August 30, 2011
A few short years ago, very few owner-managed businesses were selling online (direct to consumer). That was for the likes of Amazon. Recently, there’s been an explosion of smaller entrepreneurial companies putting up e-commerce sites, and in some cases more than doubling their revenue in a short period of time. What a great opportunity! But at the same time, this success presents a whole new set of problems. Many of these companies were previously “just” a wholesaler / distributor, others were “just” a bricks and mortar retailer. Now with the e-commerce site, the distributor has effectively become a retailer on the front end – and the bricks & mortar retailer has also become a distributor (on the back-end). These new business activities, and the need for systems and processes to successfully execute them, are the root of many of the “new” problems.
Over the next few months we’ll examine some of those problems, and ways to solve them, one at a time. Let’s start with a simple question: would you rather be able to generate a bg increase in sales online, but not be able to fulfill the extra orders; or would you prefer to build the capacity to sell more, but not generate the sales volume? I suspect most will answer “neither”.
Now let’s ask the same question another way: should you mainly focus on your e-commerce site, or should you focus on your inventory management / purchasing / accounting back-end (your ERP software system)? Here I suspect many would choose the e-commerce site. But the correct answer here is again “neither”, or more accurately, “both”. Because like any other plan designed for long term business growth, this should be approached strategically in advance, asking questions like:
- How can we grow sales rapidly?
- How can we keep customers happy so they keep buying?
- How can we fulfill sales quickly and efficiently, allowing for growth, while maximizing profitability?
A good strategy will avoid asking which comes first, the chicken or the egg, and instead focus on accommodating both efficiently. So look out for some specifics, with some real life e-commerce examples, on this topic over the next several months.
August 25, 2011
For those in the industry the answer is obvious, but many software buyers are not familiar with industry jargon and the various classes of software available. So I thought I would take a moment to address the basics: what exactly is ERP software?
ERP is an abbreviation for Enterprise Resource Planning software. ERP software is designed to be a “one-stop-shop” for an organization’s software needs. Whereas an accounting software solution would only comprise accounting functionality, an ERP software system would accomplish a variety of tasks across an organization such as:
ERP systems are characterized by the following:
- The systems share a database
- The systems share information amongst each other
- Information is available real-time
- The system and installation is elaborate
The main benefit of ERP software is that you get one system that takes care of all of your business needs. Instead of relying on multiple systems to integrate with with each other, you get a single point of entry to manage all of your processes. This allows for better reporting, information management and accuracy with accounting, inventory etc.
ERP Software can be deployed “on-premises” or “in the cloud” with some vendors (i.e. Blue Link) offering both methods as options. For more information on the differences between these types of systems read our SaaS (Cloud) vs. On-Premises Whitepaper.
August 3, 2011
Turns out barcodes have been around at least since I was born (and that’s a very long time ago). In my teens I recall laughing at MAD Magazine’s satirical comments on it’s own cover when it was forced to start using UPC codes.
And yet so many of us still don’t understand them. Despite what some may think, using barcodes and scanners is NOT analogous to Hermione Granger brandishing her wand. There is no magic here – and the assumption that scanning barcodes will instantly resolve all inventory management issues in an organization will only lead to costly mistakes.
Judicious use of the appropriate barcode scanners in a properly thought out system can hugely improve accuracy and productivity. But the key words in that last sentence are “appropriate” and “system”. While scanning products ate the grocery store checkout is a commonplace activity, in a warehouse there are many more variables, different points in a process at which you could potentially scan, and huge disparities in the cost of scanning equipment that may be used.
That’s why I’d be very nervous of a supplier who proposes a “barcode solution” for your warehouse. What you need is a comprehensive inventory management solution that can use barcode scanning in different ways to optimize your carefully designed processes.