Lot Tracking – who decides which lot to pick?

March 13, 2012

lot-tracking-allocate-lotsPharmaceutical, medical and food distributors, amongst others, need to implement proper lot tracking in order to be able to deal with regulatory issues, such as product recalls. For many, that’s the main driver behind implementing a lot tracking system. I also see many smaller distributors (particularly in the food business) resist this, because ERP Software systems that facilitate lot tracking are more expensive than the entry-level accounting software they may be using. So its fair to say that for many, implementing lot tracking is seen as a net cost, incurred just to provide compliance with rules and regulations.

There is however a measurable benefit to a properly implemented lot tracking system: you can reduce obsolete and expired inventory, by ensuring that older products are shipped out first. Food, medical and pharmaceutical products all have expiry dates, yet many distributors rely on the pickers in the warehouse to hopefully pick older product first for shipping. It does not work out that way in practice, and many companies end up losing more in expired products every year than the investment in a system that would eliminate this. Once you realize this, then it should be a no-brainer – just implement a lot tracking and allocation system and away you go – right?

Well, there are two main obstacles for the small / medium-sized distributor to overcome here:

  1. Software that can pre-allocate lots: at the more affordable end of the ERP software spectrum, those system that do offer lot tracking frequently require users to manually enter the lots being shipped.  It may be more difficult to find affordable lot tracking software that can pre-allocate lot numbers to be picked, based on FIFO or expiry date, and display those on picking slips or handheld devices, but they do exist.
  2. Warehouse pickers being able to find the pre-allocated lots: you’ll probably need to rethink your warehouse layout and flow. If you set up such that new shipments are loaded at the back of a shelf / row, and pickers pick from the front, with a procedure to shift products forward (for smaller items, perhaps flow racks), then your pickers should have little problem finding the pre-allocated lot numbers.

There are other building blocks which may help – such as barcode scanning and even RFID in certain cases. Yes, you will incur costs to implement this. But your measurable inventory savings on an ongoing basis should ensure a swift payback. Now compliance with regulations becomes a by-product of a wise investment, rather than a pain-in-the-neck cost.

Leave a Comment » | ERP Software, Inventory Management, Lot Tracking | Tagged: , | Permalink
Posted by Mark Canes

When Should You Replace Your ERP Software?

March 9, 2012

How Old is Too Old?

According to research performed by the Aberdeen Group, an ERP system reaches its maximum usefulness after approximately 7 years. At this point, the system is being well utilized and begins to show significant returns on investment. Now this assumes, of course, that the system was well-maintained over the 7 year period including incremental upgrades.

Unfortunately, after reaching peak efficiency at 7 years, the usefulness of the system begins to decline. Regular upgrades to your system can ensure that you never hit that period of decline, should you have chosen a constantly innovating, forward-facing software system. Unfortunately, many businesses, especially small businesses, are running on archaic systems that date back 15 or even 20 years. Unless these systems have made remarkable progress, chances are the software available today will blow it out of the water.

when-to-replace-erp-software-how-old-too-old

Thankfully, only a small fraction of businesses are running on systems that are over 15 years old – approximately 7% of businesses according to Aberdeen Group. While it is good news that a small percentage of businesses are running on archaic systems, it is not good news for those that still are. Failing to make strategic IT investments on a timely basis can hurt even the smallest businesses. Many managers are beginning to understand the importance of employing up-to-date software, but many remain in the dark.

Our advice: think hard about your current productivity with your software system. Are there any pitfalls? Are you losing hundreds of hours of productivity a year? Have you hired someone new to keep up with the demands of the business whose job could otherwise be replaced by a proper software system? Are your customers looking elsewhere to get quicker answers or faster service? If the answer to any of these questions is “yes” then a new software system will pay for itself.

What are you doing to avoid becoming part of the 7%?

Leave a Comment » | ERP Software | Tagged: | Permalink
Posted by Mark Canes

ERP Software salespeople – here’s the deal

March 6, 2012

erp-salesperson-discountI’ve always thought that selecting an ERP Software system was quite a serious and important task. Given that the entire business fundamentally depends on the ERP system, you’d probably not want to make this decision lightly. It’s not the same as, say, buying clothing or home electronics.

So I find it quite odd when ERP software salespeople try to coerce a quick decision from a prospective customer using very short-term, limited time discounts – particularly when the reason they give for the time limitation is (to me) quite transparent. You’ll usually find these “amazing” deals are available at month-end (or quarter-end) – the sign of a salesperson who needs to make quota.

From the buyer’s perspective, the most important decision point is not money (or at least it shouldn’t be), but is in fact suitability to their business of both the software and the company providing implementation services. So you would think that putting pressure on the decision maker to act quickly in order to lock in a discount would not generally be a successful tactic (unless the vendor has already in fact won the business in principle and is just trying to nudge the prospect to sign the contract). And happily, for the most part, you’d be correct. Most rational business decision makers will not be swayed to a product or vendor by limited time pricing pressure tactics.

And yet…we still see these “sign up quick for this discount” tactics time and time again. The sad reality is that when they do occasionally work, the result is almost always an unhappy customer, or an unprofitable sale for the vendor, or both.

Sales folks, it’s not your fault. You’re put under pressure by your sales manager to meet quotas, and what else are you gonna do? The real culprit here is the quarterly reporting cycle and the sales remuneration structure. Be honest: as a salesperson, would you rather close a “bad” sale and make target, or walk away from it and miss target? The latter will get you fired, so it’s  a non-starter. So you’ll hold your nose and close the bad sale.

I’m glad I work at an ERP Software company where we’d rather walk away from sales that are not a good fit, and focus on working with companies where we can and do add value. And sign them up when they’re ready.

1 Comment | ERP Software, Implementation | Tagged: , | Permalink
Posted by Mark Canes

What Distributors Want Out of Their ERP Software

February 29, 2012

Each industry has specific requirements that sets it apart and, of course, distribution is no exception. Neil Gillespie and Allen Ray recently wrote about “What Distributors Want” in a recent issue of Industrial Supply, where they gathered data from a study by Growth Wizards to determine what distributors are really looking to get out of their ERP systems.

As it turns out, many distributors are very dissatisfied with their current systems for a number of reasons, and are looking for change. According to the study, 50% of distributors do not currently trust the support and development of their existing system, and are considering a move to a new system in 3 years or sooner. Many vendors are not currently delivering on key requirements and it is beginning to show. Let’s take a look at the areas they have identified for improvement & their strategic objectives.

 distributors-erp-software

Attention & Education

Many distributors do not feel that they are receiving the level of attention they deserve from a development standpoint. Large software vendors may offer solutions across a variety of industries, and distributors feel that their distribution needs are being put on the back-burner. This stresses the importance of finding a vendor that is specific to your industry (e.g. distribution ERP software) or finding a vendor that is focused on constant development within your industry.

There is also a general distaste for the lack of education being provided. Distributors want solutions to their business processes, and not just the technology itself. They want vendors to work with them to streamline and automate their business so they can compete to the best of their abilities. Therefore, it is important to find a vendor that helps you improve your business processes.

eCommerce & Data

The medium-term strategic goals outlined by the survey respondents were eCommerce websites and better customer and vendor data/analytics. Distributors are pursuing opportunities to implement eCommerce WebStores integrated with their ERP software systems. They recognize the strategic benefit that an eCommerce webstore offers – a low-cost salesperson that is available for selling 24/7. Customers are demanding easier ways to order, and online systems are certainly the way to go. With customer-specific logins, distributors can maintain tiered-pricing for different customers while allowing them to enter in their own orders.

The second piece to this puzzle is customer analytics. Distributors want better information to help them compete. They are looking for more robust reporting, analytics and data-mining abilities from their ERP systems. Proper ERP systems should be able to provide an abundance of data and offer many options for getting that data out of the system. This data can provide extremely valuable insight for making strategic decisions on top of everyday tasks like purchasing. This does not have to be either costly or complicated, although many vendors seem to make it so.

The bottom line: many distributors are looking for better solutions for their business to increase their competitiveness in the market – are you?

3 Comments | Business Technology, e-commerce, ERP Software, Accounting, Implementation | Tagged: , , | Permalink
Posted by Mark Canes

The Importance of Phase 2 ERP Software Implementation

February 27, 2012

phase-2-erp-software-implementationIt goes without saying but I’m saying it anyway: ERP software implementations are far more involved than installing software like QuickBooks or consumer software like Microsoft Office.  You would be amazed at how many business owners believe it realistic to have a new ERP system in place in just a week or two. The robust functionality of a true ERP system requires a proper implementation (planning, installation, configuration, data migration and employee training) that will take at least several weeks if not months in total. This initial planning, installation, and training is what we refer to as “Phase 1” software implementation. Unfortunately, many businesses never see past Phase 1 – but they should.

Phase 2 implementation is the notion of improving upon the bare essentials and fully utilizing the functionality available in the system you have selected. Phase 1 focuses on getting the software up and running and on the essentials required to run your business on the software. However, the most important, but more complex, features are often left to a future date when employees are more comfortable with the software. This is a recommended strategy, but unfortunately these next steps are often forgotten, leaving some of the most powerful features out of employee reach. Chances are you selected your software because of several powerful time-saving features – make sure you get everything you are paying for!

The important of Phase 2 implementation cannot be overstated. Below are some of the benefits gained:

Benefits of Phase 2 Implementation

Further Reduce Manual Processes Phase 2 allows for a closer look at the details necessary to squeeze out as much efficiency as possible. Employees who know the software’s best tricks will be far more productive.
Increase Business Transparency Advanced reporting and analysis can be addressed in Phase 2 to ensure that you have access to all data important for measuring business success.
Address System Limitations Software is always evolving so there is always room for improvement. Robust software can easily accommodate changes and eliminate limitations where they once existed.
Integrate/Eliminate Other Systems A robust ERP system should accommodate the vast majority of your business processes. However, sometimes other systems are still required. Phase 2 can focus on finding ways to eliminate the work around systems that are still in place.

Once you and your employees have become comfortable with your ERP system, it is time to revisit the software and ensure you are getting everything out of it that you can. Sure, you may incur some additional consulting or training costs but the amount of time these advanced features and nuances can save is often substantial.

1 Comment | ERP Software, Implementation | Tagged: , | Permalink
Posted by Mark Canes

The hidden ERP Software problem

February 22, 2012

erp-software-problemUp next in the series on problems with ERP software: the problem that you don’t know about.

I’ve read various studies that suggest the average company uses between 40% and 60% of the relevant functionality of their ERP software – “relevant functionality” being the functionality that, if used, would provide measurable benefits to the company. My anecdotal experience in the small and medium-sized enterprise (“SME”) arena over 25+ years tends to support these stats. If you stop and think about it, this is a staggering thought: most companies, even if they have selected and implemented the appropriate inventory accounting software, are still only realizing around half the measurable benefits! It’s like buying 8 tickets to the Superbowl, then only taking 3 friends with you, and dumping the other 4 tickets.

The reason for this is one simple missing ingredient: follow-on training. When you implement a new ERP system, the initial focus is on addressing key / existing business processes, and managing the key logistical daily functions of the business. This is also the period during which you’re most heavily engaged with the ERP vendor. During this time, any training or advice you receive regarding more advanced automation and data analysis, for example, tends to largely go in one ear and out the other, because it does not relate to the most pressing issues you’re faced with during those very stressful first few weeks.

The ideal time to really capitalize on the advanced benefits that the ERP software offers is some time after go-live, when you’ve mastered to routine daily and weekly functions, and ironed out your logistical business processes with the new system. So perhaps 2 or 3 months after go-live (in the SME environment), you really should be re-engaging with your provider and initiating a “phase 2″ implementation - based on measurable and beneficial “extras” and advanced options. But in the real world, most SMEs are not willing to do so. I’m never 100% certain to what degree this is an attempt at cost saving, versus a defense mechanism against information overload. But either way, it is most certainly a missed opportunity – because if you leave it too long after go-live, the organization becomes entrenched in the current way of doing things, and even if that’s in efficient, it becomes increasing,y difficult to effect change.

Real life example: a company went “live” on our ERP Software around 9 months ago, on the understanding that after 2 – 3 months, we’d show them how to completely automate an Excel analysis tool that they currently spend around 2 days per month manually updating – re-keying data that is already in the software. Well, 9 months later we’re still trying to get this customer to spend around 2 – 3 hours with us, after which that 2 days of manual updating per month will be completely replaced with a single mouse click. And yet they remain “too busy” to schedule that session.

At least the good news (from my perspective) is that this is an exception amongst my customer base.

1 Comment | Accounting, ERP Software, Implementation | Tagged: , , | Permalink
Posted by Mark Canes

Problems in the Search for ERP Software: Lack of Time

February 14, 2012

problem-search-erp-software-lack-of-timeLast week we wrote a post about some problems finding the right ERP software. This week we are going to focus on common problems inherent in the search itself. Let’s begin with a story.

You, the CEO/President/VP of Operations/CFO, are extremely busy. You work for, or own, a small business and chances are you are involved in many aspects of daily operations. You understand the importance of keeping the business running smoothly but at times you are too busy fighting fires to make changes necessary to maintain efficiency. So it is a Saturday afternoon and you have found an hour of spare time between helping your children with their homework and finishing up work for a client meeting on Monday, so your turn your mind towards to finding new software. You jot down a couple of vendors, fill out forms on their sites and eventually have a brief conversation with them on the phone. Then your head starts spinning and you figure you cannot continue the process because you are too busy, so you drop all communication. You continue with the status quo, knowing all-too-well that your current software is compounding the daily problems that keep you pre-occupied.

Does this story sound familiar? It is certainly very common from our perspective.

The good news is that, as a small business, there is a way to get around how busy you are – implementing new software! The first step to making the software the search process easier is by understanding how important it really is. Think of it like this: how much help would it be to have another efficient employee at your beck-and-call? A proper software system can be at least that effective – reducing strain on current resources by eliminating manual work, fixing errors, duplicate data entry etc. Thinking of a new software system as a full-time employee can be a very motivating mindset and can help with budget setting. You can spend $35,000/year on a new employee or $30,000 once on a new system. No-brainer decision, right?

It may seem impossible to add another item to your ever-expanding list of things to do, but avoiding “I’m too busy” is crucial to eventually implementing a system (that will save you a great deal of headaches and free up a lot of time in the future). Think of it as an investment in your mental well-being as well as your business.

The 4 steps to avoiding “I’m too busy” are to:

1 Comment | Accounting, Business Technology, ERP Software | Tagged: | Permalink
Posted by Mark Canes

The Problem with ERP Software

February 10, 2012

Anyone who’s used any ERP Software or accounting package for more than a few minutes has experienced some level of what we’ll generically label “ERP Software Problems”. Over the next few months, I’ll sporadically explore some of the more common categories of ERP problems that you may have encountered (or that may be in your future), with a view to providing some insider insight into why these problems arise, and how best to deal with them.

In this first look, we’ll examine what’s probably the largest and most costly ERP Software problem: namely, a poor fit. In this unfortunately common situation, a company has implemented a system that is just not a good fit for their business. This may be due to the software itself being inappropriate, but could also be because the ERP Software vendor was not the right choice.

ERP Software Problem: poor fit

 Why do so many companies end up implementing software that is not a good fit for their business? There are many reasons, but the three that I’ve most frequently seen, and that keep recurring, are:

  • Buying based on price, or with a pre-conceived budget – if you make cost your number 1 (or even 2) decision point, you will choose the wrong solution at least 50% of the time, if not more
  • Lack of understanding of your own business needs and processes. If you have a clear picture going into the decision process, of how your business should look after the implementation, you’ll likely choose appropriate software. If not, you won’t.
  • Sweating the small stuff – a corollary of the above point is that it’s the big things that count in this decision, but if you focus on the small stuff you may miss the big stuff. The more detailed features you focus on, without evaluating how important they really are, the more prone you’ll be to either indecision, or the wrong decision.

ERP Software Problem: wrong vendor

Even if you have chosen ERP Software that is potentially a good fit, if the vendor is not appropriate you’re going to have problems. If you work with a vendor that has no experience in your industry, or one that’s accustomed to implementations at companies that are much larger (or much smaller) than you, then the software problems you’ll encounter may well be related to setup, implementation and training rather than the package itself.

Additionally, I firmly believe that there should be a “meeting of the minds” between you and the ERP Software vendor – a similarity in corporate culture and values – as this will result in a truly positive business partnership.

From the perspective of an ERP Software vendor, I can tell you from many years of experience that the fit between ERP vendor and customer is crucial, and works both ways. As a vendor, I don’t want a customer if we are not a good fit for them, at either the software or corporate culture level – in such situations, everyone loses.

In summary, the starting point to avoiding ERP Software problems is to avoid the wrong software, and avoid working with the wrong vendor.

2 Comments | Accounting, ERP Software, Implementation | Tagged: | Permalink
Posted by Mark Canes

Ensure Proper Training for ERP Software

January 20, 2012

proper-training-erp-software

I get phone calls all the time from managers, consultants and company owners who want to immediately “take the reins” and pilot our software before they have been properly introduced to the system. What is worse is when these same individuals decide they want to minimize software training for their staff as well. The problems with this approach are almost too numerous to mention but I’m going to take a stab at it.

Every Piece of Software is Different

Many people assume that if they are even remotely technically-inclined, that they will be able to pick up any piece of software and immediately be productive with it. This is obviously not possible as everything in life has a learning curve of some degree. As a result of this mindset, we as software providers must spend time convincing buyers that education needs to come first before productive product trials can take place. This goes for some of the most simple and intuitive software out there as well – if you’ve never seen it before in your life, you’ll need time to adjust.

Vendors should offer to take you through the system so that you can use your time wisely if you decide to perform a hands-on evaluation.

Difference in Productivity Levels

An intuitive software package may allow for quick familiarity, but a system’s true power lies in the shortcuts and more complex tasks that may not be quite as obvious. For example, consider a sales order review screen. At the basic level, you open it up and review open orders by sifting through them. More advanced functions would allow you to sort, segment and quickly identify actionable orders. And finally, you can set up automated email reports alerting you to important actionable orders. Without proper training, your staff may never get past working with the basics.

Short Term Pain for Long Term Gain

Yes, paying for things can be painful but investing in your business should never seem painful. Think of training as an investment in long term productivity for your employees. Will they be able to get by without adequate training? Maybe. However, they may spend twice as long working with the software as they need to. The long-run cost savings of properly trained staff cannot be overstated.

Hopefully this post has made it clear how important it is for proper software training. All forms of employee training are important, but ensuring proper training for the system that runs your business and that they work on every day should be at the top of the list.

1 Comment | ERP Software, Implementation | Tagged: , | Permalink
Posted by Mark Canes

Customization: Finding the Right Software for YOU

January 13, 2012

customization-software-customDepending on your industry, it can either be very hard or very easy to find software that is a great fit for you. Some industries are better represented than others but even in well-represented industries there are many businesses with unique requirements that may pose problems for solutions that are designed from a “one-size fits all” perspective.

For example, consider software for wholesale and distribution – on the surface, wholesalers and distributors will share many of the same requirements. However, there are many different lines of businesses or sub-industries within wholesale and distribution with vastly different requirements. Those in the HVAC industry may require servicing & repair management while those in food distribution may be primarily interested in landed cost or lot tracking.

Different modules offered by vendors can accomplish specific tasks required for specific industries, but even at the module level there may be some functionality left to be desired. That is why customization should always be an important consideration when evaluating vendors. Regardless of how well the software works out of the box, you want to be assured that the vendor can accommodate your specific needs – now, and in the future when you make changes to your business/processes.

Although significant customization should be avoided (i.e. the software should do the majority of what you need it to), it should be considered a good option for the small pieces that are very specific for your business. Often these customizations help accommodate the unique aspects of your business that set you apart from your competitors. After all, if this functionality were available out-of-the-box then it wouldn’t be unique to you, now would it?

Ensure that your software solution is customizable to avoid having to drastically change business processes to accommodate your software. Your options are to develop customized software specifically for your business (which can be very costly and often difficult to upgrade) or you can choose to find a software solution that is a fully integrated solution with the ability to be easily customized. Don’t focus on finding the right software for your industry, focus on finding the right software for YOU.

1 Comment | Accounting, ERP Software | Tagged: , | Permalink
Posted by Mark Canes

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