How to Deliver an ERP-Led Supply Chain

Supply chains have been disrupted for over four years, with economies faltering worldwide due to increased trade regulations and inflation. The average consumer is feeling the impact, becoming more price-sensitive and discerning in their purchases. Customers today demand more for less and won’t accept inferior products or services. Thus, effective procurement has become key to survival. How do we make this happen?

A prominent global lifestyle brand partnered with United Techno to embark on a procurement transformation using ‘Free on Board’ (FOB) delivery. FOB means the buyer assumes responsibility at the point of freight. With a substantial retail and wholesale presence, they needed efficient and transparent procurement processes.

They turned to United Techno to enhance their IBM ERPs. This included optimizing procurement under FOB terms and accurately calculating purchase order (PO) costs, including freight, duty, and commission. The focus was on three key performance indicators (KPIs):

1. Module Additions: This included the validation of Harmonised Tariff Schedule (HTS) codes, adjusted for each national market. They needed to estimate freight costs across various origins, destinations, and shipping methods, including calculating duty-free status for markets like Mexico and Guatemala. Commission calculations were automated based on vendor-agent relationships, streamlining financial operations.

2. Operational Improvements: A clear user interface was developed to maintain, report, and update financial data, providing clear visualizations of costs before a PO is created. Automated recalculation triggers accounted for changes in duty and shipping costs, enhancing accuracy and efficiency.

3. Compliance and Reporting: Tools were developed to ensure the accurate application of HTS codes, crucial for maintaining compliance with international trade regulations. Integration with third-party logistics providers like 4PL and DHL enhanced supply chain visibility, allowing for real-time updates from shipment booking to warehouse delivery.

Real Value Added by United Techno

The new FOB procurement models significantly improved operational efficiency and compliance. This led to cost savings due to a streamlined, accurate PO process and enhanced duty compliance, ensuring the correct HTS codes and duty rates were applied across international boundaries. Real-time tracking of goods enabled more informed decision-making, enhancing transparency from goods procurement to shipment.

Enhancing their IBM ERP optimized costs while strengthening compliance and efficiency, positioning our client to better manage their global supply chain.

How are you optimizing your supply chain through your ERP? Speak to United Techno today to make the most of your ERP.