“It Only Takes Us Ten Minutes to Process a Customer’s Order”

August 31, 2012

In today’s fast paced world of technology, ten minutes to perform a task like processing a sales order is an eternity (unless there is some extenuating circumstance to explain why it is taking so long).So when I’m told that “it only takes ten minutes to process an order”, my follow-up question is always, “How many line items on average are on each order”? If the answer is hundreds, and it rarely is, I can then understand why it might take so long. However, most of the time, the answer is 10-30, and often less.

It turns out that the most common reason it takes so long is that the customer service rep (CSR) is not entering the Sales Order directly into software. The CSR is typically writing the order down on paper (or some other make-shift medium). Now we examine a number of other questions, such as “Do different customers have different prices for the same product?” and “How does the CSR know what is available to sell?”

The responses we typically hear lead to one rather obvious question: “Why”?10-minutes-process-customer

Let’s do the math. If it takes one CSR ten minutes to process one order and they do not stop for 8 hours, they can process no more than 48 orders in a day, and that’s without lunch or any other breaks. To process 200 orders in a day, you would need a minimum of 5 CSR’s doing nothing but placing orders for 8 hours each. Now straight payroll cost for this would be somewhere in the region of $120,000 to $150,000 per year, and that’s not including any indirect / overhead costs.

With any good Inventory Management or ERP Software system, one should be able to process an order in a fraction of that time. Being very conservative, a 50 line order should take no more than 4 minutes. Once again we do the math, and now we should need (at most) 2½ CSRs to enter our 200 orders per day, and that even allows them lunch and personal breaks. That amounts to a direct cost saving of around $50,000/year (2 CSR’s), and you still have some slack as you have 3 people covering a job requiring 2½ people.

A big benefit of ERP software is efficiency, but that’s not the only benefit. Having  specific (correct) prices automatically populate a customer order, or knowing what is in inventory at the exact moment you are processing the order, saves a heap of time compared with manual lookups. How about knowing what that customer purchased the last time?

If you’re processing orders manually, you’re probably spending twice as long as you need to, and throwing hard-earned dollars out the window. You probably have to look up pricing for each customer (or you do not have specific prices because it is too difficult to maintain), and you do not know what is really in your inventory at any given time of the day.

How often do you have to call a customer back to tell them we do not have the product they ordered, or even worse, not ship the product without telling them? How often have you realized that a price on a customer’s invoice is below what they should have paid? If this is you, maybe it’s time to do something about it.

How Inventory Management Software Leads to Speedier, Cheaper Shipping

August 21, 2012

inventory-management-softwareMany companies are paying way too much for shipping and wasting valuable resources in the process as well.

A robust inventory management software system can help to resolve this problem by ensuring cheaper, faster shipping in the future.

Here are some tips to help improve your company’s shipping process with proper inventory management software:

Utilize Automation

If your company is shipping products without an automated fulfilment process, then you’re spending too much time and money on the process.  Inventory management systems can easily automate processes, from fulfilment services and notifications to customers regarding their shipments, to updates to suppliers when inventory is getting low.

Speed is the Key

Advances in technology have changed the expectations of customers in terms of acceptable waiting times for product delivery. Standards for damaged products have also risen significantly.  With proper inventory management software in place, these processes can be streamlined. If you ensure that your company’s order handling process is the most efficient it can be at every step, and that your employees fully understand the process, your result will be satisfied customers.

Take Advantage of Drop Shipping

Inventory management systems that allow for drop shipping can reduce inventory holding costs and associated overhead costs by having your company’s manufacturer or wholesaler directly ship finished product to your customer.

Utilize Lot Tracking

Inventory management systems with lot tracking  allow for recalled products to be easily found and properly dealt with in a speedy and cost-effective way.  Not having to recall every product – but only those affected – will help your company save money and retrieve affected shipments faster.  This will allow your company to regain the confidence of consumers and bounce back in the event of a recall.

Pay the Right Price

The ability to factor landed costs into inventory values and costs of goods sold is imperative to ensure that your company and customers are paying the fair price for products. Proper landed costs will also directly affect the pricing decisions your company makes and allow for appropriate commission payments to sales reps.

The above tips are only a few of the many ways that a proper inventory management system can positively improve shipping times and reduce cost.  In addition to standard functionality, depending on the nature of your business many inventory management systems offer additional components in order to meet unique inventory management needs.

Cloud ERP Software Popularity Still on the Rise

August 18, 2012


Previously we wrote about the benefits of cloud ERP software, and it appears that the trend towards the cloud is continuing, perhaps as a result of its many benefits.

Here’s a brief recap of the benefits of cloud ERP software:

–          Reduced up-front investment in software licenses

–          Eliminate hardware expenditure & maintenance

–          Reduce/eliminate IT staff and IT management

–          Increased data security via a secure data centre

–          Predictable IT expenditure and cash flow

With these benefits and more, it’s no surprise that cloud ERP software continues to rise in popularity. According to a Gartner forecast, cloud-based enterprise applications will amount to 16% of all enterprise application expenditure by 2015, up from 11% in 2010.[1] The numbers in favour of the cloud may be even higher in certain situations, with some vendors reporting as much as a 50/50 split between on-premises and cloud-based software implementations.

One of the main drivers of increased cloud interest and market growth is education. Just a couple of years ago, many business owners would not have been aware of cloud software or its benefits, but many have now researched the alternatives and have gone out specifically in search of a cloud solution. Cloud software still has a long way to go for true market dominance, but has already proven itself as a viable and popular alternative to on-premises solutions – particularly amongst smaller businesses.

Another driver of cloud ERP software popularity is the simplicity it offers for small and medium businesses. While large corporations may have access to significant IT resources, small and medium businesses can enjoy professional hardware and software management without having to employ IT professionals.

All things considered, a cloud solution is not necessarily always the right fit for everyone. It’s common for a vendor to offer one deployment method or the other, but if you can find vendors who offer both on-premises and cloud software, they can help you work through the advantages and disadvantages of each to make an informed decision.

Are You Asking the Right Questions to Ensure a Successful ERP Software Implementation?

August 3, 2012

successful-erp-software-implementationOne of the key factors separating a successful ERP software implementation from an unsuccessful one is the level of information exchanged between vendor and prospect prior to the implementation.  As a company, you want to ensure that you’re fully engaged with the ERP vendor, and that you are asking all the right questions.  It can become overwhelming and difficult to remember to ask about all the details involved, however, it’s often the smaller details, not initially discussed, that can lead to the biggest problems during implementation.  In order to ensure this doesn’t happen to your company, you should be fully prepared before you even begin your search, with a list of detailed questions to ask each vendor.  This will help determine if the software is the right fit for your company, whether the vendor is a good fit with you in terms of corporate culture, and mitigate the risk of an unsuccessful implementation.

Here’s a suggested list of questions, when looking for new ERP software, that you should ask when speaking with potential vendors:

1. What activities are included in the implementation and how does it work?

When you decide on an ERP software solution, the natural tendency is to think ahead to how to use it without getting enough information on the actual implementation process first.  But this step is very critical:  it clarifies how long the implementation will take and therefore how long before your company will be able to benefit from the software; what your employees can expect with regards to getting trained on the new software; and how much work will be involved in getting it up and running. It is also important to ask who should be involved with the implementation, to make sure that those who will be using the software are fully trained prior to use.   After receiving a proposal from a prospective vendor, it is important to fully read it through and schedule a follow-up meeting to ask any additional questions that have come to mind.

2. Does the vendor currently have any customers in the same industry/sector as your company?

Even though an ERP Vendor claims they can accommodate all of a company’s unique needs, it is important to determine if they currently have customers with similar needs, and then to go one step further and contact these customers.  Discuss with that ERP Vendor’s customers how the software has worked for them, and what benefits it has been able to provide.  Speaking with customers is the best way to get an honest answer regarding the software, and will make it easier for you to compare different ERP Vendors.  You can also solicit tips on pitfalls and mistakes to avoid on your side of the implementation.

3. What happens if the vendor goes out of business? Is any other company equipped to maintain the software?

This question is a very important one to be asking the ERP Vendor when evaluating different software.  If your company is planning on investing large amounts of money and resources into ERP software, you want to be assured that it will be around and working far into the future.  This is where something called a “source code escrow” agreement comes into play. With an agreement such as the above, if the software company does go out of business they have agreed to make their source code available meaning it can then be added or supported by anyone. (Of course this only helps if the software is written in a widely used programming language.)

4. Has the vendor ever had any failed implementations?

As mentioned in a previous blog post, many ERP software implementations fail, and most industry experts believe that when an implementation fails it is both the vendor and customer’s fault. The stats may seem depressing but are typically representative of large ERP implementations that are often much more complex and prone to failure.  However, it is still important not to have your business add to that statistic, and to find a vendor who takes ownership of the success of your business.   An ERP Vendor that is open and honest about failed implementations is more likely to have learnt and grown from such failures to ensure that they don’t happen again.

5. How does customer support work during and after implementation?

With the implementation of new ERP software is it inevitable that your company will need support at some point or another – therefore it is extremely important to determine the specifics of how the Vendor will deal with and charge for support.  Who will you be speaking with?  Will you be able to speak with the same person every time? How many support hours are included in the implementation? How much does it cost for extra support hours? How many support hours does the average company use annually?

These five questions are a great start and should help you to examine all aspects of the implementation process to increase its success rate.  Of course there are many other questions one could / should ask on top of these.


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