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Enabling Customer Service Personnel to Work with Customers and Purchasing to Source Products in Wholesale Distribution

August 10th, 2009 by admin

I was involved in a recent discussion with a wholesale distributor which can be a very common scenario.  A member of the distributor’s management team described that while they stock a portion of their various supplier’s product lines, they can sell virtually any of the products those suppliers offer in their product catalogues.  The distributor’s sales process generally starts via quotes.  Some of the items being quoted may be stocked by the distributor, others may not.

In situations where supplier catalogues are not stored electronically within the distributor’s wholesale distribution system, customer service personnel will spend a lot of non-productive time looking through supplier catalogues – either paper-based (which may have outdated data) or on a supplier’s Web site – or interacting with supplier personnel to find the desired items for their potential customers.

Furthermore, many wholesale distributors allow their sales or customer service personnel to place purchase orders directly with suppliers to fulfill the non-stock items on sales orders.  This process can result in numerous issues.  Sales and customer service personnel may buy the wrong quantity of items at a higher price than necessary because the distributor’s overall purchasing power with the given supplier may not have been accounted for in the given transaction.

A strong wholesale distribution system will provide sales and customer service personnel with electronic access to their suppliers’ most up-to-date catalogues online.  By enabling business rules about minimum profit margins for given product lines or customer groups, sales and customer service personnel can easily quote both stock and non-stock items in alignment with the management team’s targeted metrics.  When non-stock items are quoted, purchasing personnel can be notified electronically as to the existence of the given quote line items.

When the distributor’s customer elects to purchase the products on the quote, the sales and customer service personnel can convert that quote to a sales order, either in part or in whole based on those items desired, and have the system manage the committing of inventory for those items which are stocked by the distributor simultaneously with generating the purchase requisitions for the non-stock items.  These purchase requisitions can then be reviewed by the distributor’s purchasing personnel – those people the company has entrusted to work with its suppliers – to turn the purchase requisitions into purchase orders within the wholesale distribution system, and then transmit those purchase orders to the associated suppliers via the supplier’s preferred method of interaction – either printed paper, facsimile, email, or EDI.

By leveraging the capabilities of strong wholesale distribution systems, such as TGI’s Enterprise 21, wholesale distributors can enable their customer service personnel to work with their customers and their purchasing personnel to source products from their suppliers.

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Selecting the Best Options for Successful ERP Software Implementation Training

August 10th, 2009 by admin

One of the key requirements for the successful implementation of a new ERP software solution is a well-defined and executed training plan.  A training plan should document how, when, and where all executive, functional, and technical user personnel will learn how to execute their work processes in the new system.

Some of the key elements of a training plan include whether the software vendor or implementation services provider will train all end users or if a train-the-trainer approach will be used.  A train-the-trainer approach is one in which key members of the implementation core team become functional experts or super users who then train their peers and colleagues within various functional areas.

Another decision to be made is how much of the training will be performed in an on-site classroom environment, via off-site remote or Internet-based training, or via computer-based or self-directed methods.  Please note that these methods are not mutually exclusive and may be used in combination during a successful implementation training process.

Some of the key aspects that will help determine how training is performed will be determined by the sheer number of personnel to train, the number of locations at which the personnel to be trained reside, and whether or not an entire workgroup can be trained concurrently vs. needing to stagger their training to keep portions of the team engaged in day-to-day operations while training others.

When the customer implementing new software is of any substantial size with multiple locations, a train-the-trainer approach typically can be delivered at a reduced cost over a method of having the software vendor or implementation services provider train all functional users.  Another benefit of a train-the-trainer approach is that the company implementing the new ERP software will generally come away with better overall internal functional knowledge because of the depth of training of the super users who become the internal trainers.  If this method is of interest, don’t assume that a given software vendor or implementation services provider has a core competency in training internal trainers.  Make certain to ask the various vendors about their training approaches and preferences during the software evaluation process.

While remote or Internet-based training can be performed concurrently with personnel from various locations without the need for travel, a key element which can be lost by using this approach is the ability for the trainer to walk around and observe the participants’ comprehension during hands-on exercises.  There will be both hands-on learners and lecture learners, and it will be imperative to cater to the needs of both groups equally.

Finally, there are advantages to using canned training aids such as computer-based training including the ability to ensure that a consistent level of training is provided and that the training materials can be used after initial production Go Live with the new system for ongoing training of existing and new personnel.  Ongoing training is a critical success factor to prolong the longevity of the ERP system and enable the company who is implementing new software to use the system as-designed and as extensively as possible.

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Leveraging e-Commerce Functionality to Increase Software ROI in Wholesale Distribution

August 10th, 2009 by admin

A functional requirement that is often overlooked when selecting a distribution software solution is fully-integrated e-Commerce software functionality. In addition to providing more methods to customers to place orders, e-Commerce functionality can significantly improve software return on investment (ROI) for wholesale distributors by reducing the need for excessive order entry personnel and decreasing the call volume to customer service when customers want to track the status of their existing orders.

When evaluating a given vendor’s e-Commerce software solution, there are some key criteria the vendor’s software solution must meet. First, data that is displayed on the Internet through the e-Commerce portal should be pulled directly from the distribution software’s database. For example, when Customer A has Price A for Product A, and Customer B has Price B for Product A, each customer’s specific pricing for Product A should be displayed when they place a web order based on the customer’s log in ID for the e-Commerce portal. Customers should also then have the ability to track the status of their orders and view their order history.

Secondly, the vendor’s e-Commerce software should deliver functionality that is capable of providing relevant customer and product information to sales representatives. For distributors who have sales representatives who place customer orders while at a given customer’s facility or from the road, such functionality can improve customer service and sales revenue. A given sales rep should be able to log in to the distributor’s customer portal and be able to obtain customer information such as pricing, order history, total sales, any outstanding accounts receivable, etc., as well as product information such as available, on hold, and committed inventory.

Lastly, distributors should be able to tailor the e-Commerce software solution to have the same look and site architecture as the distribution organization’s website. While the software that is used to create pages such as an organization’s home page and contact page is different than the e-Commerce software that is used to place and track orders over the Internet, the aesthetics of the website should be completely transparent to site visitors.

Assuming the software vendor’s proposed e-Commerce solution can meet these criteria, distribution organization’s can continue to gain a larger return on investment from their purchase of an ERP system. By allowing customers to place orders over the Internet, distributors can begin to cut costs that were formerly associated with customers placing phone or fax orders. With fewer orders being placed over the phone and a larger percentage of orders coming through e-Commerce, distributors can reduce the need for excessive order entry personnel due to the automated order entry processes an e-Commerce solution can deliver. Furthermore, by allowing customers to track the status of their existing orders and view their complete order history via e-Commerce any time of the day or night, fewer calls will be made to the customer service department regarding order inquiries. Again, this can lead to a reduction in customer service personnel by readily providing such information to customers over the Internet and a tangible ROI for the distribution organization.

To view an interactive demonstration of TGI’s Enterprise 21 eCommerce solution, please click here.

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Selecting a Third-Party IT Service Provider

August 4th, 2009 by admin

After selecting an ERP solution and vendor, the next step for the selection team, in the case of small business manufacturers and distributors, is to select a third-party IT service provider (this assumes that the small business does not choose a Software as a Service or Managed Infrastructure model, and the small business does not wish to employ a full-time IT employee). It is a good idea to discuss the ERP software’s hardware and network requirements with the chosen software vendor and then communicate these requirements to potential service providers. It is also a good idea to purchase new hardware (if new hardware is required) directly from the selected IT service provider. In choosing a third-party IT service provider, quality and scope of services and cost should be the main focus of the selection process.

From a services perspective, the organization should look for an IT provider who offers 24-hour technical support in the event of server or network issues should they arise. The organization should also look for a service provider who is capable of delivering a guaranteed, on-site response time should on-site fixes be required. Typically, a guaranteed response time of 4 hours or less is a fairly good service offering. In addition, the organization should look for an IT service provider with local representation and local technical and support staff. Choosing an IT service provider who is in relatively close proximity to the manufacturer’s or distributor’s facilities can improve response time and make on-site visits much more plausible. To gauge quality of service, the provider should have some references of other comparably-sized businesses in the area that use the provider for similar services. The selection team should talk to these existing customers to ensure the IT provider is capable of delivering the services and expertise it promises during the selection process.

In terms of cost, the selection team should be careful not to buy into providers’ claims that system failure and network disasters are always lurking around the corner. Some IT service providers have fairly sophisticated software offerings that can monitor hardware performance and check for potential issues that may arise. While these service providers can deliver value to larger organizations, they are not really a cost-effective solution for small businesses. The reality is that while hardware issues do occur, complete system failure (short of a natural disaster, fire, etc.) is highly unlikely with today’s technology, and as long as data is routinely backed up and stored, hardware issues should be minimal and in no way catastrophic.

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Once You Sign on the Dotted Line for a New ERP System, You Own It – for Better or Worse; Not if Your Software Vendor Provides You With a Software Acceptance Process

July 28th, 2009 by admin

I received a recent email from a firm that provides ERP software evaluation tools and has analysts and consultants who work with clients to evaluate software solutions.  Their headline message jumped out at me immediately, which read, “Once you sign on the dotted line for a new ERP system, you own it – for better or worse.”   While this statement is true in almost every case, it is not true when companies work with a software vendor that provides them with a software acceptance process.

So, what is a software acceptance process, and how does it work?  A software acceptance process is a money-back guarantee to a company acquiring ERP software following contract signing and initial software installation.  We know that during a software evaluation process, personnel from the company evaluating software do their best to describe the processes and capabilities they require in a new software solution.  The vendor’s responsibility is to understand the prospect’s requirements and to show and describe to them how their software matches up with those requirements.  Unfortunately, this process is flawed.

Prospect personnel cannot understand and describe clearly what they are looking for from new software.  Likewise, software vendor personnel cannot comprehend perfectly what is being requested by the prospect personnel.  There will always be gaps in understanding and communication; however, a software company that offers a software acceptance process embraces this fact and helps to make it a non-issue.  Software vendors who offer the software acceptance process don’t want customers to be fooled or misled into buying software that isn’t what they thought it was during the evaluation process.

This reminds me of an old joke about a guy who is given the opportunity to choose where he wants to spend eternity.  He visits heaven and finds it to be sedate – with harps and angels singing.  He then visits hell and finds gourmet food, great music, and lots of golf courses to play.  The guy debates his options and then chooses hell.  He’s immediately whisked away to fire-engulfed surroundings to which the guy asks where the food, music, and golf courses went.  The response he receives is, “When you visited, you were a prospect. Now, you’re a customer.”

Don’t allow this to become you when you’re buying new ERP software.  I saw a recent Web posting by a software demo person who stated that his job was to get the prospect to believe the software would do whatever they want it to do.  Even if someone were inclined to approach things in this manner, there would be no value in doing so if that demo person’s employer offered its customers a software acceptance process.

I could cite numerous examples in which people have said they wished they had insisted on a software acceptance process with their vendors.  Here’s one such example.  Back in 2006 we participated in a software evaluation against a well-known ERP software vendor.  The prospect had a consultant guide them through the process, did scripted demos, scored the demos, and saw things as too close to decide.  Finally, the prospect selected the other solution.  When they did so, we strongly recommended to the prospect and consultant that they insist on a software acceptance process to which their response was, “We don’t need that; we’ve seen the other software’s capabilities demonstrated.”

In following up with that consultant in January 2009, he stated his client regretted many times not going with us.  They have been disappointed with the product they chose.  There was functionality that was promised to them by the vendor that wasn’t there when they bought and still isn’t there.

There are numerous stories and reports showing that the percentage of failed ERP software implementations is too high.  One root cause of this problem is that companies select the wrong software.  If vendors offering a software acceptance process became the norm in the ERP software industry, the issue of selecting the wrong software could be minimized.

As part of “The TGI Difference,” TGI offers a risk free, money-back software acceptance period to all of its customers following contract signing and initial software installation. This period allows customers to validate their selection of TGI and Enterprise 21.  We encourage all prospects to insist on a software acceptance process when buying new ERP software.

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TGI’s Stance On Software Development and Support Outsourcing

July 21st, 2009 by admin

A rising trend in the ERP software industry is the outsourcing of development and support services to third-party companies overseas. In the last two years, virtually every prospect I have spoken to during the selection process has inquired as to who is responsible for support services and, more importantly, where such support staff is located. There seems to be a common concern among business owners, senior management, and IT directors across the United States that should they ever require software support and/or assistance that they will be directed to somebody who is not a full-time employee of the software company and that this person will not be able to communicate an adequate diagnosis and solution with customer staff effectively.

ERP vendors’ justification for third-party development and support outsourcing is fairly simple – third-party outsourcing to other companies (and countries) can provide significant cost savings for software vendors. The cost to educate, train, and staff full-time software developers in the U.S. is significantly greater than for staff in many regions internationally. Average wages for software developers and support staff are substantially lower outside the United States, and by outsourcing to other companies, software vendors are able to eliminate costs such as employee benefits and retirement contributions.

While such development and support outsourcing is quickly becoming the rule rather than the exception in the ERP software industry, TGI believes that a key to providing effective, exceptional customer service lies in the quality and knowledge of the support staff the software vendor employs. TGI has remained committed to providing direct developer support for each of its clients; when calls are placed to TGI’s customer support line, calls are answered directly by TGI software developers with an average tenure of over ten years. We believe this philosophy provides our customers with an opportunity to interact with their software developer (TGI) in a truly unique way, which in turn leads to better business relations and lasting partnerships. This philosophy also places an added pressure (and opportunity) exclusively on TGI to routinely deliver effective solutions and responses to customer requirements. It is our job to respond to and meet these customer demands on a daily basis.

When selecting an ERP software solution and provider, software functionality is certainly of the utmost importance in the selection process; however, software selection teams should also conduct a thorough analysis of the software company and the support staff that will be charged with the task of meeting customer requirements on an on-going basis.

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Improving Operational Efficiency and Pricing Accuracy through Commodity Market-based Pricing

July 17th, 2009 by admin

Within numerous food industries, including the cheese market, it is a common scenario for two businesses to agree to transact business together in a buy-sell relationship with the pricing set relative to a commodity market.  For example, a given company may import cheese from another entity and then cut and pack that cheese for their retail customer base.  The cut and pack business may elect to buy a given Swiss cheese at $0.10 per pound above the Block and Barrel weekly market average based on the date of manufacture while agreeing to sell their cut and packed finished product for $0.15 per pound above this same market based on the date of shipment.

There are varying methods by which the cut and packaging company may choose to manage its business relative to these pricing methods.  One method would be that personnel could manage the vendor and customer pricing records directly for the specific vendor and customer described above.

Alternatively, by using commodity market-based pricing functionality, one could establish the specific Block and Barrel weekly market average as the basis for pricing in this example.  Then, within vendor and customer pricing records respectively, one could establish that the given Swiss cheese supplier has agreed to sell the cheese to the cut and pack organization at an overage of $0.10 per pound based on the date of manufacture of the cheese.  Likewise, within customer pricing for the specific example above, a customer pricing record would be established for a given retail customer such that they would be billed an overage of $0.15 per pound relative to the given commodity market average based on date of shipment.

In either case, the system would establish a purchase order with the supplier and a customer order with the given retail customer respectively for the proper pricing based on these agreements; however, the method by which pricing updates would be made would vary by these two methods.  In the case where the exact pricing is set up for the vendor and customer respectively, each time the commodity market pricing would change, the specific vendor and customer pricing would need to be updated directly.  On the other hand, if the pricing records were managed relative to the given commodity market pricing, only the reference market-based pricing would need to be updated – either manually or electronically – and the associated vendor and customer pricing records which reference the given commodity market price would be updated automatically.

While this process may not appear to save any time when we’re talking about an example with only one vendor supplying one product and one customer buying one product, you can imagine how much more complex this can be when there are dozens of vendors supplying a wide variety of products which can be cut and packed to yield hundreds of finished goods for a multitude of customers.  In this case, by setting up the reference commodity markets and associated vendor and customer pricing records once and allowing the system to automatically calculate the appropriate contract pricing as the various commodity market prices move up and down, there can be tremendous gains in time efficiency by managing the pricing in this manner.  In addition, since the pricing is set up once with the movement of reference commodity markets kept in only one place in the system, the potential for errors in pricing of purchases and sales is likely to be substantially reduced.

By using strong ERP systems like TGI’s Enterprise 21, food-based businesses and organizations in other industries that leverage commodity market-based pricing as a norm can save time and money while reducing the possibility of errors through market-based pricing functionality on the procurement and customer sales sides of their businesses.

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Use Your ERP Software Implementation to Clean Up Your Garbage Data

July 7th, 2009 by admin

A common concern many small business owners have when selecting a small business ERP software package is how they are going to be able to extract their existing data from their legacy software systems (QuickBooks, Excel, etc.) and transfer the data into their new ERP software solution. While migrating historical data into the new software package is important, the real question small business owners should ask is what historical data should be migrated over to the new ERP solution?

Within most small businesses, manufacturing and distribution operations use multiple software packages simultaneously, which leads to numerous instances in which data is duplicated, and, in many cases, inconsistent. Products are often times entered with one product description in one software package and a different product description in a second software package; the organization may also have a customer’s shipping address entered in one software package and the same customer’s billing address entered in a different software package. The software implementation process is an excellent opportunity for the organization to clean up its duplicated and inconsistent data and develop a single, cohesive data set for products, customers, ingredients and raw materials, suppliers, financial accounts, etc.

While the process of going through potentially hundreds or thousands of data records may be painful, it will prove to be highly beneficial to the small business during the initial system go-live and beyond. A sophisticated ERP software solution is only as good as its associated data. I recently spoke with one small business owner, and I believe his take on data migration was probably one of the most simplistic, yet most accurate statements I have heard when he said, “Garbage data in is just going to mean garbage data out.” This statement is just as true today as it has always been when using automated systems.

Establishing an accurate and consistent data set during software implementation is one of the first steps for the small business in realizing significant ROI for its software purchase and developing improved, efficient business operations.

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Criteria for Selecting High Service Factor Items

July 3rd, 2009 by admin

Inventory management is a key element in any sophisticated distribution software or manufacturing software solution. In Enterprise 21, inventory levels can be maintained on a product-by-product basis using a variety of inventory control methodologies. These include a simple reorder point with minimum and maximum values, safety stock level (measured in days supply on hand), and service factor, with each methodology accounting for seasonal fluctuations in demand for a given product. Service factor, which is a number between 1 and 100, allows the organization to select a desired line item fill rate for a given product. An item with a service factor of 50, for example, means that for every 100 orders for that item, 50 orders will be able to be serviced directly out of available inventory. An item with a service factor of 95, however, means that for every 100 orders for that item, 95 orders will be able to be serviced directly out of available inventory. So, with this basic understanding of service factor, what criteria should the organization use in determining the products that should be set to have high service factors?

There are two key criteria for selecting products to have high service factors. First, items with a high order volume or high order frequency should be set to a high service factor. Items with a high order volume and high order frequency account for a significant portion of the organization’s business and revenue. Having the ability to fulfill orders for these items routinely out of available inventory will not only increase gross revenues, it will also lead to increased levels of customer service and satisfaction.

The second criteria for selecting items to have high service factors is high profit margin. Setting items that have a high profit margin to have a high service factor will result in increased bottom-line profits for the organization. Even if an item has a relatively low order volume or frequency, being able to fulfill orders for items with a high profit margin directly out of available inventory will decrease the likelihood of the customer shopping for the product elsewhere and increase the likelihood of repeat business from that customer.

For items with high order volume and frequency or high profit margin, using a service factor inventory management methodology can provide a powerful tool that can be leveraged to increase bottom line profits, improve customer service and satisfaction, and improve the likelihood of repeat business from a given customer.

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The ERP Selection Process: Developing Your Initial List of Potential ERP Vendors

July 1st, 2009 by admin

Developing your initial list of potential ERP vendors is a critical step in the ERP selection process. Your initial list of potential ERP suppliers will serve as the basis for which suppliers you will send Request for Information (RFI) documents. Suppliers’ responses to the RFI will in turn help you to eliminate some ERP vendors and move forward with others to conduct initial remote software demonstrations. The vendors’ performance during these initial demonstrations will then help you to select which suppliers you will send a Request for Proposal (RFP), invite to conduct on-site scripted software demonstrations, and ultimately make a final supplier selection. In other words, your initial list of software suppliers should (hopefully) contain the supplier you will finally select as your software supplier. To help generate an initial long list of potential ERP companies (roughly 25 companies is usually a good start), there are a number of resources available to the software selection team.

Google – Google is a great place to search for potential ERP software vendors. For broad searches, use keywords such as “ERP software,” “ERP system,” and “ERP systems.” These search phrases will provide you with a large number of companies to consider. For manufacturers, “process manufacturing software,” or “discrete manufacturing software” are great phrases to search on when looking for potential software suppliers. You can also search on phrases that are more specific to your industry. Companies in the food and beverage industry, for example, can search for phrases such as “food ERP software,” or “beverage ERP software.” Pharmaceutical distributors can search on phrases such as “pharmaceutical distribution software.” You get the idea. Google is an incredibly powerful tool and provides highly-relevant information in its search results.

Industry Publications and Associations – Various industry publications and trade associations are also a great place to find potential software vendors. Members of the National Association of Manufacturers, for example, can check out the software section of the online NAM Buyer’s Guide. Cheese and dairy processers can look at Dairy Foods Magazine’s supplier guide or the Dairy Foods website, while organizations who specialize in plumbing wholesale distribution can frequently find potential software suppliers in The Wholesaler or at www.thewholesaler.com. No matter what your industry may be, your industry’s leading associations and publications are a great place to start looking for potential ERP vendors.

Independent Consultants
– Independent consultants are a great resource for not only developing a list of potential ERP vendors but providing assistance and guidance in other steps of the software selection process as well. If you decide to use a consultant throughout the selection process, be sure to select a consultant who truly is “independent” and does not have a partnership or financial agreement with any software provider. Selecting an independent and unbiased consultant will help you select the best ERP vendor for your business.

For more software selection resources from TGI, please see the “ERP Software Selection Process” within the “Resources” section on our website.  This area provides tools to assist in the software evaluation process, as well as an option for obtaining a list of ERP vendors based on your company’s industry, revenue, and manufacturing process where applicable.

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