A manufacturer’s internal processes and supply chain can make or break its chances of securing a lucrative contract, especially those mid-sized manufacturers hoping to work with blue chip customers.
And yet many manufacturers’ chances are fundamentally undermined by their reliance on out-dated methods, their inability to adapt to a key customer’s payment processes and even their inability to evidence quality control. This all comes down to a reliance on poor manual, paper-based processes that slow down document retrieval and procurement.
The obvious solution is to leverage document management systems (DMS) to remove the reliance on paper, streamline processes and transform the timeliness of information access. But as many manufacturers have discovered, ensuring an efficient investment is not automatic – there are a number of common errors made that can challenge any potential returns.A common picture
It is well known that manufacturers in all sectors that fail to meet high standards of administrative efficiency are increasingly being told to rethink or risk losing the contract – in a world of streamlined processes they are simply too expensive to do business with. For example, take those supplying the supermarkets – a large supermarket chain’s purchasing power means that processes can be forced upon food and beverage manufacturers, and an inability to comply due to primitive or inflexible systems can mean a contract lost, or not even won in the first place.
For the manufacturer already struggling with escalating prices and tighter competition, this is a tough blow. But, to be fair, most CEOs and CFOs are already highly aware of the business cost associated with retaining paper processes. But, despite the adoption of ERP systems, with automated purchase order production, emailed invoicing and remittance advice, the vast majority of mid-sized manufacturers are still reliant on slow, paper-based order and invoice processing and reconciling delivery notes with orders; and they have no robust processes for tracking and storing ad hoc documents such as delivery notes.
To show a degree of scale to the problem, one transaction to purchase a single batch of raw materials can entail an invoice, a purchase order, a delivery note and quality control documentation, all of which have to be matched to each other and stored in a fashion that aids subsequent retrieval. And then consider the documentation for the ultimate sale of goods manufactured – yet more paper. With manual processes for each transaction, and multiple transactions literally every day, the manufacturer’s document management problem rapidly becomes enormous.
Of course, this assumes that there is only version of each document, but this is rarely the case. Add to the problem the in various places, and it is compounded once again. Indeed, Gartner’s research has shown that a single document can be copied up to nine times within an organisation, creating an estimated filing cost of as much as $13.
Manufacturers cannot afford to continue to throw expensive resources at the management of various departments’ documents – although many end up with administrative staff dedicated to doing nothing more than reconciling payments and invoices for sales or the purchase of raw materials. There has to be a better way of operating.Focus on the business need
In the manufacturing industry, control of documentation is vital, even beyond the invoice processing arena. Where an end-product is destined to become a part of a larger product, for example electronic components being supplied to hardware manufacturers, documents that provide quality assurance both of the end-product, and even the raw materials used in its manufacture, are essential should there be a fault. And the need for these documents to be accessible and auditable is not a short-term requirement – the requisite storage of documents for 15 to 20 years, or even for perpetuity, is by no means unheard of.
So how can manufacturers finally limit the reliance on paper within these critical and highly auditable processes and impose real control?
The obvious answer is to adopt a Document Management System (DMS) to automate, link and centralise processes, slash paper dependence, and achieve control over the document trails.
But simply making a DMS decision is not enough. A DMS is a highly functional product set that can be deployed in many ways and across many departments to meet numerous diverse business requirements – including speed of purchasing, traceable delivery documents and batch control.
It is, therefore, essential to clearly understand and define the precise, immediate business need and then map that requirement to the technology offering. Manufacturers must also be pragmatic. If the organisation has a problem that
needs to be resolved, define it, design a solution and implement it, fast.
The emphasis right now is to get rid of the paper-based, disjointed and disparate processes that are compromising essential business functions. Don’t get distracted by additional features, however appealing, simply because they are available. Don’t encourage scope creep and stagnation by a long and heavyweight requirements process. This whole process should take around one month – and certainly no more than three.Peripheral view
Manufacturers, and even departments within them, need to clearly define their own specific requirements, such as cutting down payment to only 30 days or guaranteeing recording and storage of wet signatures confirming receipt of goods within three hours of delivery. But they also need to understand the exact implications of that objective – does it require in-depth integration with the legacy finance system, for example?
The key is to define statements of work (SOW), undertake pre-implementation review sessions and work closely with a supplier. Use proof of concept trials, followed by staged implementations to create manageable projects that deliver incremental business value.
It is also essential to avoid over-elaboration, a classic error with any functionally-rich technology. For example, a DMS utilises configurable structures and metadata – most also enable content searching. Defining a complex taxonomy may appear the best route towards a flexible and future-proof solution, but, as one organisation discovered, in areas where the filing is not automated, the overhead of working to the structure and metadata requirements resulted in slow operational processing, end user frustration and a reduction in Return on Investment (ROI). A simple taxonomy, with limited mandatory metadata, is actually a far more sustainable and usable model.
In addition to clarity and simplicity, manufacturers must look to derive every automation opportunity, from automating extraction of content from paper documentation, to implementing workflows and automating tasks such as invoice approval for fundamental efficiency improvements. Effective automation will deliver a quicker turn around for order processing or enable the manufacturer to deal with batch queries faster.Conclusion
It is easy to get derailed by a DMS deployment. The challenge is to define those needs and design a pragmatic solution that can be deployed quickly to meet those requirements. With the right approach, the manufacturer can transform operational efficiency, achieve clarity of communication and meet requisite service levels. Critically, it can become a far better business operation, and strengthen its position as a strong trading partner.Mark Palmer
Mark Palmer is director of products and marketing at Invu. Since joining Invu in 2008 he has worked with the Invu partner channel and established customer product forums, while also overseeing the future of the Invu product set and its delivery to market. Before joining Invu, Mark worked in product management roles at Ceridian, Sage and specialist accountancy software houses.Invu
Invu develops software that incorporates document management, content management, workflow, automation and collaboration specialising in solutions for the mid-market and smaller businesses. Also known as the paperless office, Invu typically gives a return on investment in under six months, allowing companies to see efficiency savings in terms of both money and time.
For further information, visit: www.invu.net