Inventory Balances

If you are in the food industry you already know that one of the primary challenges is your inventory level.  You need enough supplies to satisfy customer demand, but not too much due to obvious reasons of expiration dates and potential spoilage. 

Enterprise Resource Planning (ERP) solutions are designed to streamline operations and provide a central repository of information to effectively manage inventory processing.

A case study - VAI S2K Food: Hillcrest Foods, Inc.

Do you walk around and “look” at inventory to guess and gauge usage and need?

Many food distributors do just that.  They have been in business a long time and there is built in knowledge of customer and seasonal demand.  What moves, what does not and what to do with surpluses or not having sufficient supply and cost expense of expediting replacement inventory?

How does your organization handle recalls and FDA requirements (FDA Food Safety Modernization Act - FSMA)?  Do you have the ability to include all lot numbers on products and paperwork?  How much time and effort does it take you to process a recall?  What about the paperwork and certificates of origin?  Where are these documents found and how are they linked to your inventory?

If you are processing food inventory manually, then your ability to meet the FSMA requirements will be limited and expose your business to great risk and regulatory nightmare.

How efficiently do you process your distribution, truck loading and routing?  What tools does your ERP solution provide to ensure your customer needs are met?  How long does it take to train your workforce?  Is the equipment and process intuitive?  How many times during the day do they have to look up information and how much time does it take?

Handling inventory is a primary focus of food distributors as is financial processing.  You need to service your customers, yet also manage their credit usage on the Accounts Receivable (AR) side and expenditures via Accounts Payable (AP) on the vendor/supplier side.  The General Ledger (GL) ties all the various aspects of the financial reporting and forecasting together.

If these topics strike a nerve with your organization and you are curious if you are doing everything reasonably possible to empower your workforce and drive efficiency in your operations, then it is time to contact Dolvin Consulting.  We work with industry experts to help you look at and evaluate your organization from a fresh perspective.

We look forward to serving your needs.

Time for Help

What keeps you up at night when you are in charge of technology delivery for your business?  Every company struggles at some point in time.  At different periods of growth and contraction, struggle is part of the process.

Struggle is normal. 

The theory goes that Enterprise Resource Planning (ERP) solutions are designed to integrate the entire business (i.e. the Enterprise).  The more this is embraced and the more departments or functional roles that are integrated in your solution the more efficient your operations could be. 

Okay, makes sense right, purchase an ERP solution, install it, migrate your information, train your people, and start saving lots of money, buy a boat and relax.  But what if you already have an ERP solution?  What if you have more projects than budget?   Where are the savings you thought you were supposed to have?

Savings are potentially there, but like a sculptor, you need to uncover them. 

Where most companies start is inventory.  Even small reductions in inventory levels have the potential of improving the bottom line.  Small is relative, but think in terms of two to three percentage point drop in levels.  Cutting your inventory in half is not realistic.  It would cripple your business, but a small drop of a few percentage points is realistic and achievable.

The other area that works hand in hand with inventory levels is high accuracy.  It is the other side of the coin and cannot be separated.  There are several ways to measure accuracy, but most practical is the count.  Is what you have on the shelf the same as what you have in your inventory system?  How close these two numbers are is a measure of accuracy. 

The ultimate goal is 100% and that may or may not be realistic, but 97/98% or higher is where you need to be headed.

I know of a company that had 100% accurate inventory every month, but only one day a month, once a month.  When they did a complete physical inventory count each month, it was accurate, at that time.  Then it was off the rest of the month.  They did not have an inventory control system. 

For some companies it is the same or similar story.  They only know what they have when they count it or when they do not have it.  Out of stock equals zero and that is accurate, but not good when a customer orders it.  Their systems have not kept up with their business and the problems have cascaded from there. 

The Inventory Control module name implies that you will have control of your inventory once you install it.  In most places the inventory is in control instead of the other way around. 

You in fact must trust the system to do what it is designed to do, but that is hard to do when there is no confidence in the system.  When that happens people do just about anything to bypass and avoid the very solution that is designed to help.

The Inventory Control module is intended to do is give you observability.  Warehouse Management Systems (WMS) are designed to monitor the movement of inventory from reception, to put-away, counting, and pick-pack-ship. 

WMS solutions are usually separate and do incur additional investment, but make sense, because it provides the tools to effectively manage inventory.  By monitoring the movement of inventory you do add a level of effort, but the payback is in accuracy and people actually using the system you paid for and depend on. 

When your workers actually find the inventory the system says should be there in the place it says it should be, then their confidence increases.  That increased confidence leads users to use the system more. 

Most people do not mind using a system that actually works and helps them do their job.  Trusting and using the system are critical components to building accuracy. 

Accuracy is key to driving profitability. 

With an accurate system, procurement orders the right amount of the correct products.  Customer service can accurately answer customer questions and concerns.  The Finance department can process transactions and produce financial reporting more quickly and accurately.   

There are a lot of intricacies of implementing and actually using both an Inventory Control and Warehouse Management System properly.  Books have been written on the subject.  The purpose of this writing is not to tell you how, but to give you confidence that you can have accurate inventory, you can trust your system and you can generate savings. 

Any benefit comes after effort. 

These systems work, if you trust them to do what they are designed to do.  Dolvin Consulting works with manufacturers and distributors to help them understand and implement their inventory systems.  Contact us today to see how we can help.

Please share your success and failure stories here with the rest of our readers.  You story counts.

Customer Self Service Matters

Most organizations understand that if you treat your customers fairly, they will return.  If you treat them really well they will refer others to your business.  What is equally true is if you treat your customers poorly, they will tell everyone they know whenever they can.

A positive customer experience should be at the heart of any system improvement, upgrade, or replacement.  Efficiency matters when it ultimately drives customer needs.  Automation matters when it means products are ordered, stocked, picked and delivered to meet your customer’s needs.

In what way can you serve your customer’s needs without significantly increasing your overhead?  What is your competition doing to serve their customers and attract your customers away?

Many Enterprise Resource Planning (ERP) solutions have an integrated web or Ecommerce module.  Fully integrated is preferable, because of the efficiency, reduced errors and time delays in processing and updating. 

Less overhead is a good thing.

But what about the thought that your products do not fit the standard perception of what people purchase online?

As it turns out when you provide your customers and users with self-serve capabilities they feel empowered.  They feel like you trust them. They feel like you value them.

Adding this capability may not be where you would think you can increase productivity, especially when you look at the upfront costs.  However, by adding or upgrading Ecommerce, Sales force automation, and Contact Relationship Management (CRM) solutions to your system, you are removing roadblocks to growth. 

Customers know when you value them and are providing them tools to access what they need when they need it at a time when it is convenient to them.  Employees know when you are trying to help them do their job better by providing better access.  Management knows the satisfaction of being able to get the information they need when they need it.

Real-time access to information is the heart of your ERP system.

Increased sales as a result of these improvements is a natural result.  Increase customer satisfaction is priceless.  Customers like the ability to research products, view transaction history, place orders, get hard copies of invoices, check balances and yes of course pay balances online.  Customer self-service reduces employee resources needed to service the inquiries.

Automation allows a business to use their people where they can do the most good.  Sales force personnel need quick access to stock and balance information for their customer service needs.

Serve your customers and grow your business.

Providing web services will improve customer retention and capture business that might go to your competitors.  Even if your products are not something that ships easily or at all, providing the capability for your customers to browse, research and collect information will benefit your business. 

Take a look at how and where you do business.  Don’t you think your customers want the same thing? 

Not all solutions are created equal.  Integration with your ERP solution is key.  Some businesses build interfaces to integrate separate systems that have the functionality their customers need.  Keep in mind that the more pieces the greater the chance of a break down. 

Regardless of how your solution is built, the solution must address your customer’s needs and not yours.

With the potential return on investment (ROI) and the general movement towards a connected world, Ecommerce, Sales Force, and CRM solutions are prime areas for update, upgrade or replacement.

In what ways are you serving your customers?  What solutions are you considering or have implemented?  What returns are you expecting or received? 

Please share your thoughts with our readers.

At Dolvin Consulting we work with your team to find solutions that drive efficiency and automation in your operations.  Working solutions that are just-right for you, your business and your customers.  Contact us today to see how we can help.

Cycle Counting (Part 2): Tips for Choosing the Right Inventory Software to Support It

How accurate are your inventory records? It’s a question you've probably asked yourself on more than one occasion.  It is what every organization that handles inventory struggles with at one level or another, at one time or another, and coincides with automation and efficiency efforts.

Changing from Annual to Cycle counting does take some planning, but the long term benefits may well be worth the effort.  It also something that may need to be approved by your board or other regulatory body depending on your industry.  

We have found that many businesses need to do both Annual and Cycle counting until they show a consistent accurate inventory for at least one year.  After that time period the annual counting can be discontinued.  It is important that you demonstrate good accounting controls and financial reporting.

Please read the article series below to find out more.

Find Accounting Software continues their 2-part series and answers some additional questions about cycle counting.  Find Accounting Software has some great resources to help you navigate through the sea of change.  Read on for more information.

 

Tips for Choosing the Right Inventory Software to Support It

Where are you struggling?  Do you know how to get started?  What you should count and when?  What approach will you take?

At Dolvin Consulting we work with your team to find solutions that drive efficiency and automation in your operations.  Working solutions that are just-right for you and your business.  Contact us today to see how we can help.

Cycle Counting (Part 1): What Every Inventory Manager Should Know About It

Are you finding variances in your inventory counts no matter how hard you try, no matter what controls are in place?  Enter the Annual Physical Inventory and all the prep work, resource allocation, overtime, headaches and putting business on hold while you try to lock down your inventory during counting.

Are you considering cycle counting in addition to or as a replacement to an annual physical count? 

Please read the article series below to find out more.

Find Accounting Software starts their 2-part series and answers some important questions about cycle counting.  Find Accounting Software has some great resources to help you navigate through the sea of change.  Read on for more information.

 What Every Inventory Manager Should Know About It

Where are you struggling?  Do you know how to get started?  What you should count and when?  What approach will you take?

At Dolvin Consulting we work with your team to find solutions that drive efficiency and automation in your operations.  Working solutions that are just-right for you and your business.  Contact us today to see how we can help.

Will Analytics help Forecasting?

One definition of Analytics is “Information resulting from the systematic analysis of data or statistics”.

   

In a recent conversation I had with a contact he said his inventory was 99.8% accurate and that his firm used cycle counting to ensure accuracy.  He shared information with me about the business he obviously cares very much about and has invested a good portion of his life to as we talked about his operations, inventory and growth projections.

We discussed his Enterprise Resource Planning (ERP) solution and he is satisfied with it, in fact his company is planning on an upgrade.  I mentioned that I worked with another company and they asked if bin locations worked.  And I said, yes, if you let the system do what it is designed to do. He agreed that ERP systems can be rigid, but they do work if you let them do what they are designed to do.

I then asked him based on what he shared where his bottleneck was.  Every business has a bottleneck.  They occur at different points at different times.  If a company is growing, then bottlenecks are enviable.  What works at one level of business often does not at a higher level.

He said Forecasting was his biggest challenge at this point in time.  I asked if he meant receiving forecasts from his suppliers.  He said, no, it was sales forecasting.  This company has been growing steadily for some time and one of their product lines is really moving. 

Inventory is key and managing it is much like a dominos effect and is why companies invest in ERP solutions. 

How much raw inventory and finished goods you keep on hand is dependent on your sales projections.  Too little and you may become late, too much and you end up wasting space and paying taxes on what is left hanging around.  You need to fulfill customer orders in a timely manner and you also need to plan. 

In addition to the accuracy level, an indicator many firms use to judge their inventory level is called Inventory Turns or Turnover.  It is a measure of number of times inventory is sold or used in a given time period.  It is usually calculated as a ratio of the cost of goods sold divided by the average inventory.

Back to point.  Would a robust analytics solution that was used to analyze past and current sales to identify trends, be helpful in forecasting future sales and thus predict better inventory levels?

At its core Analytics is used to provide insight into customers and products.

Speed and efficiency are critical in businesses that operate at high volume.  These businesses have a need for real-time visibility into sales and inventories.  Their management has needs for ad-hoc as well as standardized reporting and analytics helps fill that need.

The key to Analytics and ERP in general is data integrity.  The old saying in computer technology is “Garbage In, Garbage Out”.  It means that the value of the information the system generates is only as good as the quality of the information taken in.  One of the goals of implementing these types of solutions is for people to concentrate on the results of the information analyzed and not worry about how they were achieved.

New data engines and tools speed up reporting that once took hours to produce and distribute to just minutes.  Dashboards, once built, provide management with top level overview and drill-down capability that business need to make better decisions more quickly.

Management can determine when they see customer sales dropping off if the problem is related to inventory, usage or a period of inactivity.  Increased awareness allows insight into greater margin awareness.

Greater awareness allows for more accurate forecasting and the ability to identify variances and make adjustments as demands change.  Reacting quickly to issues can make the difference in customer retention.  Knowing why a customer is purchasing less is important so that corrective action can be taken.

Forecasting not only allows users to spot global trends, but also identify specific issues that might otherwise have been missed.  Today’s systems generate and collect a large amount of information.  Tools like Analytics applications give insight.

What are your systems designed to do?  Do you use Analytics to forecast sales and inventory levels?  What successes and pitfalls have you encountered implementing your systems?  How long did it take?  How much did you budget?  Was the Analytics solution part of your ERP solution or was it a third party solution?

Dolvin Consulting works with industry experts to help your organization identify bottlenecks and streamline operations.  Contact us to learn how we can help your business.

More Efficient Operational Processes

More efficient warehouse operations.  If only.  Is it possible?  If it were, there would likely be less labor costs relative to increased production.  Less costs and less production is clearly a down cycle in the business as is more costs and less production.  Ideally you want less costs and more production. 

Automation is the key.  But, automate what, how?

For most manufacturers and wholesale distributors the key often revolves around inventory levels, processing and handling.  Inventory tends to have the greatest Return On Investment (ROI).  Inventory management is somewhat like upgrading your kitchen in your house remodel.  The kitchen remodel generally returns the most on investment.  Other upgrades make living more comfortable, but Kitchens have one of the better paybacks.

Increased accuracy in order and pick/pack/ship processing due to warehouse layout optimization, receiving efficiencies including barcoding and scanning, automated put-aways and cycle counting are just a few examples that can contribute to more efficient operations.

Most businesses that have survived the economic fluctuations are running fairly well and have probably automated at least some and likely much of their facilities.  Warehouse Management Systems (WMS) are the key to the automation.  Unfortunately these systems are not always fully implemented.  Sometimes the implementation plan was a phased approach, but never completed.  Sometimes the organization had a loss of faith in the promised return.  The causes are many, a bad match between sales and purchasing, lack of education, or lack of funds to fully implement the solution. 

WMS systems are great, but they do have to match the business model.  Typically the greatest efficiency in WMS comes from a fully integrated solution that is part of the native Enterprise Resource Planning (ERP) solution.  However, if the ERP solution is not a good match, the WMS module will tend to exacerbate the problems.

A thorough review of business operations makes sense before purchasing or upgrading your WMS solution. 

Are there plans and budget available to outfit workers with wireless equipment, barcode scanners, printers, and other tools?  The benefits of WMS will be limited without the corresponding equipment.  Automating labor collection and reporting is another benefit of WMS systems.  A phased-in approach is a valid model as long as the implementation is completed.

How much paper is involved with the current processing of orders, receiving and counting?  How will a WMS system reduce this overhead?  Will your people be convinced?  What is the baseline and what metrics are needed to gauge the project success?  Without an electronic system how can workloads be optimized?  How much time and effort is needed to check orders? 

How much does the administrative overhead affect your profitability?

Achievable goals include year over year decreases in labor costs relative to production, order, pick and shipment rates of 99% accuracy.  To enable these accuracy levels organizations will typically need to implement bin management in their WMS system, real-time paperless receiving and put-aways, automated picking and cycle counting.  Manual systems require a significant amount of administrative overhead and paperwork which contributes to inaccuracies. These inaccuracies increase if batch, lot or serial number processing is involved. 

High accuracy rates are not the end goal, efficiency is.  High accuracy rates are what enables business to concentrate on real operational efficiency improvements. 

To get started, businesses need to conduct a business process review including evaluation of the incumbent and competitive ERP software including WMS systems, including any upgrades to their current systems.  This is only a start, but it is an important an unavoidable step in the right direction.

Buy-in at all levels in the organization is an important component to not be forgotten. 

Owners and/or management cannot just decide one day to push out a whole new way of doing business without proper training and education.  From the shop floor, warehouse, to the back office, management and top level personnel, everyone needs to understand that the change will help them to do what they do more efficiently and productively.  Set the expectations and gain consensus on the outcome. 

This is a real test for the leadership in the organization.  

How is your organization dealing with change, leadership and inventory challenges? 

Dolvin Consulting works with your team to identify and remediate the causes of inefficiency in your organization.  Contact us today to see how we can help. 

Technology for Growth

First things first, the obvious, smaller companies have smaller budgets and less resources to implement technology changes.   Even changes that increase efficiencies and throughput.   The challenges are similar for large and small organizations, it is just larger organizations generally have more resources available.  The relative impact is generally equal though.

For smaller organizations the stakes are relatively greater and the margin for error much smaller.  For example, a budget overrun or deadline exception will have a negative impact on a budget for a larger organization, but it can be devastating for a smaller organization and effectively put them out of business.

Ironically technology itself can help.

When it comes to Enterprise Resource Planning (ERP) solutions, there are many different variations that are tailor made for many industries.  Often the variations came from home-grown solutions from companies that could not find the right solution and built their own and over time starting selling that to other companies in their industry.

With so many solutions and so much history now, you have to wonder why budget and time overruns occur.  The reality is it happens all the time.  Much too often.  Somewhere there was a breakdown in communication.

There are three basic categories to ERP solutions.  Each category has many components, but they all funnel into these three.  

The software or programs are module oriented where modules are based on departmental or functional roles in the organization. It is responsible for the collection and presentation of the information the solution stores.  ERP software typically has an initial license fee and annual maintenance.  I have had conversations where a prospect just could not justify why the software cost so much, after all it was already written.  I did my best to explain that the annual fee, perhaps more so than the initial fee was for future support and not so much for what was already written.  Business needs change and ERP software solutions need to change to match the business landscape.    

Remember that ERP solutions are designed to integrate the organization, the entire organization.  The more of your company that is included in the solution, the greater the efficiencies can be and therefore cost savings and increased profits.

The second component is the hardware or physical equipment the software is designed to run on.  This includes a central database of information that is shared by a server and distributed to clients.  The clients are everyone that accesses the information at one level or another including web delivery.

In some cases companies will choose a Software-as-a-Service (SaaS) solution which is a subscription based solution where someone else manages the infrastructure.  This type of solution is talked about a lot lately and is referred to as Cloud solutions.  For many, if they are not already using a hosted solution, they are one or two generations of software or hardware away from this type of solution either in part or in whole. 

On premise or hosted in the Cloud is a personal choice that really is dependent on more details than can be discussed in an online column.  It is not the point of this writing and there is no one right answer.  Each challenge needs to be matched with an appropriate solution. 

Cloud is irrelevant.  The solution as a whole is the important part.

Here is the point.  With some careful planning and analysis the software and hardware costs can be estimated fairly well.  The solution usually falls into a range that is predictable and can be clearly documented as to why it is smaller or larger than estimated.  For example, the solution is now expanded to cover another division and there are more users, clients and the need for more robust database server solution.  This, by the way, is a particularly great benefit of Cloud solutions in that the vendor should be able to scale the solution resources easily (either up or down).

So where is the problem?  What is the third component?  Where do so many organizations lose control of their budget, their time, their patience?

Implementation.

Implementation which includes training, conversion and support.  In a rush to close deals or fear of limited budgets and losing a deal this component of the solution is often given too little analysis.  Granted some of the components are harder than others.  How much training do your users need?  Do you learn to swim by jumping in the water?  That is sink or swim.  Sinking is not a good option for most companies. 

Conversion, if it has been done before between the From-Solution to the To-Solution can be estimated fairly well.  If it is a new conversion, there is still historical averages that can be used.  Some solutions are programed, some are re-keyed, and some are a combination of both methods.  A big category is the decision on how much and which type of history should be converted.  Do you phase out one system and build history in the new solution or do you convert everything so everyone uses the new system.

Support is relative to everything else.  Too little training and planning means more support later.  More support up front usually means less hiccups later.  You cannot bypass support.  New ERP solutions are a series of complex interrelated components.  They are not off the shelf box or quick download solutions. 

Your organization is not simple and neither will your ERP solution be simple.

Technology can help collect and organize information.  Information you need to make decisions in deciding what solution to select and implement as well as manage the implementation project.  Information you collect and analyze to manage your business with the solution you select. 

Information is key and technology is a vehicle for collection and delivery.  The solution is the important part and the technology is the delivery mechanism.  There are no shortcuts in implementation and it is the most variable component in a solution and therefore needs the most attention to prevent unpredictable budget overruns.

Dolvin Consulting works with your team and brings together industry experts to help you manage the chaos associated with ERP solutions.  Contact us today to learn how we can help.

The Season for ERP Solutions

The season for buying, purchasing and the season for inventory control are now.  The season for change is now.  Now is the time for the changes you need to make to better prepare yourself and your organization for the next season. 

 

The season of change is now.

 

When a business has a consistent yearlong demand for its products, planning is a little easier with the right tools.  After all if you pick, pack and ship a thousand units a month and you know your suppliers lead time and balance order point with applicable discounts, the purchasing effort can be automated.  You can ensure that you have enough inventory to meet demand, but not too much that warehouse space is wasted or consumed where other products could be better stocked.

 

When a business’ products have seasonal demand, the challenges increase.  Add another level of complexity when the seasonal products are perishable, such as found in the food industry.  Productivity has increased importance as does handling.  The need to drive operational efficiencies increases as the penalties for not doing so become increasing cost prohibitive. 

 

Some organizations in food processing are still using the look-and-see method of reordering.  Someone who has been in the business a relatively long time walks through the warehouse or is able to keep a running count in their head and orders what they think is right at that time.  Chances are if they have been doing this long enough they may be accurate.  They may also not be.  What happens when this person goes on vacation?  What happens if they take a leave of absence?  What happens when they retire or are suddenly not able to work anymore? 

 

How do you transfer someone’s gut instinct into a reproducible formula for optimum inventory levels?

 

The challenges of the supply chain have not fundamentally changed since the beginning of commerce.

 

What has changed is the need for quicker access to greater and greater amounts of information.  The need for mobility and anywhere access.  Analytic analysis of the repository of information collected to identify and respond to new business demands.

 

 

The season of the switch.

 

 

New business environments require a comprehensive set of integrated, cross-functional business processes.  There needs to be an alignment of both strategic and tactical operations to improve productivity and insight, reduce costs through greater efficiencies and flexibility in computing environments. 

 

Industry requirements are constantly changing and new systems are needed to meet those demands and reduce risk through improved financial management. 

 

The benefits are more profitability, peace of mind and a restful night of sleep.

 

The solution starts with a solid foundation of financial management.  Add to that advanced options in distribution management.  The end result is a system that integrates the entire operation.  Better integration means superior customer service levels. 

 

A happy customer should be the goal of any solution.

 

Inventory management with comprehensive sales analysis and forecasting enables a more strategic approach.  Are you achieving your goals for inventory turnover?  How well do you meet customer demand?  Do you have what they need when they want it?  Do you have excess inventory taking up space and increasing overhead?

 

There are different seasons for inventory and seasons for Enterprise Resource Planning (ERP) solutions. 

 

What worked well years ago may not be able to keep up with demand or the changing landscape of commerce today.  The overhead of maintaining an older system can often outpace and out cost a new system optimized for your industry.

 

All businesses struggle to some extent somewhere along the business cycle.  Each business has their challenge spot.  A fresh set of eyes and thorough analysis can reveal these bottlenecks and open the door to increased efficiencies and profits.  Profits that can be reinvested to further drive efficiency. 

 

Experience has shown that the more of any business that is integrated into a single system the better that organization is capable of operating.  What we do not know is where your organization struggles without talking with you. 

 

Is your season of change upon you now?  How will you address the challenges of the next season?

 

Contact Dolvin Consulting today.  Not tomorrow, not next season.  We are here to listen and help.  We are not here to tell you how to operate your business.  We are a resource that you can utilize to identify areas of improvement that will help you compete more effectively with your competition enabling you to fulfill your customer’s needs.  A happy customer is a loyal customer.

 

Finance Software Integration

When I describe Enterprise Resource Planning (ERP) software with people I often make the analogy that ERP is to the enterprise what office suites are to the desktop.  ERP integrates an organization based on department or functional roles so that one hand knows what the other is doing.  Similar to how a workstation database, spreadsheet, word processor and presentation programs can share information instead of having to rekey it in each application.  It saves time, increases accuracy and improves efficiency.

 

Within an ERP system the financial application particularly General Ledger tends to be the mortar between the bricks, where the bricks are the other applications.  Sometimes the ERP system consists only of financial applications, however, in today’s highly competitive environment the more functional roles that are included the greater the efficiency.  Having the other applications tie into the financial module really enables meaningful dashboards.  Finances give an unbiased view of business operations.  The more highly integrated with application interfaces and automatic posting, the better management opportunities exist.

 

Finance is often referred to as the Back-Office.  It is the behind the scenes company operations that are critical.  Purchasing cannot operate without payables handling the payments.  It does no good to ship orders if the proper credit application and collection resources do not exist.  Inventory valuation, write off and variance accounts for the company’s ability to borrow and fulfill customer orders.  Too much inventory and there is excess overhead, too little and business opportunities may be missed.  Finance gives an unbiased analysis of the company’s efficiency.

 

Functionality is a critical component of any system. 

 

How well does the software match operations versus how much change in operations are necessary to match the software.  This is no simple statement. 

 

The implementation of software can run from one extreme to another.  At one end the software is implemented and the company updates its processing to match the software.  This provides software stability and enables relatively easy upgrades.  On the downside if the software does not match operations the company will have to make some potentially painful adjustments to the way it operates.

 

At the other end of the spectrum is a company that develops their own system.  This system matches exactly the operations and is like hand in glove.  The problem that typically occurs is that the technology can become outdated.  Upgrades, if they even exist, require reapplication of the modifications and can significantly increase the costs to stay current.  If the software is completely custom, then adding new functionality often requires bringing in experts in new technology to learn and understand how the two can be integrated.     

 

Most companies fall between the extremes.  We like to see a 95% or better match between software and company operations.  At this threshold the software is matching the majority of the way the company operates giving stability and upgrade paths to the business.  The modifications tend to be light in nature and more easily managed.

 

There are cases when custom solutions are necessary, but they should be carefully planned and evaluated to ensure the Total Cost of Ownership (TCO) is evaluated.  

 

Another key question to ask is how well does the new software fit the culture of your organization?  How many steps does it take to process a payment?  Are accounts updated in real time or at some defined batch point in time?  Do you need multi currency support?  Are you working in multiple time zones?  Or, are you a single location facility?  How well does the software meet any industry regulations? 

 

There are software solutions to match each. 

 

Regardless of the match, business growth tends to be the common driver for any change.  Changing systems, finance, ERP or other is not a comfortable process.  It takes careful planning to make a successful transition.   Growth is good, keeping up is the challenge. 

 

The process of change can be painful, but staying put is typically more painful.  How hard is it to operate the current software?  Does it meet your needs?  How many manual processing steps are necessary to keep up?  The fit has to be right.  It has to be relatively easy to operate.  Be flexible enough to address the inevitable future changes you business will face.  Support from your software supplier is very important to consider.  How do they provide training and implementation support?  Are they large enough to develop new enhancements, yet small enough to answer the phone with a real person?

 

Is functionality an issue?  Is out dated technology a driver for change?  Is native growth or merger and acquisition a factor?  What costs are associated with your current solution versus anticipated costs of a new system?  What is your competition doing to serve their customers and win over your customers?  How fast can you react to market change?  Are you now operating in multiple locations? 

 

Cost savings from operational efficiency and reduced maintenance should be included in any analysis as well as departmental or personnel consolidation.  How many people does it take now to manage the finance department and why is that?

 

Your customers are demanding a change whether you realize it or not. 

 

Customer service should be at the heart of any change.  Every person and operation has one goal.  That goal is to serve those who pay the bills, your customers.  What good is a more efficient operation, if you cannot increase your customer’s satisfaction? 

 

Bottom line is that you need a trusted advisor that will take a fresh look at your operations and help you document your operations.  A good match for a new solution is made on knowing what you are doing now and what needs to change.

 

Dolvin Consulting works with industry experts to help you find solutions to the challenges you face.  All organizations struggle somewhere.  All different, but consistent when they want to grow.  Contact us to see how we can help you find new solutions.  We are here to help.

 

New Realities of Replacing your Accounting System

White paper titled "New Realities of Replacing your Accounting System" from Whitepapers.com is an interesting and informative read.

The eBook covers:
•The total cost of ownership—what are the real costs of running finance in the cloud?
•The top concerns including security, downtime, and control—and how do you mitigate these concerns?
•How to think about customizing your software in a cloud world.
•How do you customize cloud computing solutions to fit your business needs?


Contact Dolvin Consulting for help with your accounting system needs.  We listen and are here to help.

Technology is Too Important for the Business not to be Involved

This statement is exactly the point that should resonate with business owners.  With the recent publicity of the Internet Cloud services, everyone’s focus seems to be there.  There are a great number of benefits for Cloud services, storage, collaboration, and operations, but there has to be a business driver to make the changes.

 

Cloud or not, any investment in technology should have a driver that will provide a reasonable Return on Investment (ROI).  The recent fiscal crisis focused on cutting costs and increasing efficiencies.  Budgets were and still are very tight, so there needs to be business driver to make changes.  What is good for the business?  What will allow us to compete more effectively?  How can we use technology to empower our people to open and serve new markets?

 

In years past, the Technology Department in a corporation reported directly under the Finance department and was used to tabulate numbers for financial reporting.  Technology has evolved through time to the point where it is fully integrated in our lifestyles.  All you have to do to verify this is stop walking or whatever you are doing for a minute and look around.  People are stuck in their phones, tablets, and laptop computers.  Used to be at a luncheon if you saw someone bowed, they were giving thanks, now more than likely, they are checking their email. 

 

Everyone is a technology user today. 

 

This shift in technology from the glass room to people’s hands has changed the view of how technology should be used in business.  The shift is not only in the technology itself, but also includes the business.  The Internet and related technologies has leveled the competition plane enough so that companies from one to twenty or more now have access to tools and technology that keeps them connected and competitive.  Smaller companies are more agile and can make a technology shift and adopt new technologies much more quickly than large organizations.

 

Regardless of company size, executives want and need their phones, email, messaging, and applications in their hand, available when they need it, on their schedule. 

 

This transition is not a blanket resolution to say that Information Technology Departments have no role in the decision process, it is more a reflection that they themselves are taking on different roles.  Solutions are being driven by the business demands and technology is looked at to deliver the solution.

 

One note of caution for the early adopters is the more separate systems that are implemented either on premise or hosted in the Cloud, the greater the burden on the transfer of information and an exponential growth for errors.  This is no small issue.  Every time humans are involved, the more humans involved, the greater the potential for errors.

 

The prevalence of new technologies eventually leads to consolidation at some point.  Multiple suppliers offering almost identical products and services.  It is a trend repeated throughout history.  The only difference today is that it can take a lot less time for products and services to transition.  Adopting new technologies quickly can give a boost to a company, however, that new technology may also be replaced tomorrow or consolidated to another platform.  This can actually destabilize an organization depending on how much that organization relies on the technology.

 

Public, private, hybrid, large corporation, small supplier, there are a multitude of choices. 

 

What really matters most is customer service.  How well your supplier of services serves you is a reflection of how well you service your customers.  You will naturally be attracted to those that give the same level of service or the level of service you want to deliver. 

 

Nothing is more important than customer service.

 

A happy customer refers others to you.  A happy customer returns and buys more stuff.  A happy customer pays your bills.  We all need happy customers.

 

There is a lot of use of social media to get a consensus of what works and what does not.  Industries are the same and yet each organization struggles at different points along the path to success.  This is where a trusted advisor can help.  The advisor can take an objective view of the organization and let them see themselves in a new way.  The advisor can narrow the field of many solution providers to a few candidates taking care of the leg work allowing you to concentrate more on your business.

 

You just cannot make the decision alone.

 

While true for many technologies, this is especially true of Enterprise Resource Planning (ERP) solutions.  Given the scope of the change an ERP solution can make for and in an enterprise, it takes correspondingly more effort and diligence to make the right choice.

 

A lot of time and energy can be invested in trying to upgrade and make work an existing system that was never intended to handle the latest business trend. 

 

Selecting an ERP solution is an educational process. 

 

It requires open dialog so that the solution matches the challenges.  Many sales people call offering solutions to problems that do not exist.  To avoid that, someone needs to be open and honest about areas that could use improvements.  This is where a trusted advisor can help by interfacing your challenges with potential solutions.

 

Deeper relationships are needed in today’s ever changing world of technology.  An understanding of the role technology plays in an Enterprise is a crucial factor in selecting a trusted advisor and solution provider.

 

Dolvin Consulting works with industry experts to deliver Enterprise solutions that drive efficiency, reduce costs and increase profitability.  Contact us today to see how we can help you define the challenges that slow your business down and identify potential solutions.