Are you a Wholesale Distributor or Currency Trader?

January 14, 2014

Currency-exchange-ratesMost of the companies I deal with are wholesalers, distributors or online retailers (eCommerce) – or some combination thereof. And many of these companies are dealing in more than one currency. Several US customers purchase product for resale from Germany, the UK, France, etc. and have to pay suppliers in Pounds or Euros. And virtually all our Canadian customers are working in Canadian and US dollars, frequently on both purchase and sales transactions.

Now, keep in mind that most of the these companies are owner-managed entrepreneurial companies. And given that many entrepreneurs are at least to some extent risk-takers, it should come as no surprise that many of these business owners tend to gamble on exchange rate fluctuations. And yet is does surprise me, or moreover it’s a cause for concern in some cases.

The problem is that, in most instances, the business owner is not a financial or currency management expert, and is effectively doing nothing more sophisticated or intelligent than gambling. Yes, that’s right folks – it’s gambling. Let’s say you purchase a shipment of products for, say, €50,000, and you don’t hedge the exchange rate – you have 60 days to pay the supplier and you figure the dollar is strengthening, so you’ll wait. Meanwhile, your salespeople are making pricing decisions, and you’re looking at profitability reports, based on the cost expressed in dollars, calculated at the rate prevailing when the shipment arrives (or even worse, when the order was placed). So if you’re lucky, the dollar does move the right way and you score. But equally likely, perhaps even more, there’s some event that turns the dollar downwards and now, 5 days before due date for payment, the dollar starts heading downwards. You still haven’t bought Euros, so do you buy now to limit your exposure? Or do you wait it out and hope that it turns around in the next 3 weeks or so? And if you do that, what if it declines even more?

There’s no right answer here, but agonizing over it will deflect your attention from what you should be doing – namely managing your business, focusing on sales, merchandise, personnel, inventory management etc. But instead you’re trying to make currency trading decisions that people who do this full-time, every day, still get wrong much of the time. And even if you do get it right this time and make a small profit on the exchange rate, that will just entice you to take even more risk next time. It’s like to person who wins big at roulette one night, and gibes it back with interest the next.

The smart business owner will generally fix the currency exchange rate for a transaction early, and focus on running the business. And when you feel the impulse to gamble, take a trip to Vegas.

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Electric Document Management Software – What to Look For

October 9, 2013

This post outlines functionality one should expect from Electronic Document Management Software in the realm of Inventory and Accounting ERP Software.

Electronic Document Management SoftwareAll businesses must store information in some form or another, and for most this means a large number of paper documents, stored within filing cabinets, boxes or piled on desks. However, more and more businesses are beginning to use technology to better manage their operations, store data and eliminate the need for paper in the office.  This is where document management software comes into play. Not only does this software help keep information safe, it also eliminates the need for physical storage space and reduces the amount of time filing and retrieving important documentation.  Document management software can be used in conjunction with other systems in a multitude of industries including: health care, transportation, higher education and insurance.

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How to Convince Your Boss You Need New Software (5 Tips)

July 30, 2013

How to Convince Your Boss You Need New SoftwareYou have a problem: your software just isn’t cutting it anymore. You know the solution: new software. However, it’s not that simple, because you now need to figure out how to convince your boss that the business needs new software. Here are a few suggestions on how to make that process much easier.

1. Quantify Your Pain

Whether your boss is the business owner, accounting manager, or an executive, the language of numbers is part of the lexicon. This means the boss spends time quantifying problems, cost savings and investment returns for any project — especially software.

For example, it is one thing to say that a new system will “save you a lot of time”. Instead, focus on how much time is wasted on current processes. Perhaps it takes you 3 hours each week to compile important reports. A software system that allows for automated creation and delivery of reports can then save over 150 hours of work a year, for you alone.

2. Qualify the Investment

An appropriate distribution ERP system, for example, may cost tens of thousands of dollars. However, the cost of not getting an appropriate software system can be much greater. What else costs tens of thousands of dollars? Labor.

Appropriate software can frequently save a business at least one, if not several, salaries in many cases. As a result, the ROI can be very rosy indeed. Consider a company with 2 order entry people who are falling behind due to manual lookups and processes, so the company is considering hiring 2 additional employees. Let’s say they cost $25,000 per year each. That’s $50,000 in annual recurring costs that could be saved by a software system which could make the existing employees far more productive instead. So for example if the new software costs $60,000, then in just 14 months it’s paid for itself, and thereafter the bottom line keeps improving.

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A Great Way to Give Back this Holiday Season

December 31, 2012

Great Way to Give Back This Holiday Season

In the spirit of giving this holiday season, Blue Link decided to organize a donation drive for Goodwill.  Throughout the year and especially around the holidays, many businesses begin looking for opportunities to give back to their community and donate a portion of revenue to a charitable cause.  Although many businesses tend to “think big” for this type of initiative, Blue Link recognized a simple opportunity to give back to the community that would have significant, positive affects.

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3 Great Sources of Business Advice

April 14, 2011

3-great-sources-business-adviceThe internet is stuffed to the point of bursting with business advice. These days, the problem is not finding advice but rather sifting through the vast amount of information available. To make it easier to find valuable information, I thought I would outline several sources of business advice related to the wholesale/distribution/retail industry. In each of their respective areas, we found these blogs to be particularly useful.

  1. 1.       WholesaleAce is a wholesaler with a large variety of items for sale. They have a number of great blog posts regarding retail and wholesale operations. Learn how to survive the economic downturn, buying strategy and more. This blog is not software-oriented so is useful from a non-software point of view as well.

  1. 2.       Demac Media

Demac media “designs, develops and delivers” eCommerce solutions. That being said, they have great experience in the eCommerce arena. To find some of their best posts on eCommerce you may have to dig through to some of their older posts but the advice is invaluable.

  1. 3.       Virtual Logistics

Virtual logistics specializes in data integration and their blog focuses on how to avoid some costly mistakes in this regard. Learn how to keep your data costs low and good business practices.

Honourable Mention is a robust repository of articles written by professionals on a variety of topics. Content that is submitted is verified that it is professional in nature and not “salesy”. Be sure to check out my Profile for articles posted there

Business Software spending outlook

February 15, 2011

There’s an interesting take by WMSG on the outlook for technology spending in 2011 in this article.

In summary, he sees an uptick in spending in almost all areas of the typical warehouse-based company, with the exception of RFID. I was particularly interested in the intersection of two of the author’s sections, namely “Small and Medium Businesses are Driving WMS Purchases” and “ERP Vendors Gaining Ground in the Warehouse”. There’s a connection here: many smaller business do need the top-end sophistication provided by a dedicated WMS, but do need the productivity gains inherent in a properly implemented integrated ERP system with solid inventory management tools.

I find the take of RFID interesting. I recall reading many predictions back in 2005 that Wal-Mart would drive RFID to the point where every wholesaler and distributor would have no choice but to adopt the technology by 2010. Well, it’s now 2011 and not one of the 12 inventory management software customers I polled for this post has even reached the “intention” stage for RFID.

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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