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Supply Chain Finance Automation Fast-Tracks MSME Payments
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Sustainable Packaging
Sustainable Packaging
Sustainable Packaging
The Need for Sustainable Packaging
One of the most concerning issues about sustainability is how the world produces and consumes. The process has a ubiquitous presence of packaging. Choose any product from your daily life – 90% of them come wrapped in packaging, which is eventually discarded and thrown off as waste. With the outbreak of the pandemic, the buying trends have shifted even more online. Home delivery is the new norm. Erstwhile unpacked items like vegetables, fruits and eggs which could be bought from the local stores, are now being delivered in packages. Sustainable packaging has become a necessary condition for both businesses and consumers. It’s no longer a choice.
What is Sustainable Packaging?
In simple words, sustainable packaging is an archetype of packaging, the environmental footprint of which, goes down over time, preferably such that, in the long run, either the packaging decomposes without causing any loss to the environment or perennially retains its usability and thus, is not required to be dumped in the environment.
In a broader sense, sustainable packaging involves such packaging, the raw materials of which are sourced responsibly, designed effectively such that the packaging remains safe all over its life cycle, meets the needs and preferences of the market in terms of cost and quality, is manufactured using reusable and clean energy, and after its shelf life is over, can be efficiently recycled or broken down organically.
What are the criteria for sustainable packaging?
The basic criteria of sustainable packaging as laid down by the Sustainable Packaging Coalition, blends sustainability, ecological preservation and business objectives. They are as follows –
- The packaging should be beneficial, safe and healthy for individuals and communities throughout its life cycle.
- It should meet market criteria for performance and cost.
- It is sourced, manufactured, transported, and recycled using renewable energy.
- It optimises the use of renewable or recycled source materials.
- The packaging should be manufactured using clean production technologies and best practices.
- It should be made from materials healthy throughout the life cycle.
- The packaging should be physically designed to optimise materials and energy.
- It can be effectively recovered and utilised in biological and/or industrial closed-loop cycles.
What are the different ways of doing sustainable packaging?
Below is a prescriptive list, charting different ways, packaging could be made sustainable –
Packaging considering ingredients- One of the most common methods of sustainable packaging is to use 100% raw and natural, or 100% recycled and recyclable materials.
Packaging considering production process – Packaging can be made sustainable by reducing the production process, optimising the supply chain and minimising the carbon footprint, through transformation and innovation.
Based on the above two methods, sustainable packaging can be of following types:
Recyclable packaging – Using materials like cardboard and paper is environment friendly for they can be recycled to produce other items. They have surfaced as the major substitute for plastic packaging.
Reusable packaging – For more durable sustainable packaging, natural-poly fabric and reusable plastics can be used, which have a longer use life and also restrict brazen carbon footprint contribution of disposable plastics.
Reduced packaging – Reduce packaging implies directly reducing environment and carbon footprint. This can be done by engineering goods and products in such a fashion that they can be delivered without damage, with the least possible packaging.
What are the business benefits of sustainable packaging?
Although it appears to be environment-centric, sustainable packaging constitutes social and economic implications as well. Adopting sustainable packaging comes with a series of business benefits –
- More and more consumers are seeking to buy from environment-friendly and responsible businesses; it will not only retain but also expand the customer base, and hence sales.
- Using sustainable packaging improves the brand image of the business.
- Sustainable packaging renders a good experience to the customers as well, thereby contributing to customer satisfaction.
- By using recyclable and reusable materials, and by reducing packaging, a business can reduce costs.
- Sustainable packaging can save business significant storage and warehouse costs.
Conclusion
Clean and affordable energy, sustainable cities and communities, responsible consumption and production, climate action, protection of life on water and land are some of the 17 SDGs adopted by the UNDP, along with goals like zero poverty, no hunger, reduced inequality etcetera. These goals highly depended on each other. Issues like poverty, hunger and environmental degradation are mutually dependent and correlated. In the process of growth and development, we must adhere to sustainable means of production, distribution and consumption. In a lifestyle, where the goods we consume, without any exception, come in some or other form of packaging, for us to receive them in proper and usable condition, the packaging industry has a massive incidence. So, it must be viewed from the lens of sustainable development.
Industries & Impact
My vision for Moglix is to change the face of industrial commerce: Rahul Garg
Now and Next in the Infrastructure Sector
Moglix enabled Agile MRO Procurement at Scale through Workflow Digitization of large EPC company
Strategic sourcing
Strategic sourcing
Strategic sourcing
What is Strategic Sourcing?
Strategic Sourcing is a method of sourcing that applies various strategies while sourcing different products and services. The investors in this increasing competition and the technological environment, are more focused on investing in supplier management and relationships.
The different types of strategic sourcing are Outsourcing, Low-cost Country sourcing, Global sourcing and crowdsourcing. Strategic sourcing boosts the quality and efficiency by building a strong and multiple supply base for an organisation. It is a joint process that permits an enterprise to align its purchasing power with the overall value proposition.
What are the Advantages of Strategic Sourcing for Buyers and Sellers?
Some of the benefits of strategic sourcing for buyers are:
1. Enhanced and Advanced Futuristic Guidelines
Businesses can collect data and make better choices by using strategic methods. This will help them achieve a successful outcome.
2. Proper Management of Supply Chain in Business
Strategic sourcing can help in improving relationships with multiple enterprises. The supply chain is adequately managed through a business that protects the relationships of the enterprise with all the related organisations.
3. A Systematic Organization
By way of strategic sourcing, businesses can focus more on long-term planning for business development. The business persons with the help of strategic sourcing will be able to focus more on the future challenges of the enterprise.
4. Removing Uncertainties from the Business
If there is a close relationship with the supplier, businesses can quickly identify and solve any potential issues.
Some of the benefits for the suppliers are:
5. Control the Costs with Proper Management:
Through strategic sourcing, the suppliers can sell a significant portion of their production. This will help them in better planning and also manage the long term visibility of cash flow.
6.Increased Stability
The strategic sourcing will lead to a collaboration of the suppliers. Choosing a single supplier instead of multiple suppliers will bring more stability in the daily operations of the enterprise.
What are the Best Practices for Strategic Sourcing?
The best practices that can be adopted for strategic sourcing are:
1. Using Electronic Tender and Auction Methods:
Through eTendering, the buyers can easily calculate and evaluate the distribution, creation and storage of tenders. Electronic tendering is very efficient in comparison to manually managing the tender.
2. Using software for Contract Management
The software for managing contracts helps in managing numerous contracts. If businesses fail to manage the supplier agreements using appropriate tools, it can reduce the prices and the service terms of the contract.
3. Track the Expenses and Savings
If an enterprise has a savings tracker solution, it will help to record your savings. You can easily forecast your value by evaluating the documents and reports in the tracker.
What is the Process for Strategic Sourcing?
The process of strategic sourcing has been divided into seven steps. The seven steps for strategic sourcing are as follows:
- Study the categories of products that are used by businesses. Also, have a look at the spending pattern of the businesses. Make a record of the process and even the involved departments.
- Create a strategy for sourcing based on the goals of the business.
- Prepare a portfolio of suppliers and their market.
- Define the proposal request and create templates for the same.
- Discuss with the selected suppliers.
- Integrate the suppliers into the existing process or add new vendors or outsource the providers.
- Keep a track on the performance metrics and then improvise the sourcing plan as per the need and analysis.
What is the Ultimate Outlook of the Process of Strategic Sourcing?
The ultimate outlook for the process of strategic sourcing are:
- Define all the Category and Arrange the Sections
- Analysis of the Supply Market
- Create a Proper Strategy
- Develop a Strategy for Sourcing
- Select Suppliers Through Negotiation
- Implementation and Integration of Policies
- Track the Results and Note Them
Conclusion
Many organisations are adopting strategic sourcing methods to establish a comprehensive approach to manage the requirements of sourcing. It helps in building a proactive approach to many supply chain disturbances. The business goals and its requirements are correctly aligned to the appropriate and right suppliers having significant capabilities. The enterprises improve their performance and also gain on a competitive front over their peers. Further, by obtaining automation technology for strategic sourcing, the business units get more empowered to manage their sourcing. It is integrating the blockchain in the supply chain to increase visibility and accuracy in many cases. Contact us for more details.
Industries & Impact
My vision for Moglix is to change the face of industrial commerce: Rahul Garg
Now and Next in the Infrastructure Sector
Moglix enabled Agile MRO Procurement at Scale through Workflow Digitization of large EPC company
Procurement Transformation
Procurement Transformation
Procurement Transformation
Here is everything you need to know about Procurement Transformation
The world is going through a turbulent phase. Given the unwanted situation, the importance of efficient procurement for businesses has increased manifold. Because of this, procurement transformation, a relatively new-age concept, is gaining traction amongst small and big companies alike.
Procurement transformation is a hot topic for all organizations, and they are looking to rework their operations to optimize the value derived. It is not something that requires expertIse, but it is more of a mindset and requires dedication. The process is unique for every company and requires a different approach every time, but the underlying principles and best practices remain the same.
Similar to how the implementation varies from one organization to another, the scope differs too. Once you consider your benefits from a particular strategy and your objectives, you can then set out to decide the range of your endeavors.
It will help you and your team to demarcate the items to be covered and the requisite time frame to achieve the same. It would also help you assess the cost angle and forward the same to the higher management for approval.
The scope covers these –
- What forms the part of procurement transformation?
- What to exclude from your procurement transformation processes?
Definition of Procurement Transformation
Given the impetus on efficient procurement in the current scenario, it is imperative for companies to look for optimizing their tactics.
- Procurement transformation refers to a type of change management focusing on establishing long-term improvements for the organization’s procurement and supply management processes, activities, and relationships.
- Procurement transformation relies on applying various tools and techniques to impact areas such as extending, sustaining, and renewing cost control, launching and speeding up cost control, and several others.
The Three-Phase Procurement Transformation Process
Procurement transformation is not a one-off project that your workforce pulls off. It is instead a mindset to improve consistently and better your previous stats. Here is a three-phase procurement transformation most companies can follow –
1. Tactical
Top management of most organizations is of a view that procurement is a tactical process. So, they request their procurement team to juggle between manual processes continually. While it is right to an extent, the new-age procurement transformation imbibes a whole different approach.
- To initiate the transformation phase, the procurement department should first establish and understand its relationship with other business units. The next step is to bring them all together and speak a common language.
- You may need a consultant to make procurement the center of profits and attraction. It can then shift to a more strategic role where your workforce makes purchases based on a sound strategy. The switch will bear fruits over time and result in cost reduction, flexibility, and higher operational efficiency.
2. Operational
Once you have set up the tactical viewpoint, procurement transformation will have some leeway to explore and make changes. Even though your workforce understands its worth, trying to develop it from a tactical to an operational move will require time and patience.
- The management can benefit from the reputation it has created and opt for massive up-scaling. The top people can hire the right resources and give them the requisite power to ensure it spreads its wings and blossoms.
- A capable CPO will help it build and expand both internally and externally. Because of their name attached to the process, targeted transformations soon become a reality.
3. Strategic
Very few organizations can imbibe procurement transformation as the core of their business. These are those embracing strategic sourcing successfully. They understand that it is not a one-off thing and are committed to practicing it vehemently over time. Instead of seeing it as a separate process, it is more of an implicit practice that keeps them going.
- Strategic transformation can help them establish high tracking and reporting standards, helping other business units evolve.
- It also involves figuring out areas requiring immediate attention and those that can be excluded. It ensures a holistic approach and makes transformation a habit rather than a necessity.
Set on a Procurement Transformation Voyage With Moglix
Procurement transformation is about acting mature and looking beyond facts and figures. Instead of aiming for being the best-in-class, it envisages being better than what you were yesterday. It is more about making it a part of your culture in a way that you don’t even need to talk about it.
At Moglix, we help organizations set up procurement transformation and practice it conveniently.
Click here to contact our team of experts today!
Industries & Impact
My vision for Moglix is to change the face of industrial commerce: Rahul Garg
Now and Next in the Infrastructure Sector
Moglix enabled Agile MRO Procurement at Scale through Workflow Digitization of large EPC company
Procure to Pay
Procure to Pay
Procure to Pay
What is Procure to pay?
Before defining procure to pay, it is important to understand the process of procurement. All types of businesses, big or small, must acquire various goods and services on an ongoing basis. These goods and services may differ from one business to the other. It involves people from both the purchase and account payables department. The number of people and the complexity of the process depends on the size of the organisation. This acquisition activity is also termed as “Procurement.”
The process of procurement encompasses various activities that range from simple to complex and includes the following:
- Identification of the best source for products and services.
- Negotiations and drawing contracts for the supply
- A purchase order for goods and services
- Delivery of goods and services
- Invoice generation
- Managing account payable
With more organisations taking their business to the cloud and increased need for automation, business houses are adapting to digital ways of doing the activity of procurement.
What is “Procure to pay”?
” Procure to pay” is the term used by software companies to label the final act of buying goods; it is called procurement. This portion includes all the activities that occur once the sources or vendors for products and services have been identified. Hence, procure to pay is the component of a more extensive process called procurement.
Why do you need “Procure to pay”?
Procure to pay, also known as P2P or purchase to pay, is the need of the hour. It has become a critical component of the customer value chain. Delivering superior value to the customer is the key to growth. To ensure superior value, a smooth flow of goods and services to produce the final offering is needed. The two important components that aid in this smooth flow are
- Correct ordering from the source
- Timely payment to the source
What are the advantages of “Procure to pay”?
Procure to pay integrates the various activities and sub-activities performed by the purchase and account payable department for managing the supply chain. Procure to pay brings increased transparency and control to the process of procurement. Some of the key advantages are as below.
- Timesaving
- Paperless
- Enhanced control
- Better visibility
- Better fund management
- Enhances efficiency in account payable processes
What are the steps included in” Procure to pay”?
Procure to pay involves the integration of the purchasing department with the accounts payable department. Usually, the procure to pay system involves the following steps:
- Supply management
- Cart or requisition
- Purchase order
- Receiving
- Invoice reconciliation
- Accounts payable
While setting up procure to pay to remember to build flexibility in the system. A good implementation of procuring to pay caters to the current needs of the organisation and is flexible enough to incorporate future changes as they arrive.
What are the steps excluded in “Procure to pay”?
Procure to pay is not directly related to supplying chain management. It has a strong connection with supply management, which is ensuring the flow of goods and services and has a limited scope. Hence the following steps are not included in the procure to pay
- Sourcing
- Production planning
- Forecasting
What are the challenges with “Procure to pay”?
The challenges in setting up procure to pay can be categorised as below:
- Organisation related
- Employee related
Organisation related
Certain organisations have systems and procedures that are difficult to integrate and pose serious challenges. Information and data quality regarding vendors, finance, etc., are essential for successful execution—an organisation’s ability to provide accurate data impacts the success of procure to pay.
Employee related
Procure to pay integrates procurement and account payables and results in higher visibility and transparency in the transactions. These changes, at times, are perceived as a potential threat by the employees. Implementation of procuring to pay breaks the status quo and attracts resistance from employees. Organisations must invest time and money in managing this change from the traditional ways to Procure to pay.
Conclusion
Today organisations are in between shrinking margins and an aware customer with shifting loyalties. With an increase in the number of players, the landscape across the industries has become highly competitive. Creating, communicating, and delivering superior value is the only way to hedge and grow the customer base. Procure to pay system helps organisations in reducing cost, building efficiency, and creating a superior value proposition. A consistent flow of finished goods and services needs a robust and error-free procurement of essential production resources. Procure to pay helps organisations to create competitive differentiation in the market and gain market share. If you are looking for more on “Procure to pay,” you can contact us (either by filling the form attached in the footer or on the contact us page).
Industries & Impact
My vision for Moglix is to change the face of industrial commerce: Rahul Garg
Now and Next in the Infrastructure Sector
Moglix enabled Agile MRO Procurement at Scale through Workflow Digitization of large EPC company
Packaging
Packaging
Packaging
Introduction
Packaging can be defined as the technique of protecting the products, articles for storage, distribution, and sale. It means wrapping the products to look attractive or protecting the goods for safe transit. It also means covering the products to save them from damages during transportation and storage. Packaging is the wrapping material around an item to contain, identify, protect, display, and make the product marketable and clean.
However, the term packaging has been interchangeably used for retail as well as transport container. Consumer packaging has some marketing implications, while transport containers are more significant from a logistics standpoint.
Packaging is also closely related to branding and labelling as it appears on the package, and the brand is typically present on the label. It largely defines the product contained inside. The package contents may be pre-weighed, measured, stored, assembled and then carefully placed in a specially designed box, crate, jar, bottle, tube for convenient distribution.
Materials Used
Different types of materials are used for packaging. These materials are:
- Wood
- Paper
- Glass
- Plastics
- Metal
- Polyester
- Gunny bags
- Straw baskets
- Wooden boxes
- China jars
- Earthenware
- Cellophane paper
Objectives of Packaging
1. To provide protection
Packaging ensures that the product inside is protected against vibration, temperature, breakage, wear and tear, light, moisture, precipitation, leakage, and theft.
2. To enhance marketing
Good packaging with attractive labelling helps the sellers to promote the product to potential buyers. The size, colour, appearance, shape of the packaging is designed in such a way to attract the attention of potential buyers.
3. To convey the message
Sometimes manufacturers print essential information on the packaging about the contents inside, such as usage instructions, raw materials, expiry date, manufacturing process, etc. This information is crucial for users.
4. To provide convenience
Good packaging adds to the comfort in handling, display, transportation, opening, and storage.
5. To enable product identification
Packaging allows a product to have a distinct identity. With the effective use of colours, shapes, and graphics, such identification and distinction are essential in times of tough competition.
6. To enhance brand image
The brand image can be improved greatly, with attractive packaging in a consistent manner over a long time.
Functions of packaging
1. Preservation and protection
The core function of packaging is to protect the contents during transit from the manufacturer to the ultimate consumer. It safeguards the product from any damage as this is a loss and inconvenience to the seller and buyer. It protects the product from dust, damage, leakage, pilferage, chemical change, insect attack.
2. Safe containment
Most products need to be contained before they can be moved from one place to the other. This helps to maintain the quality and reachability of the product.
3. Effective communication
A vital function of the packaging is to communicate the product effectively. It tells the consumer about the product, other instructions, and utility information. Information such as quantity, price, inventory levels, packaging date and time, etc., serves as useful information for the consumers.
4. Convenience
Proper packaging ensures that the product needs less space and keeps the product and its content intact.
Essential qualities of packaging
- Attractiveness of the package
- Enhanced product description
- Convenience of storage and display
- Security of the goods
- Convenience of transportation
- Easily disposable
Types of packaging
Packaging can be segregated based on the items it contains.
Bulk/family packaging
A package of a particular manufacturer is packed in an identical manner. The shape, colour, and materials used for packaging will be similar for all the manufacturer’s products.
Reuse packaging
Sometimes the packaging can be used for other purposes after the goods have been consumed. It is known as reuse packaging.
Consumer packaging
This package holds the required volume of the product for ultimate consumption and is more relevant in marketing products such as tobacco, cigarettes, beverages, etc.
Transport packaging
The products traded to different places need to be packed well enough to protect them from damage during transport, handling, and storage.
Problems encountered in packaging
- Costs of packaging
- Convenience
- Reuse purposes
- Appearance
Conclusion
To conclude, packaging is the coordinated system of preparing goods for transport, warehousing, sale, logistics and end-use. Apart from serving a practical purpose of protection and preservation of the product’s quality, it is the aesthetic appeal part of packaging that makes it more interesting. The visual impact of the packaging can be a unique selling proposition of a product, because sometimes you do judge the book by its cover!
Industries & Impact
My vision for Moglix is to change the face of industrial commerce: Rahul Garg
Now and Next in the Infrastructure Sector
Moglix enabled Agile MRO Procurement at Scale through Workflow Digitization of large EPC company
Indirect Procurement
Indirect Procurement
Indirect Procurement
What is Indirect Procurement?
Indirect Procurement is the process of procuring services or products required to run any business. To ensure that the business runs smoothly, one will need services or products continuously. The goods and services obtained through Indirect Procurement are not the ingredients of the finished goods or services that a business offers to its customers. These will not impact the profitability of the organization directly. It is more to do with inputs getting converted to the desired output effectively. For example; the procurement of an outside vendor for facility management of the office premises or furniture and stationery for the staff. The goods and services brought in through Indirect Procurement are for internal stakeholders’ consumption and not for external customers or vendors. Business houses are seen to have a spending range between 15-27% of their revenue on Indirect Procurement.
What is the difference between Direct and Indirect Procurement?
Direct Procurement
- It involves purchasing raw material and Goods that are used in the manufacturing of the finished products.
- This will have a direct impact on the bottom line of the business and helps organisations to create profits, drive performance and create competitive differentiation in the marketplace.
- Direct Procurement involves purchasing goods from suppliers at the best possible rates, quality, and price, hence; the procurement team needs to be relationship-oriented with the suppliers.
- This involves purchasing goods in bulk to achieve economies of scale.
- Wrongly managed direct procurement can lead to the halt in the manufacturing process of an organisation.
Indirect Procurement
- It involves purchasing goods and services that are required for the smooth functioning of any business and aids in developing and maintaining various operations of the business.
- This does not have a direct impact on the profitability of any organisation.
- Indirect Procurement is all about getting the lowest possible rates as it involves managing expenses; the procurement decisions are more price sensitive.
- This involves identifying procurement sources that are cheapest.
- Wrongly managed Indirect procurement can lead to an increase in expenses and an increase in dissatisfaction of the internal stakeholders as it involves working with a more complex internal stakeholder environment.
What are the Skills and Strategies Involved with Indirect Procurement?
Indirect procurement usually deals with procuring goods from hundreds of categories, multiple suppliers, and category expertise across to procure at the lowest available cost. It involves catering to a much more complex environment of internal customers that are well informed and need the team’s support for procurement. Most of the internal stakeholders see truly little value in indirect procurement as an activity. Indirect Procurement also involves advising the internal stakeholders on their budget availability and spendings in an environment where they have little or no mandate on their spending budgets.
The key skills needed are as below:
- Expertise in a broad range of categories.
- Influencing and advisory skills.
- Identification, sourcing, appointing, negotiating, and managing suppliers.
- Cost management skills.
- Data mining and analysis skills.
- Update on changing technical and supplier environments.
Strategy: Like Direct Procurement, Indirect Procurement involves developing a cost-saving sourcing strategy. The organisation big enough to appoint a procurement team usually follow a system of “Procure to Pay“. This would require the procurement team to do the following:
- Create a detailed list of categories of products and services that they need to procure.
- Source, the various suppliers for each category in the list.
- Identify the best supplier for each category and negotiate the lowest possible rates.
- Decide upon the most preferred cycle for final invoice payment.
For smaller organisations who cannot afford to have an Internal Procurement team, partnering with a group purchasing organisation(GPO) would be the best solution. The group purchasing organisation offers small organisations the advantage of combined purchasing power and access to discount programs from top suppliers that otherwise is out of reach for them.
Industries & Impact
My vision for Moglix is to change the face of industrial commerce: Rahul Garg
Now and Next in the Infrastructure Sector
Moglix enabled Agile MRO Procurement at Scale through Workflow Digitization of large EPC company
Indirect Cost
Indirect Cost
Indirect Cost
What is Indirect Cost?
In all sorts of departments like production, research, retail, and accounting, a cost is defined as the value of money that has been used up to produce something and also deliver a service.
Most businesses believe that the cost could be defined as one of the acquisitions, in which the amount of money which is expended to acquire the same is being counted as cost.
Generally, in the field of economics, the cost could be referred to as a more generalized version of the field of economics, where cost is a metric that is added up as a result of a process or maybe as a differential that could help make a decision. This cost is further broken down into direct and indirect costs.
What is an Indirect Cost?
Those costs that aren’t accountable directly to an object of cost, like that of a particular project, facility, function, or product, are being referred to as indirect costs. These kinds of costs could be either fixed or variable. Costs like administration, personnel, and security costs are classified as indirect costs.
Indirect costs aren’t related directly to production, and some of these could be overhead as well, where the overhead costs could be directly attributed to a project. Most costs that are usually being allotted indirectly are those costs that are being related to transport, administration, selling and distribution, office and security, shipping, postage, utilities, and rent.
Types of Indirect Costs
Indirect costs could be categorized further under two categories: fixed indirect costs that contain activities or costs that are fixed for a particular project or company, like that of transportation of labor in the site of work, the building of temporary roads. Others in the category could be classified as recurring indirect costs that contain activities that repeat for a particular company like record maintenance or the payment of salaries.
Additionally, indirect costs aren’t directly attributable to a cost object. Even though it may financially not be feasible, indirect costs are mostly allocated to a cost object, such as overhead. For instance, those costs that aren’t directly assignable to the end product are those that are indirect.
About Indirect Cost
Indirect costs could be variable and fixed sometimes. They are mostly not related directly or could be traced to each product unit, but it may vary considering the result of the output. Examples may be cited concerning the manufacturing industry, perhaps the electricity bill.
Also, fixed indirect cost isn’t that traceable or that there’s a direct relationship with each unit of the product, and it doesn’t show much differences output-wise like that of the salary of a nightguard.
Sometimes names like overheads, administrative costs, or facility costs are also called indirect costs. There could be a lot of variation for indirect costs that differ from industry to industry.
Most companies benefit from indirect costs that help them make a significant decision on pricing. Mostly, all the overhead costs would be added together by the accountant. Post that, it would be allocated based on per unit to compute the calculation of per product overhead. It’s mostly found out that an organization makes a profit on each unit after incorporating the overhead costs.
The foundation for the product pricing strategy is determined by this before setting the desired margin of profit. For all businesses and organizations, it’s of utmost importance to carefully evaluate the indirect labor costs and also analyze its impact on overhead costs for the smooth running of the business.
Industries & Impact
My vision for Moglix is to change the face of industrial commerce: Rahul Garg
Now and Next in the Infrastructure Sector
Moglix enabled Agile MRO Procurement at Scale through Workflow Digitization of large EPC company
E-Procurement
E-Procurement
E-Procurement
What is E-Procurement?
Electronic procurement is services and information in business to business (B2B), business to consumer (B2C), or Business to Government environment via the internet or other networking systems like Data exchange via Enterprise resource planning (ERP). It is also known as supplier exchange is a sale or purchase of goods.
The E-procurement value chain consists of e-tendering, e-informing, e-auctioning, vendor management, catalogue management, contract management, e-invoicing, inventory management, e-payment, order management, and others. These elements form the value chain are optional and used as per the unique business process requirements.
Implementation of E-Procurement results in a cost-effective, transparent, and data-driven approach to reach the best supplier of goods or services.
Why E-Procurement?
E-procurement is effective by reducing time, expenses, and providing coherent real-time information during the procurement process. The implementation has changed the way procurement worked in earlier times; it has automated the complex task of finding the best procurement deal. Its working and benefits are explained in-depth below.
How does E-Procurement Work?
The E-procurement process follows a standard set of steps, such as:
- Identifying the requirement: Business evaluates the requirement of goods or services. Businesses try to recognize the kind of product they are looking for, along with estimated quantities.
- Look for suppliers: Varies suppliers of that product are evaluated. The evaluation can be based on after-sale services; public forum ratings estimated delivery time and various other parameters stored in the E-procurement system.
- Finalizing a supplier: The supplier is finalized for procurement after running all validations and checks. To reach the final supplier, multiple steps like Request for information (RFI), Request for quotation (RFQ), comparison reports, and Historical data analysis are obtained via the E-procurement system.
- Purchase requisition and order: Once a supplier is selected the purchase requisition and orders are raised. The delivery date estimates are received along with living status. The inventory is updated once goods are received. E-invoicing and E-payments modules are run to settle financial accounts between two businesses.
- Measure supplier performance: Delivery can be one at a time (One-time order) or over a period of time (Contracts). Order and contract management modules are used to streamline the process. The delivery lag days, quality, quantity, packaging quality, and other aspects of supplier services are managed.
- Analytics: Stored data can be used to derive insightful information to fine-tune strategic business decisions.
The process and the stages involved from the value chain may vary depending upon the frequency of material bought, product quantity, service hours, customization involved in the product making, and other business-specific product requirements.
What are the Benefits Associated with E-Procurement?
- Automates manual work: It eliminates paper-work and several manual hours wasted to keep track of the process. E-procurement system automates the process saving many manual hours spent on trivial tasks. This reduces the communication gap between the different stakeholders involved.
- Real-time information exchange: The vendor master information, transactional data, Pricing data, all of it can be updated and stored at one place leveraged by multiple stakeholders encourages better information exchange rather than people connecting one to one.
- Informed decision making: The single source of truth (E-procurement system here) stores data for a longer period which plays a vital role by providing insightful analysis about procurement. Well informed decisions making culture can lead businesses to crack strategic deals, raise profit margins, and reduce wastages.
- Cost-effective: E-procurement system is a very cost-effective solution to the process involving a lot of manual work hours, paper-work, information exchange, and much more. This all can be automated and stored to maximize the gain.
- Improved transparency: Various governmental agencies, PSUs, NGOs, and public societies can make use of E-procurement as a transparent tool with all activities recorded and properly channelized.
Industries & Impact
My vision for Moglix is to change the face of industrial commerce: Rahul Garg
Now and Next in the Infrastructure Sector
Moglix enabled Agile MRO Procurement at Scale through Workflow Digitization of large EPC company
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