companies to get an in-depth understanding of their KPIs and identify trends that can help in fine-tuning strategies at the top level, fundamental level, or even both.

BI systems drive improvements in performance while helping reduce expenses and save resources and time.

It also helps to analyze the ROI of new strategies or to measure the cost savings achieved in implementing a real-time approach to inventory management.

Here are the differences in some depth:

Level

BI tools are generally used by analysts and top-level management for high-level discussions for strategic and tactical planning and discussions.

The software accesses every bit of information – strategic, financial, and operational, to churn out high-level insights, and provides pan-organizational information.

ERP is an operational system with transactional and operational data, providing an operational view of the business, but without trend analyses or high-level overviews.

System

BI has developed an Online Analytical Processing System (OLAP) to deliver powerful analytic capabilities like dashboard management, high-speed access to reports, and building balanced scorecards.

It also offers advanced features of analysis that enable the viewing of data from various sources in one space, in the format you require.

ERP is built as an Online Transaction Processing System (OLTP), and used for recording transactions as and when they happen.

The data architecture of ERP is created to ensure speedy capture of transactions while utilizing minimal space.

Agility vs. Efficiency

BI has metamorphosized from historical reporting for forecasts and planning for the future.

This helps organizations become agile, and allows them to make high-level decisions to leverage future conditions.

ERP systems are developed to boost overall organizational efficiencies, through improved communication and collaboration, remote working, cost savings, automation and streamlining of processes, and so on.

What’s Your Business IQ?

BI has been talked about and used since the 1990s; now that you have a fair idea of what it entails, how does it fit in with your business, and more importantly, with your ERP software?

Complementary Technologies

We have seen that ERP and BI are definitely not the same; they, however, can be made to work in tandem to convert your data into not just information, but knowledge, helping to convert your business into a data-driven growth machine.

ERP software organizes business data, and BI mines it, chews on it, and spits it out as easily understandable information bits.

ERP and BI have a synergistic relationship; BI cannot function without ERP, and ERP’s value is significantly heightened when integrated with BI.

If you have already implemented an ERP but not a BI software, the time is certainly ripe for you to also add a BI software or a BI module to your ERP so that you will empower yourself and your employees to make informed, effective decisions that will set your business on the fast track to growth.

This is because, while ERP takes care of your business in the now, the additional functionality of BI can make your business future-ready with valuable insights.

Why You Need Integration of Business Intelligence and ERP

To make effective decisions for your business, it is critical that you have access to data, and analytics – this has been the norm for some time.

However, the amount of data a business collects today is humungous – both structured and unstructured.

This data needs to be organized, stored, and analyzed efficiently.

When ERP and BI are integrated, it helps in consolidating tons of data and transforming them into distinct, actionable insights.

Future-centric businesses who want to shift to forecasting and predictive models from historical reporting have already taken this step.

BI has the capability to identify trends and patterns and recognize market shifts to make proactive adjustments in plans, giving businesses the much-needed competitive edge in this economy.

BI and ERP software give each other a leg-up, doubling the benefits each offers individually.

By transforming raw data into actionable information, BI enables a company to gain an in-depth understanding of its customers and markets, providing valuable metrics like ROI for marketing spends.

ALSO READ: Ways to Improve the Procurement Process

Benefits of Business Intelligence in ERP

1. Better Customer Service

The combined power of BI and ERP facilitates the personalization of product and service offerings, marketing messages, and buyer experiences, building deeper brand loyalty and encouraging customers to engage more.

BI insights foster the creation of improved business processes like supply chain, and more impactful marketing strategies, eventually enhancing effectiveness across the company.

2. Data Aggregation and Analysis

ERP systems churn out mountains of data, and its value is unlocked completely only when BI is integrated into the software.

It throws up in-depth insights within the ERP platform, in the centralized dashboard, allowing every department to leverage those insights.

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3. Customization

It is possible that individual stakeholders may have specific requirements with regards to data analysis, even when different teams or departments in the business are striving for common goals.

An integrated ERP-BI solution enables every team to produce the reports and display the dashboards they need to fulfill their unique objectives.

4. Predictive Capabilities

ERP focuses on recording data of activities performed – historical data; BI goes a step further to predict future sales based on this data, using analytical tools and models.

In combination, the two software tools afford businesses a comprehensive vision of their immediate past, current status, and future possibilities.

5. Real-Time Decisions

As mentioned earlier, ERP reporting is historical; but today businesses need to focus on predictive analysis to beat the competition.

When BI delivers data and predictive analysis in real-time, it fosters more effective, bold, and quick decision making, that spurs business growth.

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6. Comprehensive Insights

With the integration of these two powerful software apps, business managers don’t need to keep toggling between them to evaluate the business performance and current situation; everything is visible upfront in a central repository, which allows them to respond quickly to situations, grab opportunities immediately, mitigate risks at the earliest, and prepare for the coming future through strategic planning.

7. Efficiency

Integrated BI-ERP software helps businesses in the consolidation, organization, and evaluation of volumes of data from disparate sources in real-time.

This gives rise to agility, something that was missing in businesses hitherto.

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8. Improved Reporting

By enabling departments to integrate huge datasets for in-depth study, BI enhances the reporting capabilities of an organization.

Simplified dashboards present complex analytical data in an easy-to-understand format for all authorized users in the company, regardless of their technical know-how.

Final Thoughts

It is abundantly clear now that when ERP solutions like Tranquil integrate BI in the platform, it offers double the benefits to businesses, regardless of their size, or industry vertical.

To see how ERP-BI integrated software will fulfill the unique requirements of your company, schedule a demo with us at a date and time of your convenience. Our representatives will be at hand to explain exactly how the system works and how it can improve your processes and decision-making; feel free to ask questions on any aspect of the software.

Procurement as a function is an essential part of any business.

A business needs to purchase several goods and services from different suppliers; and for an organization to be more profitable, it is imperative that they keep costs low – that includes the cost of procurement.

The tactical and strategic goals of an organization are achieved with the help of a proper procurement process. And for the process to be proper, it is essential that improvements are made from time to time after evaluating the efficacy of current processes.

The perfect procurement process is a myth; improving procurement efficiency and effectiveness is a continuous process.

In optimizing your supply chain, and managing supplier relationships, you will keep finding areas that can be improved.

ALSO READ : Role of ERP in Supply Chain Management

Defining a Procurement Process

The procurement process is simply the sequence of measures identified and taken by a business to get goods and services necessary to achieve its goals.

Why is a Process Necessary?

A good portion of the revenue of a business is spent in procuring goods and services, and it directly impacts the expenditure savings objective of the organization. Ergo, effective procurement systems are essential for enhancing the bottom line. If you can identify the areas that can be improved.

We spoke to a few industry procurement experts, and we gathered from them these important ways to improve procurement process.

Of course, it’s not necessarily a comprehensive list, and you can certainly add to it.

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Ideas to Improve Process of Procurement

1. Centralize Your Information

Having your information spread all over the place will make collecting that information very sloppy; so what you need in a centralized information collection method.

Regardless of whether it’s vendor information, accounts payable, or inventory details, centralizing information is absolutely essential.

It makes data collection, storage, updating, and retrieval smooth and quick, and helps in taking crucial, timely decisions.

2. Create a Standard Procurement Policy

The next step is to standardize the procurement policy.

Purchasing materials for your business becomes simple when there is an established procurement process – instead of customizing each process based on its unique features, it is better to follow a set of rules that are created to conduct the purchase.

Standardization brings consistency, as all your team members will follow the same rules and procedures.

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3. Identify Inefficient Processes

Perhaps the most important measure necessary for procurement process improvement is identification of inefficient processes, and this can be done by reviewing your current processes.

Check what is causing delays or bottlenecks and how much it costs your organization financially; examine if specific areas can be improved to an extent that you can measure their impacts, and so on.

4. Establish a Feedback System

To achieve the previously mentioned step, it’s a good idea to take feedback from your team and other stakeholders as they are the ones actually carrying out the process.

In fact, you can learn from your mistakes, optimize the process, and work to build on the accomplishments after every purchase.

Having a system of feedback machinery is key in achieving this particular goal; it can include informal surveys, measuring of KPIs, and so on.

This can help you improve your policies and processes continuously.

ALSO READ: ERP software in Warehouse & Fixed Asset Management

5. Strategic Sourcing

Strategic sourcing could play an important role in your procurement process.

Looking at new and more wide-ranging methods of providing information to your potential suppliers so that they can submit bids effectively.

To evaluate easily, you can standardize bids, and be more transparent about the whole process.

BI can help you make more informed procurement decisions.

6. Invest in Professional Development

If you want your employees to perform to their full potential, it is important that you invest in professional development.

Provide online or in-premises training, or fund external training so that they are empowered enough to make better, data-driven decisions, and are capable of leveraging technology for automation in procurement.

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7. Educate Your Workforce

Uncontrolled or unproductive spending is often caused if there are no effective preventive barriers, or if internal buyers are not aware of processes, or disregard processes because they find them cumbersome and delaying.

When you educate your employees about the purpose of having standardized procurement processes, you can curtail this haphazard spending, as they will be more inclined to comply.

Procurement teams will be able to focus on activities that add value rather than waste time in resolving conflicts or running after contracts.

It may also be a good idea to limit the number of personnel approved to conduct purchases or to cap the purchase amount.

However, you should be cautious not to indulge in over micro-management as it can be extremely frustrating for them to seek approvals at every stage of purchase, and can lead to delays.

ALSO READ : Benefits of ERP in Purchase Department

8. Establish Clear Expectations

With transparency and proper communication, you can save a lot of time; define your expectations clearly at the outset, and carry out performance reviews regularly so that everyone is on the same page.

There will be no delays in production or shipping, and products and services will be delivered as per your expected standards.

9. Streamline Suppliers/Sourcing Selection

It may be difficult to pick the appropriate supplier if you have several vendors; it’s a good idea to have a centralized directory of vendors or suppliers, along with information like their products, prices, quality, etc., in a standard format.

At a glance, you’ll be able to decide which supplier to choose for a specific purchase.

This will also help you forge better relationships with different vendors.

It’s important to have at least a few local suppliers in this database – we have seen how the pandemic forced businesses to radically transform their operations, including procurement.

Even if they don’t offer the best terms or products, they may be your only source during emergencies and lockdown situations, so you need to maintain a relationship with them.

You can also reduce time and expenses, and support the local economy.

ALSO READ: Influence and Importance of ERP System in Different Industries

Simplify your vendor onboarding process so that procurement becomes leaner and quicker.

Define a set of guidelines to identify, evaluate, and onboard suppliers, with standard performance and qualification monitoring processes.

Just as important as it is to have local vendors, it’s a good idea to also look beyond even national borders, if it will save you costs.

Of course, this will take time – you can’t hope to find and establish connections with overseas suppliers overnight; but in the long run, it may prove to be more cost-effective, and help your company in your growth journey.

10. Negotiate Better

If you learn the art of negotiating, you can build good relationships; it’s not easy to keep both the suppliers and your company happy, but it can be done by strategic planning, and some shrewd, out-of-the-box thinking.

Negotiations mean contracts; whereas in the past it necessitated several backs and forth emails, leading to confusion, it can be avoided today by simply implementing a platform for contract management.

With all stakeholders now able to read, edit, query, and comment in a central location drafting and finalizing the contract become a total breeze.

ALSO READ: Guide on How Do ERP Systems Work

11. Embrace Lean Procurement

Going ‘lean’ has become very popular in business in the last ten years and so – procurement should also go the same way.

Embracing lean practices in the purchase process can help in reducing wastage, and in saving precious time and resources, without compromising on the quality of goods and services purchased.

It is not possible to enumerate every nuance of lean management in procurement here, but it’s imperative that you understand the concept at its most fundamental state so that you know where to look and what to do when you want to make improvements to your procurement process.

12. Invest in the Right Supply Chain Talent

Skilled and proficient managers can render your supply chain more efficient, ensure that the workflow is optimized, and boost performance through onboarding the appropriate skills and tools.

This goes for systems and technologies that you invest in – not merely the workforce.

ALSO READ: Trends of ERP System For The Future

13. Evaluate KPIs or Key Performance Indicators

To have an in-depth understanding of how effective your procurement process is and how efficiently it is being operated, as well as which components or areas need to be improved, this step is vital.

Measuring key performance indicators against the actual results will tell you exactly how effective or otherwise your methods are.

However, it is essential to bear in mind that these metrics are likely to change over time, to adapt to dynamic business and regulatory environments.

For this reason, continuous or regular evaluation of these indicators is crucial to success.

ALSO READ: Detailed Guide on ERP in Production Planning

14. Information Sharing

It is extremely important to share information if you are serious about optimizing your procurement efforts.

External and internal stakeholders must communicate constantly so that all the relevant personnel is on the same page, and aware of not just the processes, but the expectations and policies as well, strategic information sharing with vendors and other stakeholders will help further strengthen the process and open up new opportunities of procurement.

15. Invest in Procurement Automation

Though this point is being mentioned the last, it is not the least; in fact, it’s one of the single most important steps you can take to better your procurement process.

You could even say that we saved the best for last! With businesses joining the digital disruption bandwagon at a rapid pace, you cannot afford to be left behind.

ALSO READ: Benefits of ERP Software for Healthcare Industry

Invest in a robust ERP solution like Tranquil. It will automate workflows, saving you significant time and money. The procurement management module takes care of all the monotonous and cumbersome work, reducing human effort and errors, bringing more consistency throughout the entire procurement cycle – right up to the payment stage.

The heightened efficiency will help boost productivity and eventually enhance profitability.

Conclusion

Compared to earlier times, procurement is today turning out to be a major, long-term and tactical function of a business. Of course, every company has varied procurement requirements, necessitating different types of procurement processes; however, the steps mentioned here can go a long way in bringing greater efficiency to your overall procurement process.

Tranquil ERP is a robust and flexible ERP application that can be customized to include every functionality you want in the procurement module so that you can achieve optimized procurement. It may be confusing as to how it can work, but we have a solution for that! Do schedule a demo to see exactly how our solution can help your business to improve your procurement process, and also streamline your entire business operation. You can choose a time and date of your convenience, and our representatives will be happy to explain everything and answer all your queries.