How ERP System (Oracle) Facilitates Companies in Auditing Process

How ERP System (Oracle) Facilitates Companies in Auditing Process

Technology is now playing a pivotal role in our day to day life matters. There is no doubt in it that usage of technology makes our life not only easy but more productive too. We can now handle multiple tasks at the same time which were not possible in the past. If we talk about oracle software (ERP system) then it’s also one of those inventions which gave us relieve and productivity in our daily work life. An oracle software is extensively using in most of the manufacturing and services industries.

The textile industry is also one of those industries which are getting multiple benefits from this technology. As it’s not only fulfilling the needs of finance but along-with that it’s also performing productive functions of accounting too. In general, if we closely look into the broader prospects of ERP system. Then it covers recording, summarizing and interpreting of accounting and finance data into more precise and efficient manner.

Why We Need ERP System (Oracle)?

The beauty of ERP system is that even an ordinary user can easily understand it within no time. And if we talk about the cost of ERP system then there is no doubt in it that it’s a bit high. But when we compare it with its benefits then it outweigh the cost from all aspects. Most of the big textile firms have their own internal audit functions due to the magnitude of financial transactions. Internal audit department uses different tools to carries out the audit of finance and accounting function. And this could only be fruitful if company uses highly integrated software system. The technology which is not only helps to summarize the data within no time. Along with that the authenticity of the summary/result could not be challenged anywhere.

ERP system makes life easier for auditors as it provides the best solution for auditing of financial and accounting transaction. Since the big organization’s transaction magnitude is so huge. So, the small or less integrated software cannot give the ultimate results in terms of speed and accuracy.

The usage and importance of technology varies company to company. In public limited companies, where people have invested their life savings in shape of investment in shares. So, being investors, they expect accurate, transparent financial position of the company time by time. The external auditors are normally hired by the shareholders to know the exact position of the company. These auditors have task to provide their opinion on the financial data of the company. If the company uses oracle then it makes it easier for external auditor to form their opinion on the financial data. Since there is no question about the accuracy and functionality of this highly sophisticated technology. So, the required outcome is normally obtained without any hassle.

Internal Audit of Purchases through ERP System:

The progress of company normally matters on different factors. A good marketing and production team cannot assure this thing that a company will progress. The financial and purchasing departments are also equally responsible for getting positive outcome. And for a company, the outflow of money equally concern as inflow of money. Because if you don’t have any appropriate check and balance on your financial activities. Then the efficiency of your sales and production teams couldn’t drag the organization on the way of progress. The ERP system didn’t ignore this important aspect too and it also efficiently manages the outflow payables of the organization.

Purchases Audit in Textile Company:

In order to know the in-depth of ERP system, we have to review the complete procedure that how it works in an organization. Let’s take the example of  Textile Company where most of expenses are on material requisition. When an audit of purchases carries out, you need to make sure that you have access to all modules in ERP. And it includes: Purchase requisition (PR), Purchase order (PO), Inward gate pass (IGP), Goods receipt note (GRN), Purchase Invoice (PI) and Purchase invoice voucher (PIV). Once you have complete access on these modules then it will really helpful to view the whole trail of transactions. Auditing these modules shall help to make opinion whether the purchases acquired through systematic procedure.

The purpose of purchase audit is to ensure that expenditures on purchases are actually for the use of the business. Further, we need to check this thing that all the materials are purchased according to agreed cost and units. In some firms, this audit is also called as reverse costing which gives the management about the clear picture of order after dispatch.

Where to Start?

The auditor normally starts with purchase order which is actually a main reason of every activity of order processing. After having the purchase order, he needs to the see all the purchase requisitions which were raised during order processing. And these are mainly includes; fabric requisition, accessories and trims requisitions etc. The purchase requisitions (PR) normally issued by marketing department who is responsible for delivery of goods to Customer. All the PRs normally signed by authorize person of department. The main motive for auditing the PRs is to check whether quantity and cost is in accordance with agreed value.

Purchase Order:

Once purchase requisitions are audited then the auditor normally moves on to Purchase department’s purchase orders. These purchase orders are normally issued against the purchase requisitions by the marketing department. While auditing purchase orders, the auditor is more curious about the quantity and unit price of the material. As these two things must be approved by the authorized person of the top management. All the purchase orders normally have an authorization person’s name on it. The good thing about ERP is that Purchase department’s POs fetches data from PRs. If there is no purchase requisition then no purchase order can be generated. So, the probability of extra or useless buying is not possible if you are using ERP system. But here the auditor normally reconfirms the quantities which are fetches from purchase requisitions.

Inward Gate Pass: 

Inward gate pass (IGP) is normally formed when goods arrived into production facility.  The IGP only signifies the date and time of arrival of goods against specific purchase order. It also shows the total quantity received against PO though. IGP is a proof of a delivery arrival which normally confirms that goods are delivered against specific PO. As the purchase order number is normally mentioned on the IGP. The Auditor normally needs to cross check the quantities of IGP with respect to its generated purchase order. In ERP system, IGP fetches data from purchase order so that each every received unit is checked under the light of demand paper.

Goods Receipt Note:

Goods receipt note is normally created when store & inventory department counted the material quantity. During Audit, the auditor checks the GRN to ensure that it has relevant PO, Quantity, Unit price. Further, he also checks this thing that all the documents are duly signed by the authority that controls the Store & inventory department. ERP integrates GRN with PO and IGP. So, GRN cannot be prepared until or unless the approvals of purchase order.

Invoice Posting:

The auditor needs to reconfirm whether the invoice posting against the PI is correct. Whether, it has proper tax rates, net values traces back to GRN and PO? If these are correct then make sure that PIV prepared on the basis of the whole data correct also. PIV had the correct nominal account in debit side with corresponding credit side. i.e. Purchases and Trade creditors. All these checks is normally performs within no time while using ERP system. Since, the integration of all document into one system can make this thing possible to compare and check value easily.

Opinion: 

An appropriate opinion can be made when an efficient audit is carried out through ERP which integrates each purchasing activity from purchase requisition to stock stacking. Although cost of implementation and maintenance of Oracle is high but the benefits are long lasting from every aspect.

 

ERP system

Why Blockchain Technology is Essential for Sustainable Fashion Industry

Blockchain Technology

The blockchain technology is not new for us. Whenever you talk about this technology the first thing which comes into mind is “Bitcoin”. As this technology is supporting all financial transaction of this virtual currency which became hot in past few years. Due to its exclusive feature of virtual payments, the blockchain technology became equally popular in other sectors too. As the said feature of payment overcome the lots of hassle of the businessmen, financial institutions etc.

What is Blockchain Technology?

The blockchain technology was invented by Satoshi Nakamoto in year 2009. As described earlier, it was made to facilitate the users of Bitcoin to make and receive payments through this technology. By using this technology, the users can make payments without involving any central bank or other financial intuition. With the passage of time, the blockchain technology is also using for other businesses and cryptocurrencies for virtual payments purpose.

In simple language, we can say it’s a set of databases which are connected with each other. And whenever, the user enters information in any database. It will update rest of the connected relevant databases automatically which are stored in different hard drives around the globe. There is no centralized storage in blockchain technology. And the data normally stores into different hard drives and servers of different countries or cities. So, the probability of data hacking is almost zero in this case of data storage. The synchronization process of the databases normally works through internet. The set of databases are called blocks and the link between these blocks is called chain. So, this is how the blockchain technology works and facilitating its users all over the world.

The scope and usage of blockchain technology is spreading in other industries too. There are so many industries like food, transportation, manufacturing and services where you can see successful implementation of this technology. This flexible technology not only improves the way of working in the said industries. Along with that it is also eliminated so many steps of documentations or complex file system through unique digitizing system. As the usage of digital identification of product/services, shipment tracking and smart contracts are proves of success of this technology.

Blockchain Technology in Fashion Industry:

As we discussed in our number of previous articles that sustainable practices are the need of present era. And the transparency of manufacturing and supply chain in fashion industry is a main ingredient for sustainable process. The blockchain technology also supports the fashion players in their sustainable product or service goal. Through this technology, the retailer can easily track its goods any time from manufacturing facility to the warehouse. Not only this, they can also track it further distribution means from warehouse to their point of sale. And the same information is also available for the end consumer to know better about life-story of their favorite brand.

There is no doubt that most of the famous brands are really worried about the counterfeiting of their hot articles. There are number of organized set ups which are totally dependent upon these type of illegal activities. They keep an eye on the upcoming range of the famous brands. And share the same material with their manufacturers for copy purpose. Their manufacturing counterpart copies the sent articles and dispatches the bulk quantity to them through swift means (by air). As these products are not only unethical but also not conforms the optimum quality standards. Besides brands, even consumer are also confuse during purchase that whether they are buying original or not? In blockchain technology, a consumer can easily access the complete information about the selected garment. So, it gives them a confident and proper verification that they are buying original brand owned product.

Why Blockchain Technology in Fashion Industry?

There some other tracking systems too exist into the market which can do the same job effectively. So, the question is why we need another new technology for the same purpose? Actually, the distinguish thing in blockchain technology is that the data can’t be altered or changed later on. Once the information is entered and stored then it would remain intact for end consumer in its original form. Like we described earlier, the information is stored in different block forms which are linked and stored in different locations. Since there is no central body involves into this so no one has the rights to alter the original information. So, the supplier or retailer can’t change the same later on. Further, the history log of all entries is also generating automatically and normally accessible to relevant entities for review.

Furthermore, the companies are also more curious to know the after buying feedback or experience of their loyal consumers. The surveys and researches are not the only medium to make decision of new or customized products. So, the fashion companies are now making contracts with tech companies to help them in this category. The famous outdoor apparel company “L.L.Bean” is taking help from Loomia’s blockchain technology for this. As Loomia will share the client’s data to L.L.Bean so that they could develop a better product for its clients. Here, we can’t ignore Martine Jarlgaard and Babyghost who considered and adopted this technology in year 2017. And the main motive behind this adoption was just to educate their consumer about the product manufacturing and its transportation. And there is no doubt; such transparency initiative through technology by these brands gives more confidence/loyalty in their consumers.

Our Input and Analysis:

The blockchain technology was originally made for virtual currency (Bitcoin). Till to date, the most of the countries of the world didn’t regulate this type of virtual currency. There is still need to do so many steps like how to certify the providers and platforms of this currency. If we see its application in fashion industry then it’s not fully conform the requirements of this industry. This is why, the apparel companies were just attracted and adopted this technology a few before (year 2017). And there are so many things which need to transform in the current technology according to their own industry. And for this the companies have to hire the developers to make the application according to their process. So, the main element is cost, which is really important when you are going to adopt this new technology.

Furthermore, if this technology is adopt by the most of the organizations. Then the other challenges would also arise of data protections, secrecy etc. Although, theoretically it is proved that the data hacking is not possible. Even then there is need to do certain steps and define protocols about the data protections. Because, before going into massive usage of this technology, the question regarding data protection may be arise. As there should be any organization who could take the responsibility of data protection. Secondly, the cost element will also be a main barrier in successful adoption. If this technology is not cost effective then chances of success or overall potential may be less than expectations. So, the transformation process and especially the running-cost of blockchain technology should be as cheap as possible. And after this, there is a chance that the scope and potential of this technology would be enhanced.

Is Old ways of Sourcing in fashion industry Still Key to Success?

 

sourcing in fashion

By definition, sourcing is a process through which something is obtained from another place. So, the sourcing in fashion industry is process to procure apparels from other best resources. The sourcing decision is normally made on the basis of several factors. Although sourcing of anything is not a simple task. That’s why, the concern people always first try to make/develop the product by their own. If the production of particular product is not cost effective, non-availability of skills, unsatisfactory suppliers or vendors then they have to go for sourcing. There are four factors on the basis of which one can decide whether to make or source the product. And it includes cost, production capability, quality and lead time of the required product.

Cost: In some products, the product cost is not as cheaper as compare to the outsource supplier. It could be due to several factors like cheaper labor availability or cheaper raw material cost due to several suppliers. So, in this particular case, you better decide outsource the production instead of in-house manufacturing.

Production Capability: Every territory and geographic location has its own characteristics and benefits. If we consider the apparel industry examples then some areas have skilled labor of top items (jackets, upper, shirts etc). Whereas, some are good in washing capability due to its good water PH value and labor proficiency. So, here in this particular case, again you will have to make fashion sourcing strategy according to the product characteristics and classification.

Quality:  Quality is no doubt the foremost requirement of every client. If you are compromising on product quality due to unskilled labor or usage of sub-standard raw material. On the other hand, you could have option to procure the better quality with same cost. Or by paying some extra pennies for better quality from contract manufacturing. Then your first choice would be none of the other to outsource the product.

Lead Time: The product lead time is also really crucial in product development process. Some companies have expertise and running regular orders in specific products. Such companies can offer you not only competitive prices of those products but also give you a short lead time. So, in that particular case, you will definitely choose outsourcing option.

Sourcing in Fashion Industry:

The sourcing in fashion industry was use to follow the traditional ways. In which the main motive is to reduce product cost through selection of cheapest manufacturers. And in order to get cheap manufacturing vendors, you have to look for in less developed countries. This is why, the fashion industry gradually moved from west to Eastern Europe to Asia and Africa.

With the passage of time, the ways of production and processing is changing and improving. The research and development teams are continuously focusing on time high quality product with low cost. In order to reduce the cost, instead of human being, the robots are working in many industries. So, by adding these automation options, one can control his/her day to day increasing labor cost. But practically speaking, its not possible to implement it on all operations of the fashion industry. Because due to fast fashion, every time you will have to change your production lines and flow drastically. But if this addition happens practically then it can affect 231 million manufacturing jobs at risk in almost 50 countries of the world. Anyhow, it’s a long debate which can distract us from our original topic i.e. sourcing in fashion.

Sourcing in Fashion: Automation & Digitization

Furthermore, through technology the sourcing in fashion can also be cost effective as well as fast.  The R&D people also suggested some new ways through which sourcing in fashion operation can handle efficiently and even effectively. And as per them, there are two ways which can revolutionize the fashion sourcing world and it include as follows:

Digitization in Sourcing:  

It’s the requirement of every client for more transparency in production and material sourcing. Along with that everyone is demanding for shorter lead-time and increased production. All of this can happen by the help of digitization in sourcing. As per the current market scenario where speedy but customize production trend is getting hot. So, you can’t meet the market trends without digital support. The sourcing in fashion with digital mode has positive impact on China which is a big player in textile sector. Since the wages are increasing in China so it’s time to move brand manufacturing outside China. In this particular matter, digitization will help the Chinese manufacturers to streamline its product cost.

In-fact, sourcing digitization will empower the client to speak more effectively. As per the experts, there will be a time when people place customize apparel orders through their mobiles. These order will digitally sent to the manufacturers for completing the desired job.  So, the elimination in barriers through digitization will definitely help the manufacturers to speed-up their productions. And this can shorten the lead time and allow end users to communicate their requirement directly. When we look this concept in a broader way then a storekeeper can place the order directly to manufacturer.   So, with the help of digitization, the sourcing in fashion is not only fast but cost effective too. Because the storekeeper will place the order as per most recent trend of the local market. And this would definitely decrease rate of waste clothes which lye on shelves due to non-selling.

Li&Fung is currently investing heavily in digitization concept. And their main motive is to streamline their operations, transparency in production and focusing on digital-design to avoid prototype cost. The famous brands Zara, H&M and Macy’s are also focusing on same line. What they are doing, they are trying to change the whole shopping experience of the customer who visit them. They will try something to the customer and then it will be customized by the help of AI and made nearby.

Automation in Sourcing:

Automation in sourcing means you replace human labor with robots. This approach is vice versa to the traditional sourcing in fashion. Where everyone is normally prefers remote manufacturers due to low cost. But in this approach, your manufacturing is handling by robots so you try to build manufacturing set up closer to end user markets. Moreover, you have a close interaction with the end user so the product innovation or customization is possible. Along with that you can easily enhance your production speed which will shorten the lead time of high fashion apparels. Furthermore, changing in geographical location can also eliminate the huge cost and hassle of long-distance transportation/duties. In-future, if this concept runs well then there will be no inventory at all as all products are made on-request.

There is no doubt that most of the people believed that in future automation would be the major driver in sourcing decision. And this thing will happen in next few years when sourcing people prefer automation instead of labor cost. Its fact, by implementing automation, there is chance the number of people will lose their jobs. But on the other hand, the new jobs are also created with better remunerations. And these new jobs would be a bit tech oriented like data analyst, engineers, technician etc. By adopting automation, factories have even a better chance to grow. So, they could also adjust the surplus staff to other vacant posts (after some training). Anyhow, there are some practical limitations which are also discourage the concept of automation in fashion industry.

Sourcing in Fashion: Practical Approach

There are some people who don’t believe on automation and digitization approach. As per them, the apparel industry is not like other industries where production steps are fixed.  As every product production steps are different from past products due to change in fashion trends (which are already a more volatile thing of current phase). So, you can’t replace skilled workers with robots. On the other hand, some believe that digitization process accompanied with automation can be practical and beneficial. But it’s not a homogenous which equally fits and beneficial for all. As it would be more practical for some brands and may be impractical for few of them.

Sourcing in fashion through digitization and automation is no doubt revolutionary concept for fashion players. And there are so many brands which are transforming their processes to take maximum benefits from this concept. Through automation, you can’t say this thing that mass production will again shift and run in the West in next-decade. But you will see many players who will return and collect the benefits of this concept.

How Google Jacquard Supports The Smart Levi’s Denim Jacket

How Google Jacquard Support The Smart Levi’s Denim Jacket

The global smart sensors market is expected to grow at CAGR of 11.25 percent for year 2017 – 2021. As per the recent report which covers both present scenario and the industrial growth outlook of the smart sensor market. The main and major driving force of this growth is wearable technology. As we discussed in our earlier article that how wearable technology supports health and fashion industry. Along-with that, its contribution in military and other industrial sectors (mines, wind turbines, and oil-rigs) is also really helpful. Smart sensors are normally incorporated with wearables which directly connected with the cell phones or satellite transmission.  Recently Google and Levi’s collaboration launched a new smart levi’s denim jacket for cyclists and bikers.

Levi’s Denim Jacket with Jacquard by Google:

The Google unveiled its first smart jacket based on Jacquard technology last month. It’s a joint efforts of Google’s Advanced Technology and Products (ATAP) team and the famous clothing brand Levi Strauss. This smart top is developed with the Jacquard technology. And after having a successful launch, the technology people could get an idea that Jacquard platform can be used for such connected devices too. The Levi’s denim jacket is now available online as well as some selected US stores of different cities (Chicago, New York, San Francisco & Santa Monica).

Levi’s Denim Jacket Construction:

As per Paul Dillinger, vice president of global product innovation for Levi Strauss & Co, it’s isn’t just about technology for technology’s sake. As this garment guide the cyclist about ride navigation, along-with that it ease the cyclist to perform other simple tasks without taking off his/her eyes from the road. The rider’s phone is connected with cuff snap tag wirelessly. The said snap tag also notifies the cyclist/biker about calls and massages with light or haptic feedback.

The Levi’s denim jacket’s left cuff is made with conductive yarn which enables user for touch interactivity.  So, the user can do the simple tasks like answering or disconnecting calls, change music and accessing navigation information (by voice) with no hassle.  The digital connectivity is provided by the jacquard snap tag which is attached on the sleeve cuff.  When a cyclist/biker swap on the sleeve, the tag sends the wireless signals to the phone for performing the requested action.

Levi’s Denim Jacket Functionality:

While conceiving the urban cyclist/biker into mind, the Levi’s denim jacket has stretchable shoulder fabric. It has opening in the back for ventilation as well as dropped hem in the back. During finalizing the overall shape of levi’s denim jacket, the function and ease of wearer was on top of consideration.  As per Levi’s CEO Chip Bergh, the both companies plan to integrate more functions into the jacket. And this would involve cuttin g the need to pull your phone out all the time. As he further revealed that they encountered a lot of challenges while developing such innovative product. And even at one point, the jacket’s sleeve caught fire which was later on fixed and rectified.

This is not the end, as Levi’s is continuously striving to attract its clientele with some of its own innovation in the online world. And for that sake, the company has recently launched a chatbot on its site that serves as a virtual stylist.

 

Photos: Levi’s Denim Jacket with Jacquard™ by Google

Sustainability in Wearable Technology and E-Textile

Sustainability in Wearable Technology

The technology is becoming more efficient, accurate as well as even personalized now. The hardware devices are smaller, less noticeable and the data collection is more easy and smooth. The wearable technology companies own the user’s physiological data which is normally collected via mobile applications and devices, with an intention to perform any kind of operations on it. And this operation can be like analyze it, interpret it or even they can sell it without user consent. For instance, the personal fitness activities data is normally use to monitor worker’s health for job worthiness.

There are several technology giants and startups which are extensively working to make the next wearable gadget or application for body data tracking. This design will focus to connect multiple sensors and applications on the body for a more integrated view of the data. This is called a body area network of wearable devices which is connected with internet.

Sustainability in Wearable Technology:

In continuity of the above approach, a very huge wearable technology project is going to launch by Europe now. This project is investing EUR 2.4 million on the teams of creative people and development of latest technologists. And they will offer new ideas to the next generation for sustainability in wearable technology and e-textile. There are seven organizations across the Europe along with “Queen Mary University of London” and “University for the Creative Arts” are the part of this project name “Wear Sustain”. And for this, they have already launched the first of its two competition call-outs last month.

The said program is looking for the applications of the teams of engineers, design, art, technology and business experts. Because they can contribute an innovative and practical sustainable solutions for the wearable technology and e-textile. The fund of EUR 2.40 million will spend on the 48 teams of the experts (EUR 50,000/team) through innovation vouchers. And with the input from advisers and experts across the Europe, they will develop prototypes and take ideas from market. These prototypes will comprise of sustainability in wearable technology and e-textile. And all they will exhibit in a final showcase event late in 2018.

Wearable technology Gains:

The main motive of “Wear Sustain” is to develop such creative and technology oriented practices which support sustainable and ethical innovation methodologies for wearable technology and e-textile. And at the end of this project, they will publish online tutorial along with sustainable strategy guidelines. This information will definitely help the entrepreneurs and other industry’s stakeholder to aware the sustainability in wearable technology. Furthermore, it will also encourage them to use the recommended best practices for the future of society.