Category: articles

Production marshaling – what is it, and what is the application?

Post author By Maksymilian Śniegocki
Post date November 4, 2024

Table of contents

What is a production route?
Technological (production) route – what is it used for?
Types of times within the production route.
How does the technological route affect production efficiency?
Production marshaling vs. ERP system

What is a production route?

A production route, or technological route, is a detailed production plan that includes the sequence of operations needed to produce a product. It provides information on:

Technological processes specify the following steps to process raw materials and semi-finished products.
Machinery and resources indicate each operation's machinery, equipment, and resources.
Production times consider the time required for each operation, which enables precise planning.
Technological requirements include quality, technical control, and safety requirements.

Technological (production) route - what is it used for?

The technological route is used mainly in production planning to accurately determine the following work stages and the resources needed. Here are the most critical applications of the production marshal:

Production scheduling: With a production marshal, you can accurately determine the production duration, allowing you to plan the work schedule better.
Resource allocation: A production marshal identifies the resources, such as machinery, tools, and personnel, needed at each production stage, which helps optimize their use.
Progress monitoring: Production marshaling allows one to keep track of a production unit's stage, which helps to monitor the work on an ongoing basis and make changes when necessary.
Quality control: The marshaling also considers quality control steps, ensuring that products meet appropriate standards and norms.
Cost reduction: The production marshal helps reduce operating costs by optimizing processes and allocating resources.

Types of times within the production route.

There are several types of times within the production route that are important to the efficiency of the entire production process:

Preparatory time (setup time): This is the time needed to prepare a machine or workstation before production begins. It includes setting up tools, checking parameters, and preliminary quality control.
Processing time: This is the time it takes to properly process materials at each stage of production, including processes such as cutting, welding, assembly, or painting.
Transportation time refers to moving raw materials, semi-finished products, or products between production stations.
Waiting time is when a semi-finished product waits for the next operation. This often results from a lack of available resources or machine downtime.
Inspection time refers to the time spent inspecting the quality of products at various stages of production.

How does the technological route affect production efficiency?

Technological marshaling directly impacts production efficiency, as it helps optimize each process stage. The main ways in which it affects production efficiency are:

Minimizing downtime: With precise planning of time and resources, machine downtime and waiting for resources can be reduced.
Optimization of resources: Marshaling enables better management of the availability of machines, tools, and personnel, leading to more efficient use.
Better quality control: Including quality control steps in the marshaling helps avoid errors and losses associated with defective products.
Reduced operating costs: Optimization of production processes and reduction of downtime allow for reduced costs, which improves production profitability.
Process scalability: Marshaling makes it easier to scale production processes, which is essential when product demand increases.

Properly planned production marshaling can significantly increase productivity, resulting in better financial results and greater customer satisfaction.

Production marshaling vs. ERP system

Modern manufacturing companies are increasingly using ERP (Enterprise Resource Planning) systems to manage all aspects of the business comprehensively, including production marshaling. ERP systems, such as SAP, Oracle, or Microsoft Dynamics, integrate manufacturing, logistics, and financial processes, enabling precise production planning and monitoring.

What are the benefits of manufacturing markup in an ERP system?

Process automation: ERP automates the processes involved in marshaling planning and monitoring, which eliminates the risk of errors resulting from manual data entry.
Real-time data access: ERP provides access to data at every production stage, allowing for real-time progress tracking and decision-making based on up-to-date information.
Integration with other modules: ERP systems integrate manufacturing marshaling with other areas such as warehousing, procurement, and sales to manage the entire supply chain better.
Reporting and analysis: ERP systems generate reports and studies on marshaling performance to identify areas for optimization.
Resource management: ERP enables better resource management and work scheduling, which increases production efficiency and allows better utilization of machinery and employees.

articles Business knowledge

BOM (bill of materials) – what it is, types, benefits

Post author By Maksymilian Śniegocki
Post date October 24, 2024

Table of contents

What is a BOM?
What is the material BOM is used for?
Bill of materials – is it necessary?
Construction of the BOM document
Types of material balances
The benefits of creating a BOM for manufacturing

BOM (Bill of Materials) is a crucial document used in manufacturing and logistics. It lists all components, materials, and raw materials needed to produce the final product. Many manufacturing companies base their processes on the BOM to manage resources and costs and ensure a smooth production process.

A thorough understanding of a BOM and its benefits allows companies to plan, produce, and deliver better products to market.

What is a BOM?

A BOM, or bill of materials, describes a product’s complete structure and contains information about all the elements necessary to produce it. The BOM includes raw materials, semi-finished products, parts, technical documentation, and instructions. It is a tool for determining the bill of materials and a way to describe precisely how the various components are related.

A BOM usually consists of several levels, depending on the complexity of the product. Each level describes different components, which can be independent products or intermediates that will be combined to make the final product.

What is the material BOM is used for?

A material BOM serves many functions in a manufacturing and logistics company. It is crucial in planning, production, and resource management processes. The BOM helps in:

Production planning - The BOM provides insight into what resources are needed at various production stages, facilitating demand planning.
Cost control - The detailed information in the BOM allows for accurate calculation of the costs of raw materials, semi-finished products, and labor associated with manufacturing a product.
Inventory management - The BOM facilitates inventory management, enabling the company to monitor and optimize the number of raw materials and components available in stock.
Production process management - The BOM allows for monitoring production progress and identifying potential problems related to material shortages.

Bill of materials - is it necessary?

The BOM is essential for effective production process management in most manufacturing companies. Introducing a BOM into production allows for a better understanding of all the stages a product goes through, from raw material to finished product. Regardless of the production volume or the product’s complexity, a BOM is the foundation of an efficient production line.

With a BOM, controlling the entire production process is easy. Introducing even a minor change to one component without updating the BOM can result in production problems, delays, and increased costs. This is why keeping the BOM up-to-date and accurately maintained is so important.

Construction of the BOM document

A BOM is usually a hierarchical document that describes the structure of a product in detail. The structure of the BOM may vary from product to product and company to company, but several elements are invariable:

Product identification - The BOM contains information about the product name, part number, version, and technical details.
Component list - The BOM contains a complete list of raw materials, parts, and components needed for production. Each element is assigned to a specific level in the structure.
Quantity specification - The BOM describes how many pieces of a component are needed to produce one piece of the final product.
Description of relationships between components - The BOM indicates which elements are related to each other, allowing you to understand the assembly and production process better.
Production time and costs - More advanced BOMs also include information on production times, downtime, and costs associated with the manufacture of components.

Types of material balances

BOMs can take various forms, depending on the needs of the enterprise. The most common types of BOMs include:

Production BOM - Describes the components and raw materials needed to produce a specific product. It focuses on physical materials and assembly steps.
Engineering BOM (EBOM) – This material balance is created at the product design stage. It describes all the components that must be considered during production based on engineering specifications.
Marketing BOM (MBOM): This includes packaging, labeling, and product delivery information. It focuses on marketing components such as packaging and promotional materials.
Service BOM - Describes the components needed to service and repair a product after manufacture.

The benefits of creating a BOM for manufacturing

Creating a BOM has many benefits, especially for manufacturing companies:

Better control over production - the BOM enables accurate planning and monitoring of all production stages, avoiding delays and problems with material supply.
Cost reduction - The BOM allows you to manage resources more precisely, leading to financial savings.
Increased efficiency - A BOM allows for better inventory and raw material flow management, resulting in greater production efficiency.
Improved communication - A BOM facilitates cooperation between different departments in a company, such as production, logistics, marketing, or engineering.
Faster implementation of changes - If changes need to be made to a product, a BOM allows new components to be introduced quickly and accurately without the risk of errors.

In summary, the BOM is integral to production and logistics, enabling effective management of resources, costs, and production processes. With it, manufacturing companies can plan and achieve their goals effectively.

articles Business knowledge

ABC analysis – what is it, and when can it be useful?

Post author By Maksymilian Śniegocki
Post date October 17, 2024

Table of contents

ABC analysis – what does it mean?
What is the ABC method based on?
ABC classification – how do you prepare the breakdown?
ABC method – examples
ABC analysis – when is it worth conducting?

ABC analysis, also known as the Pareto method, is one of the most popular techniques for managing inventory, production, and logistics. It involves dividing an assortment of products into three groups according to their value to the company. The ABC method allows us to manage resources better and focus on the items that generate the most benefit or require the most attention. It will enable companies to optimize their operations, improve efficiency, and better allocate resources.

ABC analysis - what does it mean?

The name “ABC” refers to three main categories for allocating goods or resources:

A - essential items that account for the most significant portion of value, but their number is usually the smallest. Usually, about 20% of the inventory generates 70-80% of the value.
B - the intermediate category, i.e., products or resources with moderate value for the company. This is about 30% of goods, which generate about 15-25% of value.
C - the least important products, which generate the least amount of value, but their number is the highest. About 50% of inventory creates only 5-10% of value.

ABC analysis, also called Pareto analysis, is based on the Pareto principle, in which 20% of causes are responsible for 80% of effects. Applying this method to companies allows them to focus on the most critical resources that significantly impact financial performance.

What is the ABC method based on?

The ABC method involves analyzing an assortment of products based on their value. The principle is simple – products or resources are classified according to their value to the company’s total revenue or cost. The process consists of several steps:

Identifying products or resources: The first step is determining the complete list of goods, resources, or services to analyze.
Calculating the value of each product: each product should be evaluated based on its contribution to the value of sales, purchase costs, revenue generated, or another critical indicator.
Sorting the products: after calculating the value for each item, the products should be sorted from highest to lowest value.
Categorization: The products are then classified according to the 80/20 rule. The most important 20% of the elements (category A) account for most of the value, the next 30% (category B) are intermediate elements, and the remaining 50% (category C) account for the smallest part of the value.

ABC classification - how do you prepare the breakdown?

Preparing ABC classification in practice requires following several key steps:

Gather data: Collect all necessary data on inventory or products. This could include sales, purchase costs, margins, or the frequency of use of goods.
Calculate each item's contribution to the total value. Each item should be evaluated in terms of its value to the company, such as revenue or production costs.
Divide the elements into groups: divide the assortment according to the Pareto principle - 20% of the resources generate 80% of the value (group A), 30% of the resources generate 15-25% of the value (group B), and 50% of the resources are responsible for only 5-10% of the value (group C).
Apply the classification in practice: Products from group A should receive the most attention—it is worth using more advanced management strategies for them, while items from group C can be managed more simply due to their lower importance.

ABC method - examples

Example 1: Inventory management

Imagine a company that sells electronics. An ABC analysis shows that A products (e.g., laptops and smartphones) account for 20% of the product mix but generate 80% of revenue. B products (e.g., accessories) are 30% of the assortment, generating 15-20% of revenue, and C products (e.g., cables, cases) are 50% of the assortment, generating only 5-10% of income. In this case, the company can focus its activities on group A to better manage resources and optimize sales.

Example 2: Manufacturing

In the case of a manufacturing company, ABC analysis can look at the raw materials used in the production process. A-grade raw materials are the most essential and most expensive or frequently used items. B-grade raw materials are of average value, and C-grade raw materials are rarely used and account for a small percentage of total costs.

ABC analysis - when is it worth conducting?

ABC analysis is helpful in many cases, and its application can help a company at various stages of its operations:

Inventory management: A company can use ABC analysis to better manage its inventory. Instead of paying the same attention to every product, it can focus on the essential items that bring the most benefit.
Production optimization: For manufacturing companies, ABC analysis can help identify the most essential raw materials critical to the production process.
Resource management: The analysis can also help manage time, costs, and even employees - identifying the areas that generate the most value for the company.
Purchasing planning: In logistics and sales, the ABC method allows for better purchase planning so the company can avoid overstocking low-value goods.

In summary, ABC analysis is a versatile tool that can be used in various aspects of a business. It helps identify critical resources, better manage them, and focus attention on elements that have the most significant impact on company performance. In practice, it is one method that leads to more effective management and operations optimization.

articles Business Central Business knowledge Dynamics 365/AX INLOGICA products Other Microsoft products Recommended

Microsoft Licenses – Learn about cost differences – which model wins? Subscriptions or perpetual usufruct?

Post author By Maksymilian Śniegocki
Post date October 15, 2024

Table of contents

Business Central license fees
Advantages of subscription
A cost that won’t hit your wallet? See for yourself

In our previous article: Microsoft Licenses – Subscriptions or perpetual usufruct? Which option is better for your business we examined the strengths and weaknesses of both licensing models, providing a comprehensive comparison. Below is a detailed overview of the costs for these options.

Business Central license fees

The example illustrates a 5-year cost projection for a company using Business Central with 20 users. We calculated licensing expenses over this period to provide a clear understanding of the financial aspects associated with each licensing approach.

A comparison of licensing models often shows significant differences in cost structure, especially over the long term. The chart shows how the two models evolve in terms of cost.

The subscription model appears more cost-effective at the outset, with lower start-up costs, making it an attractive solution for companies that want to implement a system quickly without incurring a large one-time outlay.

In the holding model (perpetual license), the company must initially pay a larger sum to purchase the software. However, after a certain period, it no longer incurs regular licensing costs. The chart shows that in the long run, subscription costs start to equal the price of a one-time purchase, and after a certain point, the subscription may become slightly more expensive.

Advantages of subscription

However, it is worth noting that a subscription offers:

The subscription model is undoubtedly a better option for companies needing flexibility and regular updates. Unlike a one-time license, a subscription allows you to adapt the system to your company’s changing needs. The ability to spread the cost over smaller, regular payments makes the subscription model more affordable and flexible, especially for companies with changing needs and limited IT investment budgets.

Choosing the two models ultimately depends on a company’s needs, development plans, and budget. However, for rapidly growing companies, the subscription model offers greater flexibility and the ability to continuously adapt the system to new business conditions, making it a more attractive option.

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articles Business Central Business knowledge Dynamics 365/AX INLOGICA products Other Microsoft products Recommended

Microsoft Licenses – Subscriptions or perpetual usufruct? Which option is better for your business?

Post author By Maksymilian Śniegocki
Post date October 15, 2024

Table of contents

Available licensing models
Read a comparison of the advantages and disadvantages of the available licensing models-shortcut
ADVANTAGES of using subscription licensing- details
DISADVANTAGES of using perpetual licensing- details
Further doubts? See which industries are successfully using the subscription model.

If you’ve ever wondered whether it’s more cost-effective to subscribe to Microsoft products monthly or to purchase a license on a one-time basis, here’s a detailed analysis of both options. We examine the costs associated with acquiring and maintaining a license to help you make an informed decision.

Available licensing models

Perpetual Licensing or On-premises.

We offer perpetual licenses. The cost includes the license price multiplied by the number of users, the cost of dedicated modules, and an annual subscription of 18% of the license value, known as the Enhancement Plan. The customer has the option of using its own infrastructure or an additional paid cloud computing service.
Subscription Licensing

The offer is based on recurring fees depending on the number of users, quickly allowing you to adjust the number of users according to your needs. The infrastructure can be based on customer or cloud resources, with the environment managed by a partner. For example, the Business Central system distinguishes between users: total users and team members, offering free licenses for the system administrator and an external accountant.

Read a comparison of the advantages and disadvantages of the available licensing models-shortcut

ADVANTAGES of using subscription licensing- details

The choice of subscription licensing presents itself as significantly more advantageous for several vital reasons that make this model attractive to modern enterprises. Below are the arguments for choosing a subscription:

Flexibility and scalability: Subscription licensing allows companies to easily adjust the number of licenses to meet current needs. By arbitrarily increasing or decreasing the number of users each month, companies can effectively manage costs to suit the current situation and project requirements.
No significant initial investment: Unlike perpetual licenses, the subscription model does not require a substantial initial investment. Smaller, regular monthly fees are more affordable for a company's budget, making the technology more accessible, especially for smaller companies.
Constant updates and innovation: Subscriptions guarantee access to the latest software versions and updates, which is crucial in a rapidly changing technology environment. Companies using the subscription model are assured that their software is always up to date, which helps maintain high operational efficiency and data security.
Access to support and service: Subscribers are often provided with technical support and access to additional resources and tools that can help maximize software performance. Regular technical support and consultation can significantly reduce the risk of downtime and other operational problems.
Cost predictability: Regular monthly payments make budgeting and controlling expenses easier. Companies can forecast future IT costs more accurately, making it easier to manage finances and avoid unexpected expenses.
Response to changing business needs: The subscription model allows rapid adaptation to changing business and technology requirements. Companies can quickly introduce new technologies and services, promoting innovation and market competitiveness.

In an era of digital transformation, where technology is evolving rapidly, and flexibility and adaptation to change are becoming critical to business success, subscription licensing offers companies significant advantages. Subscriptions are a forward-thinking and strategic investment for any business, providing ease of customization, reduced upfront costs, and ongoing access to the latest technology and support.

DISADVANTAGES of using perpetual licensing- details

While perpetual licensing may seem like an attractive option due to its one-time payment and permanent right to use the software, several disadvantages can make this model less beneficial for today’s businesses:

High upfront costs: perpetual licensing requires a significant one-time investment, which can burden the budget, especially for small and medium-sized enterprises. Significant upfront expenses can limit a company's liquidity in the short term.
Lack of flexibility: This model needs to make adjusting the number of licenses easier to meet changing business needs. Reducing the number of users does not translate into lower costs, making the model less flexible than subscriptions.
Additional maintenance costs: To benefit from software updates and technical support, companies often must pay for additional plans, such as the annual Enhancement Plan, which generates further costs.
Risk of technological obsolescence: software purchased on a perpetual license basis can quickly become obsolete if a company does not continue to buy upgrades. This means that the investment may lose value, and the company may find it challenging to remain competitive.
Complexity of license management: Managing perpetual licenses, especially in large organizations with diverse software, can be complicated and time-consuming. Companies must keep track of which software versions are being used and their support and upgrade dates.
Lack of access to the latest technology: without continuous updates, perpetual license users may not have access to the latest features, tools, and security enhancements, which is standard with the subscription model.
Difficult to budget for the long term: while a one-time cost may seem beneficial in the short term, long-term maintenance, upgrade, and support costs can be challenging to predict and can significantly increase the total cost of software ownership.

These limitations can make perpetual licensing less attractive to companies seeking solutions that enable them to adapt and innovate quickly, given rapid technological change and a dynamic business environment.

Further doubts? See which industries are successfully using the subscription model.

The modern business world is leaning toward payment models based on regular monthly fees. Such a payment model has many benefits, such as continuous product improvements, regular updates, and the ability to customize the product based on customer feedback and experience.

Product subscriptions: Examples include subscriptions for cosmetics (e.g., Birchbox) or food (e.g., HelloFresh), which deliver monthly packages of products directly to the customer.
Amazon Prime: A subscription model that offers faster delivery and access to streaming services.
Allegro Smart!: A subscription service offering free delivery and other benefits to users.
Hebe Drugstore: Subscriptions for packages of cosmetics.

The subscription model provides numerous benefits, including flexibility, scalability, lower upfront costs, predictable monthly payments, constant access to the latest updates, improved customer service, better cash flow management, access to a broader range of features, the ability to cancel or adjust the service at any time, and easy integration with other services.

articles Business knowledge

MES system in a manufacturing company – what is it used for?

Post author By Maksymilian Śniegocki
Post date October 10, 2024

Table of contents

MES system in a manufacturing company – what is it used for?
What is an MES (Manufacturing Execution System)?
What is MES software used for?
Key features of the MES program
MES vs. ERP system – the differences
Benefits of implementing a Manufacturing Execution System
How to integrate MES software with ERP?

MES system in a manufacturing company - what is it used for?

Modern manufacturing companies increasingly implement advanced production management systems to optimize production processes and increase productivity. One such solution is the MES (Manufacturing Execution System). MES software is a vital tool for companies that want to monitor and control every production stage in real-time. In this article, we will explain what an MES system is, what it is used for, and the benefits of implementing it in a manufacturing company.

What is an MES (Manufacturing Execution System)?

MES (Manufacturing Execution System) is software for real-time management and monitoring of manufacturing processes. Its primary purpose is to collect data from production machines and equipment and supervise each stage of the production process – from order acceptance to production finalization. The MES system integrates operational, logistical, quality, and other production-related data, giving a complete view of what is happening on the production floor.

What is MES software used for?

MES software plays a crucial role in production management, offering comprehensive tools for monitoring, controlling, and optimizing production processes. The main applications of MES are:

Monitoring production processes: MES tracks each production stage in real time, enabling you to react quickly to any problems or irregularities.
Production resource management: MES supports the management of machines, tools, and employees, ensuring efficient use of available resources.
Quality control: the MES software collects data related to quality control, allowing for ongoing monitoring of standards and identification of potential quality problems.
Production optimization: MES provides the information needed to optimize processes, resulting in increased production efficiency, reduced material losses, and minimized downtime.

Key features of the MES program

The MES system offers a wide range of functions that support production management. Among the most critical tasks of MES software are:

Real-time monitoring: MES enables real-time tracking of machine and equipment operation, which allows immediate identification of technical problems or downtime.
Production management: the MES program enables production planning, resource allocation, and supervision of production runs, which improves operational efficiency.
Quality control: With MES, you can monitor production quality parameters, identify defects, and implement corrective actions, which allows you to maintain high-quality standards.
Material flow tracking: the MES records the flow of raw materials, semi-finished and finished products through production, enabling accurate analysis and optimization of material consumption.
Data analysis: the MES system collects production data that can be analyzed to improve production efficiency, identify problems, and implement optimization strategies.

MES vs. ERP system - the differences

Although MES and ERP (Enterprise Resource Planning) systems are commonly used in manufacturing companies, they have different purposes and functions. The main difference between the two is:

ERP: an ERP system is enterprise resource management software that covers finance, sales, purchasing, warehousing, HR, and other administrative processes. It focuses on enterprise-wide planning and process management.
MES: An MES system, on the other hand, focuses on managing production processes in real-time. MES monitors and controls detailed operations at the operational level, focusing on production process efficiency.

The two systems can work together, and their integration allows for even better coordination of company activities.

Benefits of implementing a Manufacturing Execution System

Implementing an MES system in a manufacturing company brings many benefits, such as:

Increased production efficiency: by tracking production processes in real-time, the company can quickly identify and solve problems, resulting in increased productivity.
Improved process control: MES provides full transparency of production processes, allowing better resource management and control over production quality.
Optimization of material consumption: the MES system monitors and optimizes raw material consumption, reducing material waste and reducing cost.
Reduction of downtime: By monitoring the operation of machinery and equipment, the MES system allows you to quickly identify technical problems and minimize downtime.

How to integrate MES software with ERP?

Integration of the MES system with ERP is crucial to ensure the smoothness and consistency of operations in the company. The cooperation of the two systems enables harmonious data exchange between production and administration, which translates into process optimization.

To integrate MES with ERP, it is necessary to:

Defining the goals of integration: before starting the integration process, it is worthwhile to precisely define the goals the company wants to achieve and identify the key areas that require integration.
Alignment of the systems: the two systems must be adjusted to work together. This process can include modifications to the software, customization of interfaces, and configuration of data exchange.
Testing: Before the integration is fully implemented, tests are essential to ensure the systems are working as expected and data is being transferred correctly between them.

In summary, an MES system is vital in a manufacturing company’s arsenal for real-time monitoring and controlling production processes. By integrating with an ERP system, a company can maximize the use of its resources, minimize downtime, and increase production efficiency.

articles Business knowledge

What is electronic document circulation and what does it involve?

Post author By Maksymilian Śniegocki
Post date October 3, 2024

Table of contents

What is electronic workflow?
Electronic document circulation in a company – what does it consist of?
Electronic document workflow system – examples
Electronic document circulation: When is it an obligation?
How can an electronic workflow in a company with ERP be implemented?
Benefits of implementing electronic document circulation

In the digital transformation era of businesses, automation, and process optimization are critical to streamlining companies’ daily operations. One of the main tools that contributes to streamlining work is electronic workflow. What exactly does it mean, what does it consist of, and what are the benefits of implementing this system? The following article will discuss these issues, including practical examples and critical information on implementing the system in a company.

What is electronic workflow?

Electronic document workflow automatically manages company records, sending, processing, archiving, and approving documents electronically. Unlike traditional work with paper documents, electronic systems allow for the rapid and secure flow of information within a company, regardless of size.

This means eliminating many manual operations, such as printing, physical signing, or transferring documents between company departments. Everything is done with the help of integrated IT systems, which provide transparency, an audit trail, and control over documents at every stage of their circulation.

Electronic document circulation in a company - what does it consist of?

Electronic document workflow in a company involves digitizing and automating all the processes involved in document management, from creation to transmission, approval, and archiving. The critical steps of this process include:

Document creation - Electronic tools can create documents in integrated systems such as ERP. Instead of creating paper documents, users can generate digital invoices, contracts, or reports.
Document transfer - Documents can be automatically transferred between departments, employees, and management, with an entire audit trail. Electronic transmission eliminates the risk of lost documents and minimizes waiting time.
Approval - Electronic document workflow systems allow the automatic assignment of document approval tasks to appropriate people. Approval can occur in the ERP system, and each approval step is automatically recorded.
Archiving - Once the workflow is completed, the documents are stored in an electronic filing system, which allows easy retrieval and monitoring of all processed documents.

Electronic document workflow system – examples

Examples of the most used documents in the electronic document circulation system are invoices, orders, reports, vacation requests, or business contracts. Also worth mentioning are:

Purchase invoices: The system can automatically read a purchase invoice, assign it to the appropriate purchase order, send it to the accounting department, and send an approval notification to the relevant people.
Vacation requests: An employee can submit vacation requests online. They are then automatically sent to the immediate supervisor for approval, after which the system archives approved requests.
Contracts: Integrated workflow systems also enable managing a contract's life cycle - from creation through negotiation, approval, and storage of documents in the company's database.

Electronic document circulation: When is it an obligation?

The issue of electronic document circulation is familiar, but in some sectors, such as public administration, such systems have been made mandatory. Electronic document circulation: When has it become an obligation? In Poland, as of January 2021, the Law on Digitization requires public administration to implement e-documentation. More and more private companies also choose to implement such solutions because of the legislation and the business benefits.

How can an electronic workflow in a company with ERP be implemented?

Implementing an electronic workflow in a company, especially one integrated with an ERP system, is a complex process that requires proper planning and the involvement of IT experts. Here are the critical steps in the implementation process:

Needs analysis - In the first stage, it is necessary to determine precisely what documents in the company will be digitized and what processes should be optimized. This allows you to identify what functions of the ERP system will be necessary to handle document workflow.
Selection of software - Various ERP solutions and systems dedicated to electronic document workflow are available on the market. The choice of the right tool depends on the company's specifics, size, and needs.
Data migration - The next step is to transfer the documentation to a digital system. This may include archiving and integrating existing paper documents into the new system.
Process automation - After implementing ERP software, a company can set up workflow paths to automate document creation, approval, and archiving.
Employee training - Training employees to use the new system is crucial in implementing an electronic workflow. Many companies must adequately prepare their employees for the change in their work.

Benefits of implementing electronic document circulation

Electronic document workflow in a company saves paper and space and offers many operational benefits. Here are the most important of them:

Increased work efficiency: Many automated processes have accelerated document circulation and significantly reduced waiting time for approvals and document execution.
Data security: Storing documents digitally eliminates the risk of losing or destroying them. Increased control over document access also ensures the protection of confidential information.
Cost savings: Implementing an electronic document workflow eliminates the need to print, store, and send paper versions of documents, leading to lower operating costs.
Transparency and auditing: An electronic document workflow system allows you to track every step of document processing, which is crucial during internal controls or external audits.

In summary, electronic document workflow is a crucial tool supporting modern companies’ digitalization of business processes. Its integration with an ERP system allows you to gain complete control over documentation, automate processes, and significantly streamline work.

articles Business knowledge

Reverse charge VAT – what is it, and how do you account for it?

Post author By Maksymilian Śniegocki
Post date September 27, 2024

Table of contents

Reverse charge – what is it?
When should the reverse VAT charge be applied?
How do you book a reverse charge invoice?
Reverse charge VAT – examples
Reverse charge – tax obligation

The VAT reverse charge mechanism is a necessary procedure used in the tax system that applies to specific business transactions. Although this regulation was withdrawn in 2021 as part of a change in the law, it is worth learning about it, as it was commonly used and may appear, for example, in older transactions or invoices. What exactly was the reverse charge of VAT, when should it have been applied, and how can an invoice with this mechanism be booked?

Reverse charge - what is it?

Reverse charge VAT (reverse charge) is a special mechanism for accounting for value-added tax (VAT) that involves shifting the obligation to account for VAT to the buyer of goods or services instead of the supplier. In the standard model, the seller adds VAT to the sales price and then remits it to the tax office. In the reverse charge mechanism, the responsibility for charging and remitting VAT rests with the buyer.

It is worth noting that the reverse charge was applied only in certain situations, mainly for transactions related to the turnover of selected goods and services, especially in the construction, electronics, or metal industries.

When should the reverse VAT charge be applied?

When considering when the reverse charge is applied, it is important to note several essential conditions. The mechanism applied only to certain goods and services, as specified in the relevant legislation (in Poland, these were Annexes 11 and 14 to the VAT Act). Reverse charge covered, among others:

Construction services - This mechanism was commonly used in this industry, especially when one construction company provided services to another company.
Trading in electronics - in the case of sales of cell phones, laptops, tablets, and game consoles.
Trading in metals - This mechanism covered transactions related to trading in copper, steel, aluminum, and other non-ferrous metals.

The reverse charge was applied when both parties to the transaction were active VAT taxpayers (both the seller and the buyer). It is worth noting that as of 2021, the split payment mechanism has replaced the reverse charge mechanism, but it can still be relevant for older transactions.

How do you book a reverse charge invoice?

From an accounting point of view, a reverse charge invoice requires proper recognition in the tax records. It was essential to correctly recognize the buyer’s obligation to charge and pay VAT rather than the supplier’s, which differed from standard procedures.

Step by step – how to book a reverse charge invoice:

receipt of the invoice - The seller issued an invoice without input VAT, indicating on the document that the transaction is subject to the reverse charge mechanism. The invoice contained the notation “reverse charge” or “reverse charge.”
buyer's records - the buyer was required to account for VAT on the transaction. This meant he had to simultaneously charge output VAT and deduct input VAT (if he was entitled to it).
VAT return - The buyer reported both output VAT and input VAT in his VAT-7 or VAT-7K return.

Thus, if the purchaser had the right to deduct, the mechanism was financially neutral since the input tax amount equaled the output tax.

Reverse charge VAT – examples

Reverse charge VAT – examples

It is worth looking at some practical examples to understand better how the reverse charge works.

Example 1: construction services

Company A provides construction services to Company B. Both companies are active VAT taxpayers. According to the regulations, company A issues an invoice without VAT, with the notation “reverse charge.” Company B, being the purchaser of the service, is required to account for the VAT. Assuming that the VAT rate is 23%, Company B reports output VAT of 23% of the value of the service in its VAT return and, simultaneously, has the right to deduct it (if it meets the conditions for deduction).

Example 2: sale of electronics

Company X sells cell phones worth PLN 50,000 to company Y. Both companies are VAT taxpayers. Company X issued an invoice without VAT because cell phone sales were subject to the reverse charge mechanism. Company Y must charge VAT in its tax return – 23% on PLN 50,000 (PLN 11,500 VAT due) and deduct the same amount simultaneously.

Reverse charge - tax obligation

A vital mechanism element was when tax liability arose for reverse charges. Tax liability arose on the same basis as for standard VAT transactions. This meant that VAT due had to be shown at the time of delivery of the goods or performance of the service or when the invoice was issued, if earlier.

It should be remembered that even though the seller did not charge VAT, he was still obliged to show the transaction correctly in his sales records.

The buyer, on the other hand, was obliged to account for the tax and recognized the VAT in its return for the period in which the tax liability arose. This meant that the parties to the transaction had to work together carefully to ensure compliance.

articles Business knowledge

Manufacturing KPIs – how to measure efficiency?

Post author By Maksymilian Śniegocki
Post date September 19, 2024

Table of contents

What is a KPI?
Manufacturing KPIs – how to determine them?
Examples of KPIs – manufacturing
Why is it essential to set manufacturing KPIs?
How do we monitor production KPIs?

Measuring the efficiency of production processes is vital to the success of any company in the manufacturing industry. To achieve optimal results, it is necessary to monitor strategic performance indicators, or so-called KPIs (Key Performance Indicators). What KPIs are most important in manufacturing, and how do you monitor them for success? You will read all about it below.

What is a KPI?

KPIs, or key performance indicators, are used to measure progress and success in achieving a company’s strategic goals. In the context of manufacturing, KPIs measure the efficiency of production processes, labor efficiency, machine utilization, and the quality of manufactured products. These indicators are an indispensable part of operations management, allowing businesses to analyze production performance continuously and make decisions to improve efficiency.

KPIs help production managers keep track of various aspects of operations and respond to any irregularities. They help identify areas that need improvement, as well as monitor changes in performance over time.

Manufacturing KPIs - how to determine them?

Determining production KPIs is the first step to building a productive management system. The choice of KPIs depends on the specifics of the business, business goals, and company strategy. However, regardless of the industry, some fundamental indicators that can provide valuable information about the production process are worth considering.

Overall Equipment Effectiveness (OEE) - a machine efficiency indicator that measures how healthy machines are used in production, considering availability, productivity, and quality.
Production efficiency - an indicator that measures how many products are produced per unit of time. This indicator helps determine how quickly and efficiently production lines operate.
The number of defective products is an important indicator of production efficiency, which informs about the quality of the products produced. The lower the indicator, the better the quality of production processes.
Cost per production unit - a KPI that shows how much it costs to produce one product unit. Lowering this indicator is often crucial to optimizing operating costs.

These indicators must be regularly monitored, analyzed, and compared with the set targets.

Examples of KPIs – manufacturing

Choosing the right KPIs is challenging for many manufacturing companies, so it is helpful to know examples of indicators that work well for different companies. Here are some key manufacturing KPIs that you may find useful:

OEE (Overall Equipment Effectiveness) - measures the use of equipment in the production process. It is calculated by multiplying machine availability, productivity, and product quality.
Downtime - measures how long machines or production lines are out of service, which can be due to breakdowns, maintenance, or other problems. Reducing downtime is vital to increasing efficiency.
Defect rate - measures the number of defective products relative to the total number of units produced. A high defect rate means that the production process needs to be optimized.
Unit production cost - This indicator helps us understand how much it costs to produce one unit of product. Reducing this indicator is crucial in increasing profitability.
Lead Time - an indicator that measures the time from order placement to delivery of the finished product. Reducing lead time is extremely important for customer satisfaction.

These examples are only a tiny part of the indicators used in manufacturing companies. Tailoring them to the specifics of your business and manufacturing processes is essential.

Why is it essential to set manufacturing KPIs?

Implementing production KPIs is the basis for optimizing production processes. Regular monitoring of KPIs allows you to understand which elements need improvement and what actions need to be taken to increase efficiency. Manufacturing KPIs have several key advantages:

Process optimization allows you to analyze the performance of machines, people, and the entire production line in real-time. This will enable managers to identify problems and make appropriate changes quickly.
Cost control - KPIs allow the company to identify areas where it can reduce production costs, thereby increasing profit margins.
Improving quality - Indicators such as the number of defective products help identify quality problems, which in turn helps improve production standards.
Increasing productivity - KPIs allow production managers to assess how well the company's resources are used, leading to increased productivity.
Anticipate future needs - KPIs help plan resources and forecast future production requirements.

Practical determination of KPIs allows manufacturing companies to control production better, improve efficiency, and optimize costs.

How do we monitor production KPIs?

Monitoring production KPIs is a crucial element in managing a manufacturing company. The right tools and technologies can significantly facilitate this process. Here are some ways to effectively monitor KPIs:

ERP systems - Enterprise resource management systems, such as ERP, allow you to track production efficiency, machine downtime, production costs, and other key performance indicators in real-time. This gives managers complete control over production and will enable them to react quickly to changing conditions.
APS software - APS (Advanced Planning and Scheduling) systems enable advanced production planning and scheduling, which in turn allows efficient resource use and monitoring of KPIs.
Dashboards - Modern technologies offer interactive dashboards that allow real-time monitoring of KPIs. These allow you to quickly identify problems and take appropriate action.

Monitoring production performance indicators with the help of advanced tools and IT systems allows businesses to manage resources and quickly respond to emerging challenges optimally. This is a critical element in building a competitive advantage in the market.

articles Business knowledge

CEIDG database of entrepreneurs – what is it, and who maintains it?

Post author By Maksymilian Śniegocki
Post date September 12, 2024

Table of contents

What is the CEIDG database of companies?
Who is subject to entry in CEIDG?
Who runs the CEIDG?
KRS and CEIDG – what is the difference between them?
Searching for CEIDG companies
CEIDG – change of address or company name

CEIDG, or Central Register and Information on Economic Activity, is the official database of entrepreneurs maintained by the Ministry of Development and Technology in Poland. The system plays a vital role in the functioning of the private sector, especially in sole proprietorships and partnerships. We outline what CEIDG is, its functions, who runs it, and the differences between the National Court Register and CEIDG. You will also learn about the process of searching for companies in CEIDG and how to make a change of address or company name.

What is the CEIDG database of companies?

The CEIDG (Central Register and Information on Business Activity) database of companies is a register of entrepreneurs, including sole proprietorships and partners in civil partnerships operating in Poland. CEIDG contains data on entrepreneurs, such as the business owner’s name, NIP number, REGON number, business address, contact number, and the subject of activity, i.e., PKD code. This database is available to the public, meaning anyone can search for information on registered businesses.

CEIDG allows businesses to establish, suspend, and close. It is also a tool for making changes to entrepreneurial data, such as changing the address or company name or expanding the scope of business. The system operates entirely online, which makes it easy to use and gives entrepreneurs access to the most critical formalities from anywhere, anytime.

Who is subject to entry in CEIDG?

First and foremost, natural persons conducting business, i.e., entrepreneurs setting up sole proprietorships and partners in civil partnerships, are subject to CEIDG entry. Anyone who plans to run his own business in Poland and has chosen the form of sole proprietorship must register his company in CEIDG.

Registration in CEIDG is mandatory before starting any gainful activity. It is also necessary to obtain NIP and REGON numbers, which are required to run a company. It is worth mentioning that commercial law companies, such as limited liability companies (sp. z o.o.), joint stock companies, or limited partnerships, are not registered in CEIDG but in the National Court Register (KRS).

Who runs the CEIDG?

The Ministry of Development and Technology runs CEIDG, responsible for collecting and updating the data of entrepreneurs from all over Poland. This ministry ensures that all collected information complies with applicable laws and is available to all interested individuals and entities. CEIDG operates in accordance with the Law on Freedom of Economic Activity, which sets out the rules for registering, modifying, and deleting data from the database.

The Ministry of Development and Technology also provides free access to the entrepreneurs’ database, which allows anyone interested to check information on any entrepreneur operating in Poland. Entrepreneurs can also use CEIDG to report any changes regarding their companies and suspend or close their business activities.

KRS and CEIDG - what is the difference between them?

The KRS (National Court Register) and CEIDG are separate registers that perform different functions and are intended for different types of businesses. The KRS is a court register that covers larger entities, such as commercial law companies (limited liability companies, joint stock companies, limited partnerships, etc.), associations, foundations, and other organizations. It is also where changes to these entities are registered, such as changes to the board of directors, registered office, or company name.

CEIDG, on the other hand, is a register aimed mainly at individuals conducting sole proprietorships and partners in civil partnerships. Unlike the KRS, CEIDG is available entirely online and allows for quickly completing all formalities related to establishing, suspending, or closing a business. The differences between the KRS and CEIDG mainly concern the legal form of companies registered in these systems.

Searching for CEIDG companies

Searching for companies in the CEIDG database is very simple and available online. Anyone interested can go to the CEIDG website and use the search engine, which allows them to find companies according to various criteria. The most common searches are for companies based on TIN, REGON number, or company name. Searching for companies based on location or business profile (PKD code) is also possible.

Public access to the CEIDG company database makes it easy to check whether a company is registered and legally doing business in Poland. Searching for companies in CEIDG is particularly useful for contractors who want to verify a potential business partner or check a company’s business history.

CEIDG - change of address or company name

Every entrepreneur registered in CEIDG is required to update his business data regularly. If the company’s registered office address, mailing address, or name changes, the entrepreneur should update this information in CEIDG as soon as possible.

These changes can be made online via a form available on the CEIDG website. This process is simple, quick, and mandatory to avoid possible penalties or inaccuracies in the company’s records. Entrepreneurs must also report changes in other data, such as business expansion, including new PKD codes, bank account numbers, or contact information.