So, do you need Inventory Management Software?

January 25, 2011

I was recently interviewed for an article on Inventory Management software (yet to be published). Here are three of the questions and answers from that interview – perhaps you’ll find them useful (or perhaps you disagree – if so feel free to post a comment).

Q: When a business is evaluating different inventory management products, what questions should they ask themselves?

A: What are our “Critical Success Factors”? What are the things we have to excel at in order to succeed? As defined by Michael Burns of 180 Systems, these are the key activities any new system needs to handle well in order to help your business succeed, and it is very important when starting to define system needs to focus on a smaller number of most important requirements. I have seen poor business software decisions made that cover 97 out of 100 requirements – but the 3 they don’t cover are the most important. If you can’t see the wood for the trees…

Q: How do you know you need inventory management software (or improved inventory management software)?

A: Assuming that you buy and sell products, ask these questions:

  • Do I know what I have in inventory?
  • Do I know it’s true cost (including things like freight, duty, etc.)?
  • Can I instantly tell what’s committed to customer orders, what’s expected in on unreceived Purchase Orders, and how much I need to purchase to replenish?
  • If I’m not around, can someone else get this info instantly?

If the answers are all “Yes”, possibly you don’t need one. But consider also special needs for your industry. For example if you’re a food distributor, how well can you handle product recalls based on lot numbers, and are you able to manage inventory flow based on expiry or “best before” dates?

Q: What are questions that buyers forget to ask?

A: The big one here is the real cost of a proper and successful implementation. Many vendors tend to “low-ball” the implementation costs, and the result is a project that is unsuccessful, one that goes way over budget – or both.

If you implement a new system, there are two choices – do it cheap, or do it right.

Let’s Lose the Manager

January 13, 2011

Less people = more productivity: let’s get rid of redundant management…

Scott is the controller at a food ingredients importer and distributor using my employer’s inventory management software. The company also engages in food production, blending ingredients. Here’s what happened recently, in Scott’s own words: “I had to cover off production in the back during the holidays myself, and was surprised to find out that with me running the production we doubled the production each of the 3 days. We determined that the team would do better without the existing manager, so we terminated his employment. They are up 60% without either me or the old production manager.  He was actually holding them back…”

What I take away from this is that, when there are bottlenecks in a business process, they should be examined from all angles – including the managers and supervisors. Too frequently, managers will blame production issues on a convenient scapegoat – the software, the production workers, or the physical environment. But sometimes it’s the supervisor who’s the bottleneck. Particularly in a smaller environment, one should consider carefully how many levels of management are necessary at all.

If you have good people on board, they should not need much by way of supervision. And if you don’t have good people, then no amount of supervision will paper over those cracks.

<…holds breath and awaits verbal abuse from management…>

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