Cheap Inventory & Accounting Software

April 27, 2012

cheap-inventory-accounting-softwareDoes cheap software exist? Absolutely! However, the term cheap has a negative connotation for good reason: it does not mean the same as good value. Instead, “cheap” defines the compromise on quality for reduced cost. In selecting inventory or accounting software for your business, should you be looking at what offers the best value, or simply looking for cheap software? I guess it depends on how you value your business.

Cheap is a relative term, and means something different depending on who you ask. For example, to a Fortune 500 company, cheap software might come with a multi-million dollar price tag, while a small home-run business might cut and run at the sight of a $1,000 price tag.

The amount of money to spend on good and appropriate software depends on a number of factors including:

  1. How big and complex is your business? It is appropriate for a small mom & pop pizza shop to run on QuickBooks whereas it would not be appropriate for most distributors and wholesalers to do so. It is appropriate for small and simple businesses to use introductory systems while those managing inventory, accounting, a warehouse, product costing and sales require software in an entirely different segment. Learn more about the different segments of software and their relative pricing.
  2. Do you require specialized capabilities? Introductory software systems may include the basic accounting or inventory management pieces required by many small businesses, but when it comes to advanced functionality such as Lot Tracking, a more robust and comprehensive solution is required. As your business needs grow, you may have to advance to the next level of software functionality to accommodate your businesses processes.
  3. What are your business objectives? Are you trying to grow your business or cut costs and hold steady? A business that is looking to grow will use technological innovations to remain competitive and acquire new customers from competitors. For example, eCommerce is growing at an astounding pace and those that do not implement an eCommerce system may be left behind by those that are. On the other hand, if you are not looking for business growth you may be content sticking with your old system. However, bear in mind that a robust inventory and accounting system can help you reduce costs as well. An investment in new software may allow you to eliminate a salary or two – something that can provide significant savings year over year and cover the costs of a new system many times over.

Download ERP Software Pricing GuideIn summary, yes you can find cheap software. The question is: do you want to? Just like any other strategic investment (such as new staff or equipment), a new software system may seem expensive, but is often long overdue. Consider your priorities, the level of functionality you require a

nd the size of your business to make an informed decision, attempting to avoid looking at nothing but the sticker price.

Online Ordering (eCommerce) for Distributors & Wholesalers

April 24, 2012

online-ordering-ecommerce-distributors-wholesalersThe benefits of an online ordering system or web store for distributors and wholesalers are significant, as Mike Schmidt of Industrial Distribution magazine outlines in his article Strictly for Sales. With eCommerce “you are open every minute of every day and customers can buy from you at any time”. For many, this means automated sales that can reduce strain on order entry staff and result in increased sales over time.

In a previous post, we addressed 4 eCommerce implications for distributors.  Several of these points relate to today’s discussion on “Strictly for Sales”. Due to the increasing prevalence of eCommerce, customers (both B2B and B2C) now want quick and easy ways to place orders. Your customers are no longer satisfied with out-of-date product sheets; they expect real-time pricing and inventory information when making purchases and will go elsewhere if they cannot find it with you.

These changing dynamics have led to the following pressures for you, the wholesaler and distributor:

  • Not only are you expected to deliver the right quantity to the right location but also deliver product immediately and at the right price
  • Customers demand diversity in ordering options, including traditional methods and online ordering systems – not to mention the desire to order from anywhere at any time (mobile ordering)
  • Customers have also come to expect superior product selection including multiple delivery options
  • eCommerce itself can increase order volume to such an extent that you may require a more sophisticated accounting and inventory software system

The easiest way to deal with these pressures is to implement an integrated eCommerce and ERP software solution. Implementing a web store lacking proper back-end integration with a sophisticated inventory management system is a recipe for failure. As orders roll in from the web store at a blistering pace and business begins to expand exponentially, you may end up falling behind with order fulfillment. In addition, inventory discrepancies result in dissatisfied customers, creating manual work when you must notify them that you do not have the product in stock that you promised them on your website.

Many wholesalers and distributors find themselves doing “too well” after implementing an eCommerce solution, and as a result feel like they are drowning. Thankfully, avoiding the problem is simple: do your research, find an appropriate integrated solution for eCommerce as well as a robust and integrated inventory & accounting solution. Finding the right partners is the most important piece of the puzzle – a team with experience offering integrated ERP and eCommerce solutions will help you ensure success.

Pricing Software for Distributors

April 17, 2012

pricing-software-distributorsA recent article in Industrial Distribution Magazine, Stuck in the Middle, outlines the importance of pricing for distributors. The article specifically addresses the need to manage your margins to ensure maximum profitability – for which the appropriate software can be a big help.

A number of factors can impact your bottom line and it is important to keep a close eye on each factor. Direct product costs may increase; pushed along by vendors (be they manufacturers or other distributors). Indirect costs may also rise – such as landed costs or carrying costs. Whatever the reason for thinning margins, the fact remains that to maintain profitability you need to keep a close eye on your margins and this is made much easier with the appropriate software system.

Entry-level software systems may not offer the accurate and granular data obtainable from a sophisticated inventory and accounting system. Ask yourself how long it takes you to get information out of your current software system and add that to the costs we discussed above. Okay, so now you’re thinking that your software system might not cut it. Your next question is “how would an appropriate software system allow me to keep an eye on my costs and appropriately price my products?”

Software features that are vital to these processes include: customer specific pricing / contract pricing on the revenue side and landed cost tracking and automated reports on the cost side.

Customer Specific Pricing / Contract Pricing

Customer specific pricing cannot be more straightforward; it is simply the ability to specify pricing on a per-customer basis. Some customers may receive discounts or specific preferential prices on all products they purchase, while others may receive discounts (or contract prices) on particular items. Pricing rules should also be able to be applied at a per-item level for all customers and for varying volume levels. Appropriate software will also allow you to set prices based on different units of measure (each, box etc.) as well as in different currencies.

Landed Cost Tracking

Landed cost tracking may be most relevant for distributors that import their product, but is still an important part of identifying the true costs associated with a product; right up until it is sitting on your shelf. These costs may include brokerage, duty, freight and more. Without proper landed cost tracking your inventory costs may be inaccurate or may require an abundance of manual work to arrive at accurate costs.

Automated Reports

Sophisticated systems will allow for the automated delivery of reports to key decision makers in your organization. These detailed reports can be scheduled to be sent on a daily, weekly or monthly basis and will allow you to pin-down exactly where your money is going and identify problem areas.  In particular, exception reports delivered automatically facilitate timely and focused action to deal with these problems.

In this post I have only scratched the surface of how appropriate software can help you manage your business. For more information, read our post on What Distributors Want Out of Their ERP Software.

Eliminate Errors: Wholesale Distribution Software Success Story

April 13, 2012

ERP-software-errorsToo many people try to apply simplistic solutions to complex problems – like politicians at election time. However, sometimes a simple solution actually works out well.

A great example of this was a wholesaler that was experiencing a very high level of errors in outbound orders. More than 15% of orders they shipped out had one or more errors, resulting in customer dissatisfaction as well as financial loss – these were perishable products and mostly non-returnable, so they’d have to credit the customer and write off the cost.

The first attempt at dealing with this involved adding a level of checking after orders were picked and before they were packed, followed by bar code scanning for pack verification. The good news: this eliminated almost all picking errors. The bad news: turns out many of the errors were discrepancies between what was entered into the order entry system, and what the customers had ordered (or thought they’d ordered – most orders are by phone).

The solution to this turned out to be dead simple: have the ERP Software system automatically email an order confirmation immediately after each sales order was entered, asking the customer to review the order and notify the wholesaler of any discrepancies immediately. This eliminated both genuine key-punch errors, and customers changing their mind after the fact. They key here was the automated part – no-one has to think about sending these confirmations, they go automatically.

Now, after these two steps, fewer than 2% of outbound shipments result in any query from customers. (Fortunately for this company, their existing Inventory Management / Accounting / ERP Software was already capable of generating automated emails.)

Service and Repair Software – What To Look For

April 9, 2012

This post outlines functionality businesses should expect from their Service and Repair Software.

service-and-repair-softwareI previously wrote a post on what you should expect from Wholesale Inventory Software. This week, we’ll focus on the features that are important to most service & repair businesses.

By “service and repair businesses”, I refer to any business that employs technicians who perform repairs or maintenance work on a recurring or scheduled basis. These businesses may be primarily wholesalers or distributors and provide these additional services as complimentary offerings, or service may be the primary business offering.

Service & Appointment Scheduling

Being able to schedule technicians for repairs or maintenance is one of the most commonly requested areas of functionality in this space. Whether the work is being performed on-site or at the client’s site, it is important to keep track of availability as well as when work has been performed. Not only should an appropriate software system allow you to keep track of these schedules, but it should also allow you to track customer details and notes in relation to these appointments throughout the system (these notes come in handy when accounting is trying to collect payment from customers).

Automated Communication

A requirement that often goes hand in glove with appointment scheduling is automated communication. I refer specifically to the ability to automatically send reminders for previously scheduled appointments, as well as notifications about upcoming maintenance requirements. An automated communication system can save hours of unproductive administrative time, and reflects well on your company in the eyes of your customers.

Job / Project Costing

Many service and repair businesses require the ability to track both revenue and costs incurred over a long period of time and tracked on a per-job or per-project basis. A proper ERP system in this space will allow you to associate revenue and costs on a per-transaction basis to a particularly job or project. This allows for effective ad-hoc reporting to determine the profitability of a finished project (or to monitor for cost overruns).

Integrated Quoting

Due to the complexity of certain repairs, detailed quoting may be required. Your software system should allow for tightly integrated quotes for both salespeople and technicians. The ability to turn quotes directly into sales orders should be a given.

In summary, ERP software for Service & Repair, at a minimum, should allow for the functionality outlined above. Other functionality such as accounting, order entry, invoicing etc. is a given for an ERP software system.

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