Different Stages in the History of ERP Systems:

The evolution of modern ERP has mainly passed through five stages as described below. During the start of 1960 the industrial sector started feeling the need of a system to handle this issue. At first this paved way to formulate an Inventory Management System which became the first step towards ERP.

1. Inventory Management System – First Stage in History of ERP Systems:

Inventory Management system controls the combined information’s as well as the business processes to maintain the appropriate stock level in a warehouse that includes,

• Identifying procurement requirements
• Setting targets for procurement
• Providing replenishment techniques and options
• Monitoring consumption of items
• Reconciling the inventory balances and
• Inventory status reporting

In other words Inventory Management system was a tool to manage, monitor, and control their inventory mainly of a production unit.

2. Material requirements planning (MRP) Second Stage in Evolution of ERP Systems:

In 1970’s Material Requirements Planning (MRP) evolved as the next stage of ERP history. In short MRP handled the material requirements planning part for scheduling production processes. This includes generation of operation schedules and raw material procurement. Scheduling is specifically based on,

• Production requirements
• Production system process
• Inventory levels updation and
• Batch quantity palnning procedure for each operation.

In short MRP can be defined as an organized system for production planning and scheduling in industry. Thus MRP was mainly used to determine which material is required at what time and how much quantity are required. Hence the process involves monitoring of stocks and its demand, leading to automatic creation of procurement proposals for purchasing or production.

3. Manufacturing Resource Planning (MRP II) – Third Stage:

The third stage of the history of ERP is manufacturing resource planning that occurred in 1980’s. More manufacturing processes were added to MRP for simplified and accurate operation which formed the base of Manufacturing Resource Planning- II (MRP II). Further, MRP II utilizes software applications for coordinating manufacturing processes like

• Product planning,
• Raw Material Purchase
• Inventory control and
• Finished Goods distribution.

This provided the industry a more streamlined control in production by connecting all functional areas and encourages cross-functional interactions. Hence ERP is a broad-based resource co-ordination system

4. Enterprise Resource Planning (ERP) the Fourth Stage:

The Gartner Group introduced the term ERP in 1990 ‘s for a system which could be used to control and monitor the whole business processes. ERP evolved as a multi-module application software system in order to integrate business activities across all functional departments in an organization like

• Product Finalization.
• Raw Material Procurement.
• Inventory control.
• Replenishment,
• Order tracking
• Finished Goods Despatching
• Invoicing etc

A Best ERP Software Systems consists of several modules for supporting the business flow especially like

• Sales & Marketing.
• Finance.
• Inventory
• Procurement
• Human resources.etc

Basically ERP is an effective way of centralizing information and workflow processes through data management by managing your workflow data in one place. During this stage only large business units used ERP to support their functionalities of their daily business operations.

5. Enterprise Resource Planning(ERP II) Latest Stage in History of ERP Systems

ERP II is the successor evolved from ERP since year 2000. It can be defined as the Advanced web based ERP solution demanded by the modern business needs. The Modern Business demands an increased business focus on internal integration of their functions and processes as compared to earlier periods. Data in this is internally and externally circulated and accessible depending on various needs of business especially in this Internet era. ERP II is in short a complete package including departmental modules, CRM, SCM and other stakeholder’s modules needed by business sectors.

Studies on ERP invention and evolution points towards the need of coordinating manufacturing processes but it evolved out to be an integral system connecting all processes of an organization effectively. In general irrespective of their business nature now it is important for all business sectors to get centralized, real-time data along with streamlined business processes.

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Importance of Inco-terms in Dubai, UAE is high, becuase UAE is treated as one of business hug in the world. Incoterms® explains a set of eleven of the most commonly used three letter trade terms, monitoring business practice in contracts for the sale and purchase of goods and mainly describes three major roles of delivery and risk in transportation of material from supplier to buyer and importance of incoterms reflects high value in international market.

This Article Importance of Inco-terms in Dubai, describes Obligation of seller and buyer who organizes carriage or insurance of the goods or who obtains shipping documents or delivery documents. Incoterms describes the risk of delivery involved. Ie., where and when the seller deliver the material or in which point risk transfer from seller to buyer. It also describes cost of delivering of material like transportation, packaging, loading and unloading, inspection cost etc..

Before 2010, Incoterms rules grouped in to four main categories such as E Rules, D Rules F Rules and C Rules .

E Rules – EXW D Rules – DAP, DPU, DDP F Rules – FCA, FAS, FOB C Rules – CPT, CIP, CFR, CIF

But now a day’s incoterms are grouped according to modes of transport used. Even then old groping is also helpful in understanding the point of delivery.

EXW (EXWORKS) E Rules

In EXW, the seller has merely kept the goods at the buyer’s disposal. Thus the delivery point in Exworks (EXW) is an agreed point for collection of the goods/services by the buyer, whatever the destination to which the buyer need to take them. The buyer is responsible for loading the goods onto a vehicle (even though the seller may be better placed to do this); for all export procedures; for onward transport and for all costs arising after collection of the goods from the place mentioned

DAP (Delivered At Place) D Rules

In DAP, the seller is completely responsible for all the charges required to transit the material and risk involved until the goods reach their destination. In the customer destination the risk transfers to the buyer. In this case buyer is responsible for all the cost and risk related to unloading of material and customs clearing and need to pay entry fees, custom duties, taxes, inspection fee, storage charges etc. The seller must need to provide all the documents required for export Clearance. When using DAP, it’s very important that both parties (buyer and seller) need to identify the destination specifically, because both risk and cost transfer at this point only. It is a flexible term and the named destination may be a port, airport, seaport, or the buyer’s warehouse or an International border crossing. It does not need to be a freight destination; any named place will work as long as it’s a foreign destination or a border crossing. In DAP the risk of loss stays with the seller until the goods reach at the named place.

DPU (Delivered at Place Unloaded) D Rules

Delivered at Place Unloaded (DPU) formerly called as DAT (Delivered at Terminal). In this term seller requires to deliver the goods at the disposal of the buyer after they’ve been unloaded from the arriving means of transport. This is the only rule in incoterms that needs the seller to unload goods at the place of destination. The buyer and seller should specify and agree upon a named place of destination. This term requires the seller to clear goods for export, without any commitment to clear the goods for import, pay import duty or carry out import customs formalities.

DDP (Delivered Duty Paid) D Rules

Delivered duty paid (DDP) is a delivery agreement whereby the supplier need to care all of the responsibility, risk, and costs associated with transporting goods until the buyer receives or transfers them at the destination port. This includes payment of shipping costs, export and import duties, insurance, and all other expenses got during shipping to an agreed-upon location in the buyer’s country

FCA (Free carrier)

The free carrier is a trade term saying that a seller of goods is responsible for the delivery of goods to a destination specified by the buyer. The destination is classically an airport, shipping port, warehouse, or other location where the carrier operates. The seller includes transportation costs in its price and assumes the risk of loss until the carrier receives the goods. At this point, the buyer assumes all responsibility.

FAS (Free Alongside Ship)

In Free along side Ship (FAS), it is the buyers responsibility to load the freight onto the vessel, as well as handling local carriage, discharge, import formalities and duties and onward carriage to the final destination. In this Rules, the seller clears goods for export and places them alongside the vessel at the departure port mentioned. The departure port can be a loading dock or a barge, but not a container terminal.

FOB (Free on Board)

Carriage paid to be utilized in any form of transportation, and the risk passes from the seller to the buyer as soon as the items arrive at the designated destination and are taken over by the carrier. Free on Board (FOB) is a shipment term used to indicate whether the seller or the buyer is liable for goods that are damaged or destroyed during shipping. “FOB shipping point” or “FOB origin” means the buyer is at risk once the seller ships the product. The purchaser pays the shipping cost from the factory and is responsible if the goods are damaged while in transit. “FOB destination” means the seller retains the risk of loss until the goods reach the buyer.

• FOB origin – the buyer is at risk once the seller ships the product.
• FOB destination – means the seller retains the risk of loss until the goods reach the buyer.
• The terms of FOB affect the buyer’s inventory
• Legal definitions of FOB may differ between individual countries.

Carriage Paid To CPT

The seller is responsible for arranging carriage to the specified location, but not for insuring the goods until they arrive at the specified location. At the moment that the products are taken in custody by a carrier, however, delivery of the goods takes place, and risk transfers from the seller to the buyer. “Carriage Paid To,” or CPT, goes into a bit more depth than FCA, stating that the seller is responsible for the costs of delivering the products to the buyer’s specified location.

Carriage, Insurance Paid to (CIP)

If we use this incoterms, seller is responsible for arranging carriage to the named place, and also for insuring the goods.

For more details Please visit – International Chamber of Commerce

to know more about Letter of Credit, please visit Letter of Credit Page

A letter of credit (LC), is a payment mechanism used in international trade to provide an economic guarantee from a creditworthy bank to an exporter/suppler of goods. In the recent period LCs are also used in National/Local trading also. It is also known as a documentary credit or bankers commercial credit, or letter of undertaking (LoU).

It is a letter or undertaking from buyer’s bank guaranteeing that the buyer’s payment to a seller will be received on time and for the correct amount. In the event that the buyer is failed to make a payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase.

LC is an important aspect in international trade because of factors such as distance, lack of personal relationship between each party, different trade laws on each country etc. Normally LC will be sent from buyers bank or financial institution directly to the seller or seller’s bank. Buyers bank will collect a fee from buyer for issuing a letter of credit to his supplier.

It protects supplier payment by giving guarantee that if the buyer fails to pay, the bank who issued LC must pay the seller as long as the seller meets all the requirements mentioned in the letter of credit.

LC not only protects suppliers but buyers also. The supplier also needs to fulfill the conditions or requirements mentioned in the LC to get the payment against this document.

DIFFERENT TYPES OF LETTER OF CREDIT

Commercial letter of credit

Commercial letters of credit provide for direct payment by the bank to the beneficiary/supplier upon presentation of required documentation. Commercial letters of credit are mainly used as a primary payment method in export and import of the tangible goods in international trade. It is also referred as documentary credit

Import/Export Letter of Credit

Import letter of credit is using in Internal Business. It is issued by the importer’s bank on behalf of the importer to the exporter being the beneficiary. It is a guarantee by the importer’s bank that the payment will be given to the exporter or seller. The credit capacity of the importer is replace with the credit capacity of the issuing bank. This improves credibility and reduces the risk of fraud. There are terms and conditions regarding the type, quantity, place of delivery and time of delivery mentioned in the import LC. It also mentions the documents to be submitted as proof of shipment like Bill of Lading(BL). The exporter has to submit required documents satisfying these conditions before the payment can be released to him

Revocable & Irrevocable Letter of Credit

Revocable letter of credit can be modified/changed or cancelled by the buyer bank who is issuing LC, after its issuance at any moment without getting the beneficiary/Supplier’s approval. But if the beneficiary/Supplier fulfill their obligations/requirements as per the LC before they receive the amendment/cancellation notice from the issuing bank, then the issuing bank require to pay the amount. A revocable letter of credit can provide as a limited security payment method to the beneficiary/Supplier, because they are subject to amendment or cancellation without their prior knowledge. As a result revocable letters of credit are not used frequently in international trade.

Irrevocable Letter of Credit is a letter of credit type which cannot be cancelled or amended by the issuing bank without the consent of beneficiary/Supplier. In other words, every amendment requires beneficiary’s acceptance in order to be effective. Irrevocable letters of credit give much more payment security to the beneficiaries than revocable letters of credit. As a result, irrevocable letters of credit are the types of LCs that dominantly seen on the market place.

Revolving Letter of Credit

A revolving letter of credit is useful for multiple payments.5 If a buyer and seller expect to do business repeatedly, they may prefer not to get a new letter of credit for every transaction (or for every step in a series of transactions). This type of LC allows businesses to use a single letter of credit for numerous transactions until the letter expires, and letters might be valid for three years or less.

Back to Back Letter of Credit

Back to back Letter of Credit are normally comes when there is an intermediately company between buyer and seller like distributor/ broker/commission agent.

In this case, two distinct LCs will be prepared. One issued by the buyer’s bank to the distributor/broker/commission agent and the other issued by the intermediary’s bank to the seller.  When the broker gets original LC from buyer, he goes to his own bank and will prepare a second LC with the seller as the beneficiary. The seller is thus ensured of payment upon fulfilling the terms of the contract and presenting the appropriate documentation to the intermediary’s bank. In some cases, the seller may not even know who the ultimate buyer of the goods is.

Documentary Letter of Credit

Documentary Letter of Credit is called At Sight Letter of Credit (Sight LC). This LC Stats that, the seller/exporters receives their payment from the buyer/importer, once the terms and conditions specified in the LC are completely fulfilled. The Issuing bank gives a guarantee that they will pay the amount, if the buyer fails to do so even if the requirement as per LC, is completely fulfilled by the supplier. When the seller/exporter makes a compliant presentation regarding the non-payment of  buyer,, the issuing bank or financial institution will make the payment to the seller/exporter. This type of LCs are mostly used in international business transactions, where the buyer/exporter and seller/importer have yet to build a close business relationship and/or are located in different countries.

Standby Letter of Credit

This type of LC is different: It provides payment if something fails to happen. Instead of enabling a transaction, a standby LC provides compensation when something goes wrong. Standby LCs are generally similar to commercial LC, but they are only payable when the payee (or “beneficiary”) can prove that they didn’t get what was promised in an agreement. Standby LCs are a form of insurance that ensures you’ll get paid, and they can also guarantee that services will be performed satisfactorily.

Letters of credit can also protect buyers. If you pay somebody to provide a product or service and they fail to deliver, you might be able to get paid using a standby letter of credit. That payment can be a penalty to the company that was unable to perform, and it’s similar to a refund. With the money you receive, you can pay somebody else to provide the product or service needed.

Fortuner, A complete ERP Application and a Best ERP Software in Dubai,  from Fortune Technology LLC, handles the full functionalities of LC including opening, amending and clearing LC required for all domains of business.

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If you’re thinking implementing an ERP system or upgrading your current system, or you are in confusion whether want to implement any ERP System, it’s worthwhile to understand the benefits that an ERP system can bring to your business.

A good ERP system is and scalable, bendable and modular enough to adjust to shifting market dynamics and changing customer needs.

An ERP system can streamline your entire business and place your data all in one place, enabling more precise reporting and a more resourceful, collaboration-based and data-driven work environment.

An ERP ensures that materials, products, and procedures are visible to all, that they are monitored, and that they are applied or developed correctly. You can automate audits and checks of incoming raw materials with ERP software to guarantee that they fulfill agreed-upon quality standards.

Faster cycle times, greater on-time delivery rates, cheaper labor costs, more productivity, and the elimination of handwritten spreadsheets are just a few of the immediate benefits of ERP.

The expenditure of implementing an ERP system is easily covered by the ROI of a more efficient, fully optimized enterprise environment.

When you implement an ERP Software, you also expand the partnership of your ERP solution provider and getting all the support, knowledge transfer and consultation for your business activities.

An ERP system can eliminate inefficiencies, time wastage and resources wastage, empowering your business to prosper and flourish.

While implementing a new ERP system, it can be a big change for your business and the benefits can be seen instantly. You do not want to wait for the industry to pass you by.

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Cigarettes red digital tax stamps

No cigarettes will be allowed to be stored, held out for sale, imported or produced anywhere in the UAE unless they carry a Digital Tax Stamp with end-to-end traceability. Penalties for non-compliance with this rule may apply. It would therefore be advisable for businesses to consider this final deadline date into their supply chain planning to ensure all unmarked products have been sold prior to this time.

The Authority called on all cigarette producers, importers, dealers, and consumers in the UAE to comply with the Decision in order to avoid the penalties outlined in the Cabinet Decision on Violations of Procedures for Applying Digital Tax Stamps on Tobacco and Tobacco Products. The objective, the FTA explained, is to curb attempts at commercial fraud and protect consumers from sub-standard products that harm their health and the environment, in addition to combatting tax evasion.

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