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Shipping different items or goods is full of different methods and terms, and one of the most important terms related to shipping is direct shipping and transshipment, and there is a big difference between each of them, and each method has a number of advantages that the other method does not provide, along with a number of disadvantages as well, and in This article will show you everything you need to know about direct shipping and transshipment, as well as what is the most appropriate shipping method between them and what are the factors for choosing the appropriate method.

What is Direct Shipment?

It means that the ordered items are shipped from start to finish through a direct route, which means that those items are transported directly from the port of origin to the port of destination.

Or in other words, direct freight means that the ship transporting the goods does not need to stop at any intermediate ports to unload its cargo, but rather moves directly to the final destination. Have you heard about Cargo Tracking ?

What is Transshipment?

It is not the same as Direct Shipment; it is a shipping method, in which items are shipped to an intermediate destination first before being shipped to the final destination,

Meaning that the ship that transports the items can unload those items or goods they are carrying through an intermediate port.

Usually, this method is used when the first method, direct shipment, is not available

Direct Shipment vs. Transshipment

There are a number of differences between direct shipping and transshipment, and here are the main differences between them:

• Direct shipping does not use any intermediate ports, but rather transports the required items directly to the final destination,
• As for the transshipment, it uses the intermediate ports before transporting the items to the final destination, and the following are the most prominent differences:
• Direct shipping reduces the time taken in transit, because there is no need to unload the cargo in an intermediate port, while Transhipment takes longer in transit due to the unloading and loading operations that take place while using an intermediate port.
• By using the direct shipping method, the risk of delay is avoided, as the shipment moves from the starting point to its final destination without using intermediate ports,
• Unlike transshipment, where this method is more prone to the risk of delay due to the additional time it takes to unload the cargo at an intermediate port. Diggipacks provides you with track shipment.

Which Shipping Method Should I Use?

After we got to know both direct shipping and Transhipment and the most prominent differences between them, you may now be wondering, what is the appropriate method that I can choose while shipping goods?

In fact, the answer to this question depends on the nature of the shipment, as well as your capabilities, as:

• Direct shipping method is most suitable if you want to ship the goods urgently i.e. you don’t want any delays, and also if you can afford direct shipping cost, because usually direct shipping is more expensive than transshipment.
• If you want a less expensive option, Transhipment is the most suitable for you, and it will also be suitable if you do not want to ship the goods urgently, or there is no other shipping method available other than transshipment, of course you will use it.

What are the benefits of direct shipping over transshipments?

There are a number of benefits offered by the direct shipping logistics, as:

1. Avoid any potential delays

As we talked about, the direct shipping method transports items from the starting point to the final destination without using any intermediate ports,

And therefore there is no time lost in the event of crowding of intermediate ports or during unloading and loading operations.

2. Save time

The direct shipping method also has the advantage of reducing transit time, because there is no need to use intermediate ports to unload the cargo in the middle of the shipping journey.

When should I use Transhipment to transport my cargo?

Here are a number of factors that indicate that you should use Transhipment method to transport goods:

1. If you want an affordable option

The direct shipping method is more expensive, so if you want an affordable and budget-friendly shipping method, then of course Transhipment is right for you.

2. If there is no direct path available

Sometimes you will need to use the Transhipment method if there are no other direct routes available, in many cases there are no direct routes especially if the desired destinations are far apart.

3. If you want to avoid customs duties and import duties

One of the most important advantages of the Transhipment method is that it is less expensive and helps avoid paying some tariffs and import duties.

What different documents are required if the shipment is not direct but transshipment?

As for the documents required in the case of transshipments, they are exactly the same as those required in the case of direct shipments.

There is no difference between them; you only need to submit the documents you need at the destination. The following are the most important documents required:

• Commercial Invoice.
• Packing List.
• Packing Declaration.
• Certificate of Origin.
• General Declarations.

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Product diversification is one of the most prominent strategies that help in the growth of the business significantly, so successful leaders know that if they want their business to grow and prosper in the long term, they will not be able to stick to the same old way of working, as they must find ways to reach customers Or new consumers and thus increase the profits that they always aspire to achieve, so one of the strategies to achieve this is diversification, and in this article we will show you everything you need to know about product diversification and the best product diversification strategies, and how successful diversification is.

What is Product Diversification?

Product diversification is a growth strategy that involves adding digital products, services, and markets to your company’s core business.

Business diversification can also mean expansion through new production lines or services, and you can use this strategy to take advantage of momentum in a new market, or to reduce the risk of a core market downturn.

Diversification Strategies

There are three types of product diversification strategies, which are as follows:

1. Concentric diversification strategy

Concentric diversification involves adding similar products or services to an existing business

2. Horizontal diversification strategy

Horizontal diversification involves offering new and unrelated products or services to existing consumers.

3. Conglomerate diversification strategy

It involves adding new products or services that are largely unrelated and without any technological or commercial similarities. And you can manage your products through e-commerce services in diggipacks .

What are the most risky product diversification strategies?

After we have presented the three strategies for product diversification, we can say that among those three types of diversification techniques, conglomerate diversification is the most risky strategy.

Conglomerate diversification requires a company to enter a new market and sell products online or services to a new consumer base.

This means that the company incurs higher research and development costs and advertising costs; in addition, the probability of failure is much greater in a conglomerate diversification strategy.

Risks in Product Diversification

The process of product diversification involves huge risks to the company or facility that applies it, because there is a possibility of increasing costs for it or not succeeding, and thus incurring additional costs.

Therefore, it is advisable to use product diversification strategies in the event that the market of that company turns into a stagnant market with slow opportunities or almost preparing for future growth.

Then, it is preferable to test the extent of the audience’s attractiveness to the products before starting the application of product diversification,

In addition to studying the costs so that the cost of entry does not eliminate the expected profits.

Product Diversification vs. Market Diversification

The alternative to diversifying your product is to diversify your markets, and that means attracting new customers using an existing product or format.

Companies with successful high-end products may offer a low-to-mid-range option to economic buyers to attract a new market.

This may not provide the same profit potential as high-end solutions, but it does provide access to a new market and higher sales volume.

Examples of Successful Diversification

After we talked about product diversification and its most prominent strategies as well as its weaknesses, there are a number of successful models in applying and using diversification strategies.

And the following is one of the most prominent successful models in product diversification:

1. Walt Disney

The Walt Disney Company has successfully implemented diversification strategies, diversifying its business, from cartoon business, to owning huge, popular theme parks.

It has also succeeded in creating brands, airlines, resorts, TV broadcasts and leisure activities that are among the most popular forms of entertainment today.

2. General Electric

We cannot talk about successful diversification models, nor do we mention General Electric, as it is one of the most successful companies in diversification, as it initially merged with two electric companies,

Then, it started working in a large number of fields, such as aviation, power cables, oil and gas, renewable energy, as well as transportation and healthcare.

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Recently, the term drop shipping has become very popular, and it has become one of the important types of business on the Internet, and there are many who have achieved great success through it, especially the Arab countries, If you are an entrepreneur and are thinking of establishing your own business and achieving financial freedom and financial stability in the long run, you can start working in drop shipping, which is one of the types of online business that belongs to the world of e-commerce services, and in this article we will show you everything you need to know about dropshipping and how to link it to warehouses and shipping.

What Is Dropshipping?

Dropshipping is the processes of marketing the products you want without actually owning them, by agreeing with a third party to market its products,

And in turn it ships the products that your customers purchase through you, and your profit is the selling price that you set for your customers minus the selling price set by the product owner.

Drop Shipping Is One of the Easiest Online Businesses

Drop shipping is a type of the easiest online business that belongs to the world of e-commerce, in which the online store does not keep stock.

But as soon as the buyer makes a purchase order from one of the products displayed in the online store, the store makes a purchase order from a third party,

And the third party (wholesaler or other large store or factory) ships the product directly to the buyer.

How Drop Shipping Works

You may now be wondering how drop shipping works, and here is a detailed explanation of how drop shipping works:

1. Create an online store

Where the dropshipper creates a dropshipping store which is an integrated online store to complete the dropshipping operations (just like the usual e-shops).

This may be a website or an online store on social media platforms (Instagram store, Facebook store and others).

2. Choose the supplier you will deal with

The dropshipper chooses the seller or third party he wants to work with and sell his products, and he joins his dropshipping program after accepting its terms and conditions.

3. Sell products

The dropshipper sells the products he chooses to sell on his store at special prices, setting himself the optimum profit margin from each successful dropshipping sale.

4. Customer order

A customer or online shopper visits a dropshipper store and then decides to purchase certain products, places an entire order and also completes the payment process.

Note that the customer has no idea that he is shopping online from the Dropshipping store anyway.

5. Transfer the order to the supplier

Customer data and order details are transferred automatically (through an automation system) or manually to the third party to prepare the order.

6. Preparing the order and shipping method it to the customer

The third party prepares the order, ships it and delivers it directly to the customer. Noting that you do not necessarily have to own an online store to start dropshipping,

There are many marketers who use popular online stores as an alternative platform to display products,

Advantages of Drop shipping

After dropshipping has become at the forefront of ways to profit online and freelancing activities from home,

It’s necessary to know its advantages that made it a successful business for many novice entrepreneurs. And the following are the advantages of dropshipping:

1. Ease of getting started

At the fore in the dropshipping system is the ease of getting started. There is no need for a lot of experience or knowledge in the field of entrepreneurship or e-commerce.

All you need only in order to get started is to know some of the basics related to the work and the rest of the things you will learn easily as you progress in the work day by day.

2. No need for a warehouse

As one of the most important features that make commission selling a popular business for many and an easy business to engage in quickly and easily,

is that you do not need to provide a storage warehouse in order to store or package products and you have nothing to do with storage matters from the ground up, not even any of the details or tasks related By shipping products to customers.

3. Provide quick and easy growth opportunities

The basis of commercial projects is expansion and growth, which are goals that project owners seek over time to achieve in the fastest time and in the best way.

And when we talk about business growth opportunities, we will not find better than dropshipping as a model for the ability to grow and expand business easily and quickly and without additional costs to the business budget.

4. No need for a lot of capital

Capital has always been the most difficult obstacle for many aspirants to start their own business; consequently, they were backing off their plans to launch their own business until the capital was available to them.

This is no longer prevalent with the emergence of ways to profit that do not need a lot of capital,

Especially dropshipping, which has brought about a change in the concept of self-employment and capital requirements.

One of the most important advantages of commission selling is that getting started does not require high costs; you can start your own business with very little.

5. Flexibility at work

One of the most important reasons that prompted many entrepreneurs today to launch their own projects is the desire to get rid of the controls of traditional work and the routine of government and private work.

One of the biggest advantages of working with a dropshipping system is flexibility at work; you are the boss of yourself out of anyone’s control and away from sterile business rules that kill a lot of your creativity.

In Dropshipping, you are the one who sets your work rules, and you are the one who determines the working hours, where and when without any interference from anyone.

The flexibility of dropshipping is also the ability to work from home, whether on your mobile phone or your laptop, as well as working at the times most convenient for you.

6. Ease of management

Dropshipping does not require much effort from you in management at all; simply because it basically doesn’t require you to make many commitments.

All you have to do, as we mentioned earlier, is to find the right suppliers for the nature of your business and prepare everything after setting up a suitable store or website to sell your products.

Linking with shipping companies

And you can link with shipping logistics companies, and this is what Diggipacks can provide you with, which provides you with all delivery solutions,

So that your customers are aware of everything that is happening in a timely manner, such as the delivery rate for each shipping company and the latest updates.

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Demand management is an essential component of any business plan, it helps in adequate planning of future events, including investment analysis of any business operation, accurate forecasting of the demands of the products it offers, and thus the ability of any organization to deal with customers effectively, as well as using its assets more efficiently, demand management is essential that enables the organization to use its resources properly, as well as plan the demand for products well, and in this article we will show you demand management and its role in the success of your e-commerce

What Does Demand Management Mean?

Demand management is the process within the organization through which the organization designs its own ability to meet demands and its differences, as well as manage its levels based on strategies for supply chains or marketing management.

How we help with Demand Management

Diggipacks services can help you effectively manage the demands of your organization, as it gives you all the technology needed to succeed, whatever the size of your business.

All necessary tools and technology and all shipping method are available for electronic stores to prepare your products and deliver them in a timely manner.

It also has a highly experienced team to manage all tasks; they are able to process more than 150,000 orders per month as a minimum.

It can also manage your order effectively, as within less than 48 hours of receiving your stock and in Diggipacks warehouses updates will be displayed in the customer control panel,

The storage and the customer will be informed online of the storage status, increase or decrease with the feature of printing the SKU for each product in case you do not have it.

Value of Demand Management

The process of demand management is of great importance and value, especially in light of the highly competitive market and the tremendous technological progress witnessed by the current era,

As most companies compete to apply the best modern technologies that make their supply chains the most efficient.

inventory control Helps your organization reduce inventory, improve customer satisfaction as well as increase profitability, all of which will be achieved with an effective order management currency.

Here is the value behind demand management:

• Helping organizations gather useful insights while improving their ability to plan and forecast customer demands.
• Improve stock levels as well as enhance customer service.
• Enhance inventory planning and improve ecommerce Revenue planning and promotion.
• Proper forecasting of demand, thus reducing supply chain costs and increasing profit margins.

Basic components of demand management

There are 4 basic components in the demand management process, and they are:

1. Forecasting

Forecasting is based on the current trend and expected sales of the customer’s behavior, as well as analytical data, which helps in preparing for any unexpected event.

2. Supply planning

Supply planning helps in planning supply operations more efficiently and effectively.

3. Demand analysis

Demand analysis mainly helps in managing demand effectively by relying on the analysis of sales data.

4. Sales and Operations Planning

Sales and Operations Planning helps in knowing the roles of stakeholders in the supply chain system,

And preparing reports that help in the effective planning of sales and operations and thus more efficient demand management.

HOW TO PROPERLY MANAGE DEMAND MANAGEMENT

There are a number of tips that will help you manage the application correctly and more efficiently:

1. Create a database to manage your order

This is done by identifying the data available to you and creating a system specialized in collecting information and storing it in a database.

Note that this data should include shipping dates, current orders, and what previous demand forecasts were.

2. Get the data from the sales department

Collecting data from the sales department is important in properly managing demand, as their data is different from most supply chain data, and this step helps in reviewing and entering their demand forecast.

3. Data analysis and processing

After you collect the data and put it in the right place, you should start analyzing and processing that information by reviewing the changes that occurred over the different time periods.

Dedicated order management software that generates reports through real-time data analytics can be used.

4. Continuous evaluation and improvement

Effective demand management always needs a good system for evaluation and improvement, and this is what can be done by order management programs where reports and alerts are prepared automatically and periodically.

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There are many Shipping Terms of delivery and payment, and there are Shipping Terms and conditions for sale. When the product is shipped or transferred from the country of origin to the country of the importer, but from the source’s store to the place of the importer, so you must be aware of all kinds of conditions, and this is not enough either, but you must know what your responsibilities are As an exporter in each of these Shipping Terms, so that you can negotiate properly and include the payments that you will pay in the quote submitted to the importer so that you do not discover that you paid the profit in shipping the product and you have nothing left, and in this article we will show you the Shipping Terms and conditions of sale, delivery and payment .

Shipping Terms Explained

Shipping Terms are a set of provisions recognized around the world, which outline the things to expect from each party in the sales process and contract negotiations.

In general, and in all international transactions, the costs of shipping can be paid from the shipper or the consignee

There are also many of those conditions that govern international trade, which we will learn about in some detail in the next section.

International Commercial Terms

Incoterms are a set of trade rules established by the International Chamber of Commerce used in international sales contracts. You can try e-commerce services at Diggipacks

International trade Shipping Terms are divided into four main categories: E – F – C – D, and the following are those categories, which we will discuss in detail later:

Class E – This contains only one trade term which is EXW

Class F (main carriage unpaid) – which contains three commercial terms for Shipping Terms :

• FCA
• FAS
• FOB

Class C – This contains four commercial terms:

• CPT
• CIP
• CFR
• CIF

Class D (Access) – which contains three commercial terms:

• DAP
• DPU
• DDP

The above four categories can be classified according to the mode of transport:

• Incoterms for any means of transport: EXW, FCA, CPT, CIP, DPU, DAP and DDP;
• Incoterms only for shipping and inland waterways: FAS, FOB, CFR and CIF.

Incoterms – what each term means 

Incoterms are the abbreviations that represent shipping terms during international trade, which were created by the International Chamber of Commerce for overseas sales and export operations.

And the following is the interpretation of those abbreviations:

EXW:

In this condition, the exporter commits to the contract, by delivering the goods to a point within the agreed-upon place, according to the type of goods ordered and the place of delivery,

Under this condition, the buyer shall bear the responsibility of the carriers sent by him to his warehouse or factory. In this method of delivery, the importer bears the duties, licenses, taxes, all damages and all expenses associated with receiving the goods from the source location.

 FAS:

In this condition, the exporter is bound by the concluded contract when he delivers the goods according to the Shipping Terms of the contract to the berth of the sea loading port next to the ship or the Shipping Terms line named in the contract, with customs clearance to be the goods ready for export.

Thus, the exporter bears the licensing fees and taxes in his country, and also bears the fees and risks of the loading process from his factory to the beginning of the intended journey in the contract.

The responsibilities of the importer begin from loading the goods on the ship until it reaches the desired destination, and he bears all costs, losses, defects and risks of damage.

FOB:

During this condition, the exporter’s responsibility for the risk of loss or damage to the goods ends when the goods pass the ship’s edge at the port of loading, and the exporter pays the fees for loading the goods until they enter the ship’s land.

From this point, the importer is responsible for the goods and all costs, losses and damages that may occur during the transportation process.

CFR:

It is a condition that indicates the exporter’s obligation to be responsible for the risk of loss until the ship passes the edge of the ship at the port of loading as in the FOB condition and the exporter pays the Freight Shipping charges Pre Carriage & Main Carriage until the ship reaches the port of discharge agreed upon in the contract of sale.

The exporter is not responsible for unloading the goods from the ship, and the responsibility for customs duties is borne by the exporter in this way, the CFR clause is used for sea carriage only.

FCA:

In this condition, the exporter fulfills the obligation agreed upon in the contract by delivering the goods to the carrier (to be determined by the buyer) at the place or point specified in the contract, and the goods are ready for export.

This clause is used by all modes of transport, such as air transport, rail transport, road transport and various modes of transport.

CPT:

The exporter bears the costs of the cargo to the port point mentioned in the contract, but the risks are transferred to the buyer once the goods are delivered to the first carrier, which is chosen by the exporter.

Carrier refers to any person who undertakes to carry goods by rail, land, sea, air, inland waters or various modes of transport within the framework of a contract of carriage.

CIP:

In this condition, the goods are delivered to the transport company chosen by the exporter, and the exporter must also pay the transportation costs to the specified point or destination, and therefore the importer bears the risks and other costs that may arise after the goods are delivered at the specified destination.

In this condition, the exporter must also provide insurance against the risk of loss, shortage and damage to the goods during the importer’s journey after receiving the goods.

DAF:

In this condition, the seller delivers the goods to the importer through the means of transport agreed upon within the contract, to the designated point or place before the customs area, the borders of the country of destination, without unloading them from the means of transport, where the goods are clear for export but not for import.

DEQ:

This condition means that the exporter satisfies the delivery in accordance with the contract, when he places the goods at the disposal of the importer, unfavorable for import, on the quay at the appointed port of destination.

The exporter must bear all fees and expenses resulting from the delivery of the goods to the port concerned in the contract, and also from unloading the goods to the berth.

DDU:

This condition means that the exporter must deliver the goods to the importer unpurified for importation and unloaded from the means of transport arriving at the appointed place of destination.

The seller shall bear the expenses and risks arising from the delivery of the goods to the appointed place, with the exception of the fees for delivering the goods to the country of destination.

DDP:

In this condition, the exporter delivers the goods to the buyer, cleared for import, without unloading from the means of transport arriving at the specified destination or point.

The exporter must bear all expenses and risks resulting from the delivery of goods to the mentioned place.

Rules for any mode of transport

There are a number of rules for any means of transport, which are the same as the rules of international trade, where:

• In EXW the seller fulfills his obligations by providing the goods to the buyer for pick-up at his premises or other specified place
• In FCA, the exported goods are delivered to the carrier specified by the buyer or another party authorized to receive the goods at the seller’s premises or at another specified location.
• At CPT, the seller will clear the goods for falsification and then deliver them to the carrier or other person specified by the seller, and the seller is responsible for the transportation costs associated with delivering the goods to the specified destination but is not responsible for purchasing insurance
• In the case of DAT, the seller clears the goods for export and bears all risks and costs associated with the delivery and unloading of the goods at the terminal at the specified port or place of destination, while the remaining costs will be borne by the buyer.
• At DAP, the seller clears all the goods for export to the place of destination, but does not bear the responsibility and costs of unloading, and the buyer undertakes the rest of the other tasks.

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Incoterms – what you need to know

We explained and clarified all incoterms for Shipping Terms in the previous part, but there are a number of things that you also need to know about incoterms for Shipping Terms other than their own terms, as:

The rules for incoterms for Shipping Terms are renewed every decade and were first developed in 1936 by the International Chamber of Commerce.

These rules are the solution to all international trade problems, which lay the foundations for transport agreements in more than one way.

Therefore incoterms for Shipping Terms are used as the basis for agreeing all contractual obligations of trade, including export, import and transit of goods.

We can say that incoterms for Shipping Terms allocate the cost by defining who will bear the costs, it also divides the obligations between the parties, as well as clarifying which party will cover the potential risks.

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Kanban is a Japanese word meaning “board”, invented by an engineer working for Toyota in the late 1940s. was adopted as an agile framework for product development by improving transparency and communication between one team and raising efficiency by reducing Waste of time and material, framework was used by many software and marketing companies in early 2007, then framework spread as a way to increase performance among major companies in various industries, and in this article we will show you everything you need to know about Kanban.

What is Kanban?

is a method of workflow management that allows you to better visualize your business, in order to improve your efficiency. Kanban means nameplate or sign in Japanese and was originally used in the industry, having been first implemented at Toyota in the 1950s.

 Since then, this method has invaded many sectors and has been adopted by many companies that want to improve task management among team members.

 How Kanban works

We can show how works through the following. The simple board consists of parallel columns, where each column includes the tasks to be performed, and most likely the columns are divided as follows:

• Required tasks.
• Tasks in progress.
• Tasks under test
• Completed tasks.

If there is a process that consists of 4 tasks, the first column can be dedicated to the tasks to be accomplished, which are often requested by the management, the customer or the team leader.

The second column contains the tasks in progress, work or development, and the third column includes the tasks that have been completed and are waiting to be tested and to know their readiness for release as a working part of the final product.

While the last column contains tasks that have already been completed, the board can be customized and used differently, for example, we may include a column under review, a feasibility study column and so on.

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Kanban system

A kanban system is defined as a work management system, where tasks on a kanban board are divided into three or more columns depending on the nature of the work, and a kanban board enables teams working on the same product, project, or department to communicate in a collaborative visual platform over the Internet and thus reduces the use of Contact email.

And since all team members can see and follow up on tasks through this platform, individuals will be able to follow up on the work and know where the problems are and what are the causes of delays and delays, etc. This reduces the wasted time, and completes the work quickly, easily and highly and efficiently.

Types of Kanban

There are 5 types of kanban, and each type has a specific use. The following are the most important types :

1. Production Kanban

It consists of a list of all the things that the part needs to be completed or finished, thus bringing those parts or materials required, along with the information contained in the withdrawal .

This clarifies what production system is required for the production process to begin, and what will be produced.

2. Withdrawal Kanban

This type has another name, conveyance kanbans, and this type is used when a component has to be transferred from one production part to another.

3. Emergency Kanban

This type is used in the event of defective parts that need to be replaced, or in the event of a sudden change in the required production quantity and thus the need to modify the plan.

4. Through Kanban

This type helps to speed up the production process and save time, as it pulls the parts required in production when they are needed and operates them.

5. Express Kanban

This type is used when a sudden shortage of production parts appears, and it is intended to speed up the manufacturing or production process as well.

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A recipe for Kanban

is a magic recipe for success, through a number of steps that will inevitably lead you to success if you apply them correctly. Workflow:

• Focus on quality
• Reduce Work In Progress
• Deliver often
• Balance demand against throughput
• Prioritize
• Attack sources of variability to improve predictability

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What is a Kanban board and how to start using it?

Kanban is a pull system, where tasks cannot be pushed or imposed on a team or person if they are still working on many other tasks. Conversely, a team or individual can pull out new tasks after completing one of the tasks in a particular column.

The draw system limits the number of tasks in progress (Work in Progress – WIP) by setting a threshold, and the threshold is the maximum number of tasks in progress, for example there can be no more than three tasks ahead of completion,

In this way, no one can add any column task in progress before one of the three tasks moves to a column under test, and in this way we reduce the pressure on the development or manufacturing team so that this team focuses on specific tasks in progress instead of accumulating tasks that cannot be accomplished.

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The purchase order is the company’s approval to purchase products from a supplier, and it also precedes the supplier’s invoice and contains the names of the goods, their required quantities, unit price and all other purchase terms. By the company, after confirming the purchase order and receiving the purchases from the supplier, it can be converted directly into a purchase invoice, and in this article, we will talk about purchase orders and why they are important for small and medium businesses.

What are purchase orders?

A purchase order is a document that is an agreement with a supplier for the purchase of goods or services, and this document also helps to track product receipts that have been posted against the purchase order and, later, to calculate the invoices that the supplier prepares against the order.

Reasons why Purchase Orders are important

The purchase order is an essential process when conducting large, two-way transactions, and it helps in clearing business expenses,

This is essential when sticking to budgeting, generating inventory expense reports, and avoiding supply chain errors. Below we’ll show you why purchase orders are important:

1. Understand the company’s financial condition and prevent inconsistencies

Where purchase orders help provide clear information for auditors to consider historical data of transactions.

When a company is clear in issuing, processing and recording purchase orders, this prevents inconsistencies in financial information and allows auditors to clearly understand the company’s financial condition.

2. Easily track expenses

The company’s expenses can be clearly tracked through the use of purchase orders, it not only helps the company know how much it is spending, but also shows the details of what is being purchased.

This gives companies key information about ordering data to improve this process in the future, a simple look at past purchase orders and sales statistics for the company can show.

3. Billing accuracy

An invoice is basically the opposite of a purchase order, this is a document issued by the supplier to the buyer to request payment. get to know digital payments

However, it is still necessary to use the purchase order with invoices, as it provides more clarity and accountability during the transaction process for both parties.

4. Smooth execution of orders

When a company’s finance and inventory departments have access to purchase orders, it creates a seamless and transparent process for restocking and order fulfillment. Via fulfillment center

5. Providing legal protection

Purchase orders provide legal protection for both parties. If the supplier of goods or services does not fulfill the agreements stipulated in the purchase order, such as price – quantity – delivery date… This document can be used as evidence of breach of contract.

How purchase orders (POs) are different from invoices

Many people confuse the purchase order and the invoice, but in fact there are clear differences between each, so we find that:

A purchase order is a document passed from a buyer to a seller that specifies the quantity, quality, number of different products needed by the party and the expected rates.

It is a legal defense for the seller if the buyer refuses to accept the goods and services once the seller has produced them and the buyer refuses to pay for them.

An invoice is a document that is passed on from the seller to the buyer and indicates that the seller wishes to receive payment for goods or services that he previously provided.

The buyer also needs to pay when the invoice is presented, and the invoice is usually sent with the goods or services supplied but the seller can issue it when payment is due and the buyer is obligated to pay when it is presented to him.

The following is briefly the main differences between purchase order and invoice:

• Invoice is a document from seller to buyer, while purchase requisition is a document from buyer to seller.
• Invoice is a payment reminder and the buyer needs to pay for the goods and services he has already acquired,
• While a purchase order is an offer document from the buyer to the seller in which he specifies the quantity and quality of materials required along with prices.

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All large businesses use a purchase order

All large companies use purchase orders primarily in their business, which helps them avoid the risk of wasting time and money,

As many parties may order goods and services informally, so purchase orders protect the company from any potential risks.

It also helps purchase orders in improving the company’s profitability as well as enhancing its future vision as well,

Especially since all companies realize that the greater their size and growth, the greater their need to track their financial operations, especially purchases.

Also, in large companies, purchase orders play a vital role in managing the company’s spending, thus improving purchasing processes, as well as assisting the company in receiving and accounts payable.

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Inventory management is one of the most important things that can affect the efficiency of the work of any business, especially since inventory is one of the most important assets owned by the facility, so care must be taken to manage it well, and We will know the average inventory formula to manage it well, and it is necessary to have an appropriate amount of inventory, which will push the company forward. It reflects its strength in managing costs, sales, and then labor relations, calculating average inventory, as well as inventory turnover, can help maintain the right amount of inventory. In this article, we will talk about the average inventory formula, its use, and what are the main challenges for average inventory.

What is average inventory? 

The average inventory formula is one of the accounting metrics useful in tracking changes in inventory over time, and it is a tool that helps show the state of inventory during the current time or accounting period.

The average inventory can be defined as an estimate of the value of the inventory owned by the company during a specific period of time.

The calculation of the average inventory helps in the face of the rises or drops that can occur suddenly in inventory balances.

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Average inventory formula

There is average inventory formula for calculating the average inventory, which is by adding the current and previous inventory and dividing their sum by the number of periods, and the following is the average Inventory Formula:

• Average Inventory = (current inventory + previous inventory) / number of periods

Average inventory calculator

As we mentioned in the previous part, average inventory is an estimate of the amount of inventory owned by the company during a certain period.

And there are a number of accounting tools that can help you easily calculate average inventory without the need to manually use the average inventory formula.

What Is Inventory Turnover Ratio?

Turnover is an accounting term that calculates how quickly a company collects money from accounts receivable or how quickly a company sells its inventory.

The inventory turnover ratio is a ratio that shows the number of times a company has sold and replaced inventory during a given period.

The company can then divide the days in the period by the inventory turnover formula to calculate the days it takes to sell inventory on hand.

Calculating inventory turnover can help companies make better decisions about pricing, manufacturing, marketing, and purchasing new inventory.

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Calculate Inventory Turnover

Companies calculate inventory turnover by calculating average inventory, which is done by dividing the sum of beginning and ending inventory by two, and then dividing sales by average inventory.

Inventory turnover can be calculated by the following formula:

• Inventory turnover = Sales / Average inventory.

Uses of average inventory

You may now be wondering when to use the average inventory formula, and in general, you will need to calculate average inventory to calculate the inventory turnover ratio, which will help you get a sense of how much your inventory is moving, and thus how much inventory you will need to have at any one time.

You will also need the average inventory in order to calculate the Average Inventory Period, which will help you figure out how long it takes to convert your inventory into actual sales.

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Challenges with Average Inventory

There are a number of challenges facing average inventory. Despite the average inventory and its importance in inventory management, there are a number of flaws in it.

The following are the most important challenges facing average inventory:

• Inaccuracy, due to seasonal cycles, average inventory may be inaccurate.
• The occurrence of errors resulting from the presence of estimated balances, the average inventory is estimated accounts that are not accurate as physical counts of inventory.
• There are variances between monthly and daily sales, so using average inventory you will encounter a large discrepancy between today’s inventory and inventory calculated for longer periods.

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Bonded Warehouse is one of the types of warehouses, in which imported goods that have not yet been processed by taxes are stored, that is, the taxes and customs duties are still on them, and there is a customs authority that controls this type of warehouse, and there are many advantages provided by Bonded Warehouse, the most prominent of which is the possibility of postponing Paying due taxes or any other fees until those imported goods are distributed for sale, and in this article we will learn together in some detail what is a Bonded Warehouse and what are its advantages and most important disadvantages, and we will also show you what is meant by a private bonded warehouse.

Bonded warehouse

It is a building or secured area used to hold imported goods awaiting customs clearance, and in most cases they are close to commercial ports.

These warehouses are licensed by the country’s government to hold goods until customs duties are paid and a clearance document is issued to them.

When the goods enter the Bonded Warehouse, the importer and the warehouse manager bear the responsibility of the goods under a document signed between the two parties, and this responsibility is canceled in the following cases:

• When the goods are exported or considered to be exported;
• When the goods are to be withdrawn for the purpose of transporting them to a cargo ship or aircraft; You can track shipments through the tracking service provided by diggipacks.
• When the goods are destroyed by a decision of the Customs;
• Upon obtaining the clearance document and withdrawing the goods.

Diggipacks offers you the service of warehouse rental and managing a warehouse, and diggipacks owns many warehouses throughout the Kingdom of Saudi Arabia.

Importance of Bonded Warehouse

It is of great importance, and here are a number of points that illustrate this importance :

• Goods kept in the warehouse are safe, so the importer gets time to pay customs duties;
• It is possible for the importer to keep the goods in the customs warehouse if the goods are not required immediately and does not wish to pay storage costs, by delaying the payment of clearance fees;
• Importers are allowed to sort, divide and reclassify the goods within the bonded warehouse, making them ready for sale after clearance is obtained;
• If the importer does not own a private warehouse, he can transfer the ownership of the goods to another person while the goods are still in the warehouse.The advantages of a bonded warehouse

The advantages of a bonded warehouse

there are a number of benefits to users, and the following are the advantages :

1. Postponing the payment of duties and taxes

One of the most prominent benefits is the possibility of postponing the payment of taxes and duties on imported goods.

This is until these goods are taken out of the warehouse for sale, which allows importers to engage in other activities before selling them.

There are also some countries that impose savings and deductions in tax costs of up to 30% when importers use bonded warehouses.

2. Possibility to store for a long time

Bonded warehouses allow the possibility of storing imported goods for a long period, so this type of warehouse is called long-term storage warehouses.

If the imported goods do not meet some requirements, they can be stored in a bonded warehouse until all requirements are met.

3. Provide a better customer experience

Bonded warehouses allow imported goods to be stored ready to order, which will provide customers with better service and thus provide a better customer experience.

4. Maintain the quality of the stored goods

Bonded warehouses are equipped to the highest level, so that they can store any type of goods. They are equipped with facilities that can control their temperature, in addition to the presence of dry and refrigerated containers.

5. Maintain the security and safety of the goods

shall be equipped with all security and safety devices to provide security and safety for all goods stored therein. are also subject to many regular reviews by the competent authorities.

6. Proximity to ports

Most bonded warehouses are located near the nearest ports and airports, thus allowing companies to store their goods at the port of entry and ready for distribution.

Thus, saving a lot of costs, as well as reducing the time taken, and reducing the possibility of any damages, in addition to reducing transportation costs.

7. Provide additional logistics services

Most bonded warehouses can provide additional fast logistics services, as a large number are associated with distinguished Freight Broker who can provide end-to-end logistics solutions to users.

This contributes to maintaining the movement of corporate puns, as well as saving time and effort in searching and dealing with suppliers.

The disadvantages of a bonded warehouse

Despite the many advantages, there are a number of disadvantages that occur in bonded warehouses, and the following are the most important of those disadvantages:

1. Goods must be paid and removed from the warehouse within two years at most

On the figure that bonded warehouses are a place for long-term storage, but the period is not infinite, so this type of warehouse requires importers to pay the goods and remove them from the warehouse in two years at most.

This will cause a problem for importers with goods that need a long time to find the right market, which makes the importer have to sell at a loss, so this type of warehouse is not the best place to store goods.

2. The length of time in the clearing process

Bonded warehouses do not allow the exit of any goods from them except after following all the procedures for clearing those goods, and sometimes that process takes a great deal of time and is very cumbersome.

3. The need for a license to establish bonded warehouses

Bonded warehouses can only be operated or established with the approval of the competent customs authorities in that area, and therefore are not always readily available.

What is a private bonded warehouse?

is divided into two types, the private and the public, and the following is what is meant:

It is the place or building in which goods are deposited for the account of the owner of the private warehouse under the supervision of the competent customs department in a suspended situation for taxes and customs duties in accordance with the provisions of the customs system and law.

Type of person or business uses a bonded warehouse

is used by individuals or companies, and is frequently used by companies or importers who move goods in bulk.

This type of warehouse provides many benefits to companies and importers, in terms of inventory efficiency and cash flow.

Bonded warehouses take one of the following forms:

• Public bonded warehouses, which are owned by a party and used by individuals in return for payment of a certain fee.
• Private bonded warehouses, which are owned by their employees under the supervision of the customs authority.

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Many people do not know the difference between supply chain management and logistics, and the terms “supply chain” and “logistics” are often used interchangeably in the transport and trade sector, but there are differences between them, as each has specific operations, duties, and responsibilities Which differs from the other extreme, and it is believed that the confusion in the distinction between supply chain and logistics is caused by many people considering that logistics is a subcategory in supply chain management, but the main difference between supply chain and logistics is that the latter is just a dedicated part in the operations of The entire supply chain, and in this article we will detail the difference between supply chain and logistics.

What is the supply chain?

In order to be able to differentiate between supply chain and logistics, we will first need to learn about the concept of each; the supply chain is a broad and integrated process that entails many other aspects besides logistics,

Such as finding and selling goods, negotiating prices, manufacturing, warehousing, packaging, and inventory control.

Supply chain management also includes distribution, cost allocation, control, negotiation and collaboration with third party companies as well as supply and demand management.

What is logistics?

After we know the definition of supply chains, we will need to know what is meant by logistics and will know The difference between supply chain and logistics, and in general logistics services focus on the transportation and physical storage of goods, and deal with things such as shipping method like internal and external shipping, reverse shipping, communications in transit, and warehouse warehousing.

Logistics also deals with the delivery of goods, freight shipping, coordination between external third party carriers, fleet management and other activities directly related to the actual transportation of goods from one point to another.

Depending on the company’s needs, logistics management may also include manufacturing, packaging, price negotiation for various aspects of transportation, integration with third party companies, procurement, technology and communications, and customer service.

The difference between supply chain and logistics

When learning about the difference between supply chain and logistics, you should know that supply chain is the bigger picture between the two.

As supply chain management is the umbrella that covers all aspects of sourcing and purchasing goods, basically supply chain management forms and manages business links between companies that allow goods to be sold to consumers in the end.

Logistics—essentially shipping logistics from one place to another—is a function that falls under the broad umbrella of supply management, and is just one part of the entire process.

Examining KPIs: Supply chain vs. logistics

The KPIs are similar in both Supply Chain Management and Logistics, they both track inventory movements and warehousing, and the following are the KPIs for each and what difference between supply chain and logistics:

I. Supply Chain Management KPIs

1. Cash-to-cash cycle

The difference between supply chain and logistics at the Cash-to-cash cycle is an indicator related to supply chain management that measures the time taken for the cash you paid for materials to be converted into cash that customers pay you for your work or service.

The fast cash-to-cash cycle is a good indicator and means better and faster cash flow, and the opposite means that there is restricted and unusable cash.

2. Inventory days of supply

An indicator of how many days it takes to run out of supply if you don’t replenish your inventory, the higher this metric is, the better for your organization and means your organization is able to generate more cash.

3. Perfect order rate

The difference between supply chain and logistics at the Perfect order rate ​It is also one of the important indicators of supply chain management, which measures error rates taking into account the multiple aspects of the supply chain, and the higher this indicator, the more it indicates that the stages of the supply chain are good, which increases customer satisfaction.

II. logistics KPIs

1. Freight bill accuracy

It is a performance metric for logistics that measures the accuracy of shipping invoices. It is a useful metric in monitoring the efficiency of your business.

And helps you in estimating customer satisfaction levels with the service you provide to them. The higher the percentage, the higher the level of customer satisfaction and the lower the costs.

2. Transportation costs

It is a measure of checking the percentage cost of moving inventory based on sales revenue,

And the higher this number, the not a good sign, it means more your company is spending on shipping its merchandise compared to what it will recover.

3. Inventory turnover

It is one of the most important and also common performance metrics for logistics services. It is a measure that shows you how many times you have sold through your inventory during a given period of time.

The higher this indicator is, this is a good indication that your company has a strong customer demand for your products, and this is a good thing.

Should Small and medium-sized companies outsource their supply chain management or logistics functions?

Outsourcing refers to the process of hiring another individual or company to handle some of your business activities. It is not a new concept, but it gained a lot of importance in the early 1990s.

Companies can outsource some tasks and easily get skilled and experienced assistants, thus saving time, money and effort as well.

As for the basic question, should small and medium-sized businesses outsource supply chain management or logistics functions?

In fact, the answer to this question depends on the nature and size of your business and your business.

If you own a small business it is better for you and your business not to outsource your supply chain management, if you are a medium business it is better to hire them, when you can do it all on your own without outsourcing.

Outsourcing helps you make your supply chain easier by controlling the many errors that occur, such as missing shipment tracking or suddenly running out of stock.

In general, in logistics services, especially transportation operations, it is recommended that outsourcing is done, in order to reduce costs and reduce errors that may lead to the loss of customer satisfaction and consequently their loss. and this is The difference between supply chain and logistics in this point.

Advantages of outsourcing logistics

There are a number of advantages that outsourcing fast logistics services can provide to you, and the following are the most important ones:

• Reduce focus on freight, outsourcing logistics helps you get your employees to focus on important value-added activities related to other parts of the business, and leave the freight operations on those outside sources.
• Access to better technology, outsourcing logistics helps you to access more advanced technology, which will save a lot of time, effort and money as well.
• Improve Flexibility Outsourcing significantly improves the flexibility of your business, helping your company to expand and grow bigger and faster.
• Better resource allocation, outsourcing helps you save costs on additional overheads and focus on better allocating your resources.

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