Article credit: Sage 

Supply chains are complex business networks with the inherent risk of unexpected disruptions.  In fact, most organisations identify supply chain risk as their biggest threat.

Yet most companies lack adequate plans to mitigate supply chain disruptions. COVID-19 has revealed these gaps in the global supply chain.

Since China is South Africa’s biggest trading partner, the strain is felt by local businesses that have built their markets on the global trade network. Some are trying to cope with fewer people, while others have seen a dramatic decrease in productivity as customer spending changed drastically.

Accelerated trade growth in recent years means that today’s global supply chains are extremely complex, with manufacturers and distributors vulnerable to just about any disruption.

The impact of China’s prolonged production shutdown between January and March has certainly affected local businesses and manufacturers as they try to deal with the chain reaction of events. The manufacturing sector contributes 14% to SA’s GDP, but during the first quarter of 2020, the seasonally adjusted Absa Purchasing Managers’ Index (PMI) experienced its weakest quarterly performance since 2009.

How COVID-19 affects supply chains:

• Procurement of raw materials and finished products,
• Labour, with more people in quarantine,
• Sourcing, with travel restrictions making new business arrangements challenging, and
• Logistics, with disruption affecting capacity and availability at established hubs and supply networks.

So, what should you do in the short and medium-term in terms of contingency planning and what measures should you put in place to ensure you are as prepared as possible in the long run?

Here are immediate and long-term business continuity steps that you should take to future-proofing the supply chain.

8. Put your people first. Your people are your most critical resource, and they’re also having a hard time. Which work arrangements are useful in keeping them engaged and productive?
9. Monitor your ecosystem. Implement a system to get full visibility into your supply chain, especially in countries affected by the Coronavirus.
10. Develop an emergency plan. What if your factory has a confirmed case of Coronavirus? Establish communication and coordination processes, designate responsibility for decision – making and communication with customers and suppliers.
11. Keep your inventory close. Move stock from hard-hit areas and distribution hubs; find local suppliers.
12. Know your and your customers’ legal rights. Get legal advice about your responsibilities if you can’t get supplies to customers.
13. Review your customer contracts. If you cannot fulfil your commitments, a clear understanding of your terms will allow you to plan and prioritise your response.
14. Build a buffer. How can your supply chain be diversified to balance supply and demand?
15. Diversify your supply chain and revisit your risk management approach
16. Work with stakeholders and your most critical suppliers to prepare for potential material and manufacturing capacity shortages.
17. Review business forecasts and run scenarios to determine where you are at risk now (and maybe in the future).

Steps to consider in the future:

Technology-enabled supply chain visibility

COVID-19 highlighted the importance of complete visibility in the supply chain. You should follow alternative plans if you know how the change impacts the ecosystem such as creating routes to other suppliers.

Enterprise Resource Planning (ERP) applications integrate all business areas and connect customers and suppliers. A connected environment helps you identify supply chain exposure, manage or mitigate risks, and reduce disruption effects.

Modern business management solutions leverage artificial intelligence (AI) and machine learning-powered platforms to illuminate supply networks and reveal a level of detail that was previously thought impossible.

Diversify risk

Nearly 75% of companies reported supply chain disruption due to the Coronavirus – and 44% didn’t have a plan to deal with it. Diversity is your best defence against disruption.

Don’t rely on one or two suppliers; find multiple suppliers for all your products, both locally and in neighbouring countries. If you’re heavily dependent on Chinese imports, for example, consider a “China + 1” strategy, which keeps China as your main supplier but also sources from local suppliers.

Having facilities with local suppliers spreads the risk and could cut transportation costs. What’s more, you’ll help stimulate the economy, reduce economic cash outflows, and support job creation.

Prepare for recovery

Eventually, things get better. Businesses equipped for the inevitable upswing will move faster and secure a larger share of the pent-up demand. They’ll also strengthen relationships with their existing customers and attract new ones.

Article credit: Sage 

Whether you’re bringing a new client on board, looking for additional investments from new or existing stakeholders, or agreeing on new contracts with your employees, your ability to effectively negotiate these conversations is key to the success of your business.

Solid negotiation skills can help you to forge strong working relationships with your clients, mutually beneficial partnerships with suppliers, and put you ahead of your competition when looking to secure the best hires.

Although negotiation skills don’t come naturally to everyone, there are a number of strategies that you can practise to nurture your negotiating skills.

1. Preparation is key

Before you go into any negotiation, it’s important to do your homework on the person, company, or supplier you’re talking to. Gather as much information as possible about the other party and try to understand their strengths and weaknesses, their needs, and the challenges they face. The more you know, the stronger your negotiation position will be.

Your research should define realistic objectives for the negotiation, a strategy, and the outcome you hope to achieve for your business.

Try to understand these questions before the meeting:

• What do you want and how much are you willing to pay?
• What does the other party want and what are they expecting you to pay?
• How will the deal benefit both parties?
• What are your other options in the market?
• How will you handle objections to your proposal?

Assume that the other party has also researched you and be prepared to answer any questions that might come your way.

2. Find a mutually beneficial middle ground

Nobody wants to walk away from a negotiation feeling like they’ve lost a battle. Good negotiators don’t view negotiation as a game that can be won or lost. Rather, they try to come to a mutually beneficial agreement that leaves both sides confident in, and satisfied with, the outcome.

Let’s say you’re negotiating with a new supplier. You want good value for money and a high-quality product that you can sell to your customers. The supplier wants to close the sale and hopefully form a long-term relationship with you. There are certainly ways to ensure you both get what you want out of the negotiation.

In business, we want to engage with people who respect our interests, who take the time to develop a positive relationship, and who are creative, flexible, and empathetic in their dealings with us. Keep this in mind for your next negotiation: try to understand not only what the other party wants but why they want it.

3. Listen

Being able to listen is a key skill in negotiation. Not only will you be able to identify what elements of your proposal will resonate with the other party, but it will also give you an opportunity to understand what their concerns might be.

After presenting your proposal, leave time for the other party to ask questions – and really listen to what they’re saying. Ask them questions if you need clarity on anything. The more information you have, the more successful your negotiation will be.

4. Don’t be scared to walk away

If something doesn’t feel right about negotiation, or if you are struggling to come to an agreement with the other side, don’t be afraid to walk away from the deal and either look elsewhere or come back to it at a later stage.

You never want to feel trapped by the terms you’ve agreed to. For example, don’t invest all your sales resources in one large client or get locked into a contract with a single supplier. Keep your options open, even if you’re happy with your current supplier.

Know what your non-negotiables are and stand by them. Showing the other side that you aren’t afraid to walk away will let them know that you are serious about putting your business interests first.

5. Wrap it up

The longer a deal takes to be signed, the more chance there is of terms changing and something coming along to derail your progress.

That’s not to say that you should rush through negotiations and sign the first contract that is put in front of you, but try to make decisions quickly and keep turnaround times to a minimum.

The tip of the iceberg

There is so much more to negotiating; it’s a skill that should be constantly practised and developed. Whether you choose to read more on the subject, attend a workshop to boost your negotiation skills, or simply learn on the go, the more effort you put into improving your skills, the better you’ll get.

If you are a one-person agency or a multi-national empire, ERP software can strengthen your infrastructure and assist you to carry out core functions with efficiency.

If you’re attempting to standardize your businesses processes, get immediate information, or reduce the demand on your overworked staff, then ERP software is suitable to be the solution. Here are four ways ERP software can further streamline your business.

1. Creation of Central Repositories improves Efficacy

As ERP software stations all of your business’s core data into a centralized location, employees find it simpler to find the information they require. Essentially, the software totally eradicates the necessity to flounder about the office searching for misplaces reports.

By equipping everyone in the workplace with access to a convenient repository of data, employees will acquire the information required to carry out their tasks in only a few of clicks, without the demand for them to learn different systems.

Also, if you create the right permissions, people won’t be delayed by waiting for files and data. Everyone can obtain the information needed instantly, while confidential information remains protected.

ERP is, however, a lot more than an asset management tool, and you should look to achieve process efficiency as well as stoke a spirit of innovation in your staff. ERP software can save on IT costs, by acquiring ‘buy-in’ from your employees, you are also able to look to transform the culture of your company for the better.

2. Formation of Processes Increases Accountability

Another benefit of utilising ERP software is that, by gathering all your data onto a single system, you can regulate processes and workflows between departments; so everyone in your company follows the identical methods.

This is especially helpful in larger corporations, where various offices may use multiple programs that are not compatible with each other or areas where several staff members work remotely. By including a centralized system, everyone can share and edit records together, guaranteeing compatibility.

When all employees have been shifted to the same system, it’s then simpler than ever for you to improve accountability in your business by setting down stringent rules about how the systems should be used for each specific task. These practices can then become self-governing by your staff, who will then be operating more collaboratively than before.

3. Adopting Automation Saves Time and Money

By implementing ERP software, you will also be able to automate various duties, which can assist in saving you time and money.

Automation is a fundamental part of Industry 4.0, which is transforming businesses. Uncomplicated tasks like data entry can be accomplished by robots instead of people. Therefore, the task is accomplished immediately, and human error is removed entirely.

Automation, however, doesn’t only pertain to data entry and can be practised in almost all areas of a business’s functions, from human resources to sales. In customer-oriented businesses, AI and machine learning are transforming customer assistance and automating numerous processes that no longer demands human interaction.

Wherever you implement automation systems in your company, you’ll be capable of reducing human error, finish tasks faster, and discover discrepancies. Because of the regular reporting possibilities allowed by automation, you’ll get real-time feedback about your business’s development.

4. Technology Advances Planning

The real-time data rendered by your ERP software is invaluable with regards to planning within your company.

This information allows you to make knowledgeable decisions on the current status of your company and will provide you with insights into your operations. It is able to reveal which departments are operating well, and which are not performing in real-time. This information can be used to assist you to prepare future resources, notify recruitment, and plan possible development.

By merging all of your essential systems into a central repository accessed by all employees, you’ll improve productivity, increase accountability, conserve time, and enhance your future planning. Industry 4.0 promises to transform the way we operate. By incorporating ERP software into your business, you’ll be able to remain ahead of your competitors and reap the benefits and be at the forefront of the movement.

Article credit: Sage 

Like most industries, South African manufacturing has been impacted by COVID-19. As global supply chain disruption has exposed many challenges – for instance, being unable to source enough personal protective equipment to meet the rising demand – some manufacturing companies are now looking for innovative ways to optimise.

We spoke to Tracey Linnell, director of specialist risk and resilience consultancy firm Morgan Solus, who shared ten tips for your business.

1. Know your risks

Linnell first noticed issues caused by COVID-19 in late January, although at this stage it was only impacting manufacturing companies that sourced stock from the Far East. One month later and many more companies were feeling the impact. This led to concerns about how a significant, unexpected shock to global supply chains could have a domino effect on other companies in markets across the globe.

“At the beginning of the year, people were mostly focusing on what we can call Tier 1 supply chain risks,” Linnell says. “This meant that the initial supplier review only looked at the circle outside my circle. But because the world is so inter-connected, the components that you’re sourcing might come from three layers below your primary supplier. That’s why it’s now about taking a tiered approach by understanding who your suppliers are and who their suppliers are.”

2. Map your entire manufacturing supply chain

Understanding who your suppliers are and how they are connected is critical for manufacturing companies navigating COVID-19. That starts with making a list of your most critical suppliers, identifying where they’re based, and knowing how anything that impacts them (from natural disasters to political instability) might impact you.

“Manufacturing companies need to know things like which supplier is going to be impacted based on geography, the mode in which products will be shipped, and what the impact will be when things go wrong,” Linnell says. “But because the knock-on impact is felt in multiple layers in the supply chain, I think there’ll be quite a bit of Tier 1 to Tier 3 supplier mapping post-COVID.”

3. Build a diverse network of suppliers (especially local ones)

Once manufacturing companies have done the mapping, it might be clear that they’re too reliant on specific suppliers or specific regions. This is when they can consider ‘multi-sourcing’ from different people and places to avoid any additional risks. (It’s much like consumers might have a back-up store to get products they need.)

“As COVID-19 started to rear its ugly head, we began to feel the impact locally because of the physical stock that was coming out of the Far East,” Linnell says. “That was a known risk that started to affect the supply chains for a lot of companies in South Africa. Some companies (prior to any kind of actual lockdown happening) started sourcing locally instead, trying to quickly find South African companies that were selling the same product. So that was one of the strategies.”

4. Follow due process in procurement

Under normal circumstances, it takes time for manufacturing companies to onboard new vendors. But in the world of COVID-19, some companies were so desperate to get stock that they were partnering with suppliers that put them at risk. In some cases, there was negligence that caused quality control issues or outright fraud that cost companies (and governments) millions.

“In certain companies, you’ve either had an impact from the supply side – in other words getting stock in – or you’ve had an impact on the demand side,” Linnell says. “For some of the pharmaceutical companies, there’s obviously been a massive demand for supplies (masks, ventilators, and so on). But they couldn’t keep up with the demand for what was required so they were looking for multiple suppliers all over the place. Unfortunately, breakdowns in the procurement processes were inevitable.”

5. Plan for business continuity

To avoid this kind of disruption during the COVID-19 pandemic, manufacturing companies should do more detailed research into their suppliers. This is a normal part of business continuity planning but it must be even more detailed right now. It’s about knowing who your suppliers are, what products or services they provide, and how dependent you are on them. Once you’ve ‘risk rated’ them, you can put mitigating controls in place.

“Look at various strategies for your different suppliers based on products, services, and risk exposure,” Linnell says. “If it’s a critical single source supplier – in other words, I can only get a component from them and not from anyone else – then typically we put in place service level agreement clauses that stipulate that the vendor must make an alternate plan to ensure services to the organisation. We also send out letters to them, asking to confirm availability and their COVID-19 plan. Once they’ve supplied that information, we can understand the broader impact.”

6. Consider incidents holistically

If a supplier can’t meet their agreement, due to COVID-19 or any other reason, it’s important to know this. Unfortunately, many manufacturing companies have an issue with reporting. They might register an incident but not be able to fully understand how it impacts the entire business.

” We’ve seen many manufacturers struggle with this issue over the last couple of months,” Linnell says. “For example, if a manufacturing company has a raw material issue, it tends to stay in that department. It doesn’t get aggregated up or escalated as a risk. Worse, companies are reverting to archaic Excel-based reporting when they should be using more advanced supply chain mapping software that can depict the interdependencies.”

Article credit: Sage 

In order to correctly show the movement and management of cash within a business, accountants use a cash flow statement. This statement will display a business’s money coming in from ‘cash receipts’ and where it has paid money out,’cash paid’. The cash flow statement is a standard financial statement and is frequently used in conjunction with the balance sheet and income statement.

As a result, the cash flow statement plays an important part in the management of finances for the company. In this week’s tip, we share a basic cash flow statement template that you can download, customize and use.

You are welcome to download the workbook here.

Applies to Microsoft  Excel 2010, 2013 and 2016.

1. To enter values for the beginning of the period, enter values in row 6 for their respective months.

2. The cash receipts can be entered in rows 9 to 11.

3. Cash paid out values are entered in rows 16 to 44.

By entering these values for the respective period, your statement will showcase the cash movements, and can, therefore, be better analyzed.