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The Hidden Costs In Business Processes

September 8, 2013 • Business Process, OPERATION, Strategic Spotlight, Supply Chain

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Most businesses are affected by hidden costs in procurement, distribution, order processing, sales and finance.  Organisations can benefit from a careful review of their business processes, and implementing message integration within their supply chain.

Most businesses don’t earn revenue by processing data, but do spend a large amount of their hard earned revenue in manually processing data. If you were to look at ‘most businesses’ there would be costs hidden in procurement, distribution, order processing, sales and finance. In the following paragraphs you will see just some of the hidden costs found by one of our clients, and the systems then built and implemented to avoid and mitigate these costs.

Our client is a multinational company and the UK is their second biggest market. As with most major organisations, parts of the supply chain are outsourced. Each outsourced organisation has its own systems and processes that are considered ‘best of breed’, which had a lot to do with why they had been chosen as outsourced partners for our client. In our client’s case, two of the operations outsourced are: the warehousing of finished goods, and the transportation of those finished goods to the customers, who are retailers and distributors of various sizes.

Our client uses SAP R3 as their ERP of choice and so when implementing SAP they had a number of options for the integration of the outsourced operations within their legacy systems.

The first choice was to provide access to their SAP system for their warehouse and logistics partners. The partners, or the client, could then deploy human resources to ensure the data on all the various systems were kept up to date.  This would present some training burdens as each outsourced company’s staff members would need training.  An additional on-going cost was also identified at this time due to outsourced contract workers only being retained for a limited time, therefore subsequent re-training may be required in the future.



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