Category Archives: Finance

Your Cash Costs You More Than You Think

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While a recent article from Stores on “the true cost of cash” didn’t actually tell you how much your cash costed you as a merchant relative to debit, credit, and other payment solutions, it did provide some good ideas on how to decrease the cost of handling, and securing, that cash.

Counting cash is costly. It takes time. It can be miscounted. Some of it can disappear in the counting process. However, automation technology in the form of “smart safes” can reduce this cost considerably.

Taking cash to the bank yourself is costly. It takes time, increases the risk of theft, and delays the credit to your account until it is received AND processed by the bank. However, cash logistics services such as armored transportation, deposit solutions, and cash processing can reduce those costs and get you your credits faster. For example, store receipts can be transmitted electronically.

It was a decent article, and if you handle a lot of cash as part of your business, you should consider checking it out.

Rub The Red From Your Bottom Line By Going Green

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Industry Week recently ran a great article on why “going green can mean less red for your bottom line”. The article quoted some great statistics from a recent Economist Intelligence Unit study that found that companies undertaking green initiatives as part of a strategy to cut costs and increase profits are

  • much stronger than their closest competitors in their ability to find and exploit new opportunities (20% compared to 11%),
  • much more profitable (24% compared to 13%), and
  • ahead in revenue growth (23% compared 11%).

In other words, green-based initiatives are twice as likely to increase your revenue, increase your profit, and increase the new opportunities available to you. In other words, going green yields more green in your pocket.

The article also pointed out a recent WSJ article that detailed an academic group’s independent confirmation that a Subaru auto plant in Indiana not only decreased solid waste by 99% but saved millions in the process by undertaking appropriately chosen green initiatives.

And the article pointed out that you don’t need to undertake massive efforts to get massive results. You can start with a series of small efforts and the collective results will yield big savings, which you can then put towards bigger efforts down the road. For example, regular maintenance on the right equipment will cut energy costs 20% to 30%. Compressed air systems are a prime example. Small part failures and minor leaks alone can increase energy utilization requirements up to 30%.

For more great ideas, see previous green category posts.

CFO: You Are The Weakest Link!

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A recent article in CSM Worldwide Insights about “Stress on the Supply Chain: Where is the Weakest Link?” about the perilous state of the US automotive supply chain hints at a much deeper question than just who will fail when one of the big three fails. Why will they fail, and how could failure have been prevented?

They’ll fail because they were too reliant on one company that has been essentially financially insolvent for years. What could have been done to prevent this? They could have diversified among not just the big three, but the big three foreign manufacturers who also have, and are opening up plants in, North America. Moreover, they could have diversified beyond the automotive industry. Cars aren’t the only things with gasoline-based engines. We have buses, trucks, boats, airplanes, and even riding mowers. Is it the same part for every vehicle? No, but there are similarities since all gasoline engines pretty much work the same way.

Why did they choose to overspecialize? Most likely because, during the last boom, business was so good that the CFO advised them to follow this path. A CFO who was more concerned with presenting an unrealistically and unsustainably good set of financial statements to Wall Street and investors than insuring the business was diversified and stable for the long term. The same CFO who, when times get tough, cuts New Product Development and Marketing first, the two things that could actually help the company thrive during a downturn, and then, more recently, kicks procurement in the face (and cuts positions, budgets, and new technology implementation) when, in fact, they could be the organization’s saving grace.

For this, I name CFOs, with their reluctance to focus on the big long term picture, the weakest link in the supply chain.

Does Your CFO Think All You Deserve is a Kick In The Face?

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I read a very startling article this weekend on SupplyManagement.com. A recent study across 550 financial directors and CFOs from large organizations in the US, UK, Scandinavia, Germany, Spain, Belgium, the Netherlands, Luxembourg, and France found that only 17% of CFOs believe procurement heads deserve a place on the company board.

That’s right, 83% of CFOs surveyed essentially believe — to quote Adrian Done, a professor at the Navarra IESE Business School and supply chain expert, that procurement deserves nothing more than a “kick in the face”. Ouch. At a time when their top priority is to save money, this is how they view procurement? Let’s hope their replacements, when they eventually get fired or laid off when company performance goes down the drain because they did the usual blind cut across the board which irreparably damaged the business, are smarter than this.

The True Costs of a Counterfeit Supply Chain

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I know this is Norman Katz’s area of expertise, and while I thoroughly intend to allow him to lead most of the discussion on this topic in his new column here on Sourcing Innovation, ISM’s e-Side Supply Management recently ran a great article by Robin B. Gray Jr., the Executive Vice President of the National Electronics Distributors Association that had some great facts, and tips, I just couldn’t ignore. Here’s the jist:

  • Counterfeiting and IP piracy amounts to 250 Billion a year (FBI),
    resulting in lost sales totaling as much as 600 Billion (WCO).
  • Counterfeiting and piracy have resulted in the loss of 750,000 jobs in the US alone. (CBP)
  • Eliminating counterfeit parts could create 250,000 jobs in the automotive industry alone. (FTC)

According to the Office of Educational Technology (OET), 50% of counterfeit electronic components were bought from brokers (30%) and unauthorized distributors (20%). While you might be able to find genuine parts from unauthorized sources, can you afford to take a chance? Not only are you at risk for lawsuits if something goes wrong because of a counterfeit part, the damage to your brand and reputation is potentially huge!

So, before you buy a product, not only should you make sure the source is authorized (which is often as easy as checking a manufacturer’s web-site or picking up a phone), be sure to:

  • assess the seller’s reputation,
  • determine the seller’s financial stability,
  • practice quality control,
  • determine the product’s traceability,
  • assess (your) legal liability, and
  • ask for documentation.