The rise of technological innovations changes routines and the operation of companies, with transformations related to products, processes and people. In addition, it is necessary to consider the economic scenario in the country and in the world, which requires special attention to avoid damages that put profitability and business maintenance at risk.
In this text, we will show the applications of the Opex and Capex concepts, considering the 4.0 Industry era. Read and find out the best way for finance in your organization.
Opex and Capex
Opex and Capex are acronyms that mean Operational Expenditure and Capital Expenditure – and they are widely used when planning an organization2s finances.
Capex is an expense related to investments and acquisitions of capital goods, while Opex focuses on the expenses and costs of maintenance of equipment and resources related to activities and services of the company.
The purchase of a printer to print catalogs, for example, is Capex. The hiring of a printer to print these materials is Opex.
In the first case, the payment is made at the time of purchase and the tax discounts occur from the depreciation of the asset, while in the second the expenses occur only when there is need for service and the tax deduction occurs in the current year.
Opex and Capex in Industry 4.0
In view of the rapid technological advance – a characteristic inherent to Industry 4.0, which has already reached its second wave – Opex has taken on a leading role in organizations. And there are good arguments in favor of that.
The rhythm of discoveries and technological innovations that make outdated technologies faster, as well as the possibility of outsourcing services and reducing burdens, make Opex offer an excellent cost-benefit ratio for business.
Thus, instead of employing a high investment in the acquisition of computers, for example, it is possible to rent the equipment. Besides the capital savings, the company:
- doesn’t have to worry about maintenance, which is already included in the rent;
- avoids depreciation, since every product or equipment loses value as soon as it leaves the store;
- can more easily replace the equipment with more modern ones whenever necessary – you can even change the supplier at the end of the contract;
- does not need to decapitalize, keeping the cash on hand or using it for whatever it thinks is most interesting.
We must not forget, however, that Capex expenses are incorporated as assets in the company’s balance sheet. These tangible assets are responsible for demonstrating the asset value of the organization, making it more valuable in the market.
Other examples of the replacement of Capex by Opex are:
- renting a commercial property (Opex), instead of buying it;
- signing applications using the software as a service model (SaaS), instead of the final acquisition (Capex).
In the next topic, learn more about these two perspectives, their advantages and disadvantages, in view of the current phase of the world industry and how they should be analyzed to generate benefits to the activities.
Capex and Opex: what is ideal in Industry 4.0?
To start answering that question, check out the main advantages and disadvantages of Opex and Capex:
- Advantages – Opex: it is easier to approve expenditures (which is usually lower when compared to the other modality); greater flexibility of costs, without resorting to decapitalization; deduction in the taxation of the current year;
- Disadvantages – Opex : values are understood as expenses (and not investments); there is the possibility of high costs in the long term;
- Advantages – Capex: value spent is understood as investment; it gives long term return; it increases the assets cash flow;
- Disadvantages – Capex: high costs in the short term; greater difficulty in approving expenditures, usually higher in Opex; depreciation of assets acquired.
Deciding whether to use Capex or Opex therefore depends on an assessment that identifies the best option for organizational results, and a careful study is essential to compare the costs of: manufacturing equipment, acquisition or provision of services, taxes, revenues and return on investment time for each option (Capex and Opex).
But, as we said, it is undeniable that Opex offers the agility and flexibility necessary for companies to remain competitive in a market that is constantly changing, making use of the most modern products and services and generating savings for the organization.
In fact, the current market moment has even gained its own name. It is the VUCA moment, an acronym that describes four resources very present in our daily lives: volatility, uncertainty, complexity and ambiguity – learn more by reading this Forbes article.
Having subsidies to define Capex and Opex will ensure the best benefits for your company. And, speaking of advantages, take the opportunity to know Soluparts differentials by reading this article about our value proposition.
Due to the Coronavirus Pandemic, the World Health Organization (WHO) has been issuing daily reports with recommendations to combat COVID-19.
Among the various advises, one of the most important is social isolation, even for those who are not part of the risk group. It is not just a matter of avoiding contagion, but of reducing the spread of the virus, enhanced in agglomerations or in environments with many people, such as factories and offices.
In this scenario, the home office appears as an excellent alternative for many companies and employees – including purchasing professionals – ensuring that, even from a distance, people remain engaged, producing and moving projects forward. On the other hand, employees, while remaining in isolation, reduce the chances of contracting and transmitting the virus – which, according to recent studies, has airborne transmission and can survive for up to 3 days on surfaces such as plastic or stainless steel.
In this blog post, we will bring you some tips to optimize your time while in home office. What is the best way to set priorities? How to divide attention between work, children and home chores? Keep reading to find out.
See how to make your Home Office safe and productive in times of pandemic
Remember: despite being in the comfort of your home, the home office should not affect your productivity.
It is necessary to maintain a routine – and more than that, a mindset – focused on work. After all, even in times of pandemic and isolation, the production cannot stop.
Most of the people who are working from home these days have been taken by surprise, with no time to plan this change of workplace. Therefore, it is even more important to know the tips we have prepared and which we list below.
There is a right time for everything!
Many may find it easy and comfortable to work remotely. But the home office requires unique discipline, as it becomes even more difficult to separate moments of relaxation, home chores and professional activities.
Working at home does not mean producing while lying on the couch watching a movie. So, first of all: reserve a room or space in the house to be your workstation. When it comes to producing, privacy and silence are essential, especially considering online meetings and video conferences.
Rest and relaxation are also an important part of the day. Optimize your time by dividing it between work tasks and rest periods.
A great way of doing that is to have a schedule well defined. In the period dedicated to work, eliminate everything that can cause distraction. Strictly follow the hours you set, without delays, the same way you do when you go to the office – if you don’t respect your own hours you won’t be able to produce well while in home office.
In this same note, in moments of relaxation, do not do anything for work. Turn off your computer and work chat so you can focus on your family and on yourself.
The challenge of caring for children
Dealing with work commitments at home in times of Coronavirus also implies, in many cases, sharing attention and time with the little ones.
With children at home, more than ever, the home office becomes a multitasking marathon. And they don’t always understand the urgency of working in silence. Therefore, the first step is to explain to them the need for mom and dad to have privacy during their work time.
Show them the schedule with your working hours, the place where you will be developing your professional activities, set limits and, in a respectful and loving way, make sure they are met.
For example, they should know that when their parents are on a phone call or in the middle of a negotiation, loud noises and interruptions must be avoided. A practical way to do this is to tell them that whenever parents are wearing headphones, for example, more silence is needed.
During periods of isolation like the one we are going through, with interrupted classes, closed schools, and indications against agglomerations in public spaces, separate films, videos and series for the children to watch – always checking its Parental Advisory labels and if they show the values you want to pass on to your children. Again: talk to them, establishing what can and cannot be seen. By giving an explanation rather than simply prohibiting you will have more chances to see your rules being followed.
Internet access for games and chatting with friends can also be allowed, but, of course, if the rules you find convenient are respected. In addition, to ensure the well-being of the little ones, you should also educate them about cybersecurity – you will find some tips about that matter below.
As much as electronic devices are very effective when it comes to entertaining children, it is important to take a break and propose other distractions. Here are some suggestions:
- Encourage reading – establish a family reading time, with games and story discussion;
- Tell stories – they can be from books or even stories experienced by people you know;
- Create a game night – games are good options to have fun together;
- Create new hobbies – use creativity to invent games, especially the ones that allow you to move (within the possibilities of your house space);
- Include physical activity – it can be as simple as stretching!
- Assign daily tasks – depending on the age of the child, he can already collaborate with small chores, including: putting dirty clothes in the basket; making the bed; drying and storing dishes, etc.
If the children realize that, outside of the time dedicated to work, parents find time to be with them and have fun, they will respect the “office hours” much more, facilitating the home office.
Attention to Information Security
At home, we do not always have all the technological resources we find in the company – even when remote access to office documents is easier, due to the Digital Revolution.
For this reason, we should be even more attentive to cybersecurity when working remotely. The first step, therefore, is to know your company’s security policies.
If there is no rulebook, reach out to your company’s Information Technology sector and ask for guidance on the security procedures that should be adopted while in home office and make sure you follow them correctly.
Each company adopts a specific digital security protocol, but there are some precautions that are valid for all employees who work outside the organizational environment. See the main ones:
- During work, avoid opening personal items on the same computer;
- Use strong passwords that are difficult to guess;
- Whenever you leave your computer unattended, make sure you lock your computer screen to prevent someone from accidentally tampering with it;
- Just use your home’s Wi-Fi signal and don’t pass the password on to people who aren’t completely trustworthy – don’t use public Wi-Fi, as they are more vulnerable to cybercriminals;
- Be careful when accessing unknown websites and, especially, when granting your data for internet purchases – only do this when you are completely sure about the reliability of the website / company;
- Any strange happenings during the performance of your tasks should be reported to your company’s IT department.
With proper discipline and organization, the home office can be very productive. For the purchasing department, specifically, one way to optimize the routine in these days of seclusion, is to have a company specialized in the supply of indirect materials, such as Soluparts, as a partner.
Find out more about Soluparts on our website and, take the opportunity to read other important content for the development of your work:
Industry 4.0 is a term that echoes in our minds and, although it is relatively new, it is already changing. It is the so-called second wave of Industry 4.0 – the subject of this article. Keep up with us!
The concept of Industry 4.0 through the eyes of its creator
A “simple” explanation for the term is to say that it is the fusion of the digital, physical and virtual worlds. The definition is from the creator of Industry 4.0 – or “Fourth Industrial Revolution” – Henrik von Scheel, named by the Financial Times as one of the world’s leading authorities on strategy and competitiveness. According to him, these three realities have come together to promote the greatest structural change in the last 250 years.
Scheel developed Germany’s ‘Digital Agenda’ in 2008 at a time when the country was experiencing productivity difficulties and its economic growth was slowing down. The strategy was to bring together industry, universities and government and to draw up a roadmap for the economy, which would focus on increasing efficiency in all manufacturing sectors – you can find more details in the article of the author himself.
The intention was to increase Germany’s productivity and Gross Domestic Product (GDP) through greater efficiency in all sectors, based on technologies and applications that already existed at the time or that were becoming more successful. It worked. And it was the beginning of the Fourth Industrial Revolution.
For the considered “father” of the new industry, among the main results of the fusion of digital, physical and virtual realities are:
- An unparalleled growth in efficiency and productivity;
- A redefinition of the competitive landscape on a scale never seen before;
- The introduction of smart products and new service models;
- The creation of the next generation of operational excellence;
- Intelligent automation, complete connectivity and true alignment across the value chain.
The first wave of Industry 4.0 began in 2009. It was configured in the meeting of emerging technologies, involving digitalization, the Internet of Things, robotics and systems such as Advance Analytics and Cloud Computing – check out our article on technologies that are changing global trade.
However, since 2016, we already started living the second wave…
The second and current wave of Industry 4.0
The second and current wave of the new industry, on the other hand, goes even further. According to Henrik von Scheel – whose linkedin profile you can acess, it is focused on solutions such as, and mainly, Artificial Intelligence (AI) – in addition to Blockchain (asset-based), Intelligent Automation, 6G Communication, as well as new energy sources.
This phase of Industry 4.0 also brings a new era of operational excellence to industrial processes – that is, it transforms manufacturing, operations, product services, production systems and even design.
In this sense, parts, machines and human beings, well-connected – by advanced technological and digital solutions such as Artificial Intelligence, Intelligent Automation and 6 G Communication – will have the possibility to make production systems faster and more efficient and thus reach a level never seen before.
The leader in strategies and competitiveness states that the changes proposed by Industry 4.0 require managers to search for changes in their competitive model, increasing the ability to supply products at lower prices throughout the supply chain.
Scheel points out that “manufacturers need to rethink the entire value chain” and also “need to apply different thoughts and tool sets“. Henrik von Scheel also points out that there are only six different ways to model his manufacturing operations. These are: revenue, value, cost, performance, service, and operational model.
The human being at the centre of change
The authority on strategy and competitiveness makes another important observation: it is the human being, and not technology (as most people think), that is at the heart of the fourth industrial revolution.
“And while technology is certainly the main driver of the second wave, what may be the most fascinating thing about change happening today is the ability of AI technologies to put humans at the center of everything they strive to achieve. This sets it apart from the industrial revolutions of the past,” emphasizes Henrik von Scheel.
He points out that companies cannot delay the advance of their digital AI journeys because if they do, they fall behind their competitors who already adopt these competitive advantages – causing the gap between leaders and laggards to grow rapidly.
It is worth noting that a third wave of the 4.0 Industry is already being projected – this one, starting in 2025. It will involve Quantum Computing, Cybersecurity, Neurotechnology, Nanotechnology and Bioinformatics.
Now – knowing a little better about this redefinition of the competitive scenario – it is not difficult to conclude that the search for new equipment, parts, products and services (modern, updated and of the highest efficiency) is a necessity for the evolution of the industrial process. The company that wants to grow needs to be ahead of the competition.
Soluparts – a global company with offices in Brazil, Germany, Portugal, Hong Kong and the United States – can connect you to the most relevant manufacturers around the world.
We specialize in purchasing all types of industrial materials and have access to thousands of products and suppliers from around the world – learn more about our company!
To better understand how Soluparts can help your business connect with the fourth industrial revolution, contact our team of experts!
The world is changing fast. The growth of the digital economy, changes in international production networks and the speed of transportation are changing the way we conduct foreign trade, making processes more inclusive and efficient. To stay in the market, you need to keep up with these new technologies and trends.
Globalization, transport and communication advancements make technologies and know-how cross borders much faster, increasing the growth and innovation potential of many emerging market companies. According to the International Monetary Fund, “between 2004 and 14, the knowledge flows of technology leaders may have generated, for an average sector of the country, about 0.7% of labor productivity growth per year. This is about 40% of the average productivity growth observed between 2004 and 2014.”
Cryptocurrency and the financial decentralization proposed by blockchain will definitely change the way foreign trade happens as people begin to include this technology in their daily lives. Since it has no central authority, the blockchain is a democratic and transparent system. Learn more about blockchain.
The chain is maintained by the so-called miners. By constantly watching what happens and what is updated on the system, each of them are able to identify and report malware or fraud, making them responsible for each other’s actions. The network can be accessed anywhere on the globe and every information added is copied as in a chain reaction so that it can no longer be edited. All of this global transaction management, tracking, compliance and non editable truth capabilities will surely change the financial transactions as we know.
Artificial Intelligence and Machine Learning
Artificial Intelligence and Machine Learning will automate all processes involved in international logistics, as is already the case in other sectors in developed countries such as medicine.
AI will be able to manage vessel and truck traffic at ports, track shipping worldwide, translate ecommerce search queries from one language to another, and respond with translated inventory, for example; The possibilities are endless. In short, this technology will streamline and optimize shipping routes and the entire system will be less prominent to error.
There is still a lot of debate regarding the real impact 3D printing will have in international trade. Maybe in the short term, the impact would be close to none, since the reality of mass manufacturing is rather complex. But in a few decades, when 3D printing becomes cheap, faster its mass adoption would decrease 25% in the global trade according to studies.
An increasing number of people worldwide is using mobile payments systems such as Alipay in their daily life. World Bank Global Inclusion Database affirms that the access to bank accounts increased by 20% between 2011 and 2014 thanks to mobile phones, especially in emerging economies. Soon enough, companies will start using these systems for their international purchases as well.
We can also mention technologies such as Optical Character Recognition (OCR), used to read container numbers, Radio Frequency Identification (RFID) and QR codes to identify and trace shipments in the improvement of reliability and efficiency of global trade. From basic digitization of trade documents to the technologies cited above will make the opportunities of innovation in international trade endless and many challenges will be overcome.
These innovations will most likely develop faster than the regulations for the industry. In terms of agreements and regulations, the International Chamber of Commerce have been keeping an eye on the changes to adjust incoterms for example, but industries and governments also need to start accepting the big impact of technology and start thinking about options to regulate this market. Some national governments are already responding to this transformations, working on increasing the benefits and to mitigate adverse effects.
“As with every technology and solution, there will be bad actors who deliberately try to cheat or find some way to circumvent the system. Governments need to reward individuals and companies that participate and use the systems as intended and, conversely, need to react swiftly and harshly to those that seek to circumvent the system. “ says David Mounts to Forbes.
The World Trade Report 2018 also points out to some downsides of the technology on world commerce. As said in the report: “while technological advance and trade-opening continue to yield enormous benefits for economies overall, they can also adversely affect specific groups and regions – a problem which a number of countries are currently struggling to address”.
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