Connected Distributor - An Epicor Blog

Reducing Shipping Errors through Automated Carton Packing

Do you have important customers that require special labeling or packaging information when you do business with them? Would it help serve your customers better to know what items shipped in what box?

Carton Packing functionality, now offered in Epicor^® Eclipse^® Release 8.7.3, allows distributors to efficiently and accurately capture the items and quantities shipped in each box/bag/bundle/pallet (a.k.a. carton), associate a unique ID to that carton, and label orders leaving the warehouse. At each step, logic exists to set defaults for the specific packing station, and required fields support barcode scanning to constantly minimize the amount of interaction that the packer needs to have with the mouse or keyboard.

Activity triggers are leveraged to allow users to configure actions that result in labels printing out automatically, with the right format to affix to the carton. Customer-specific product labeling requirements can now be seamlessly incorporated into the packing process, to reduce the cost of filling these orders to key accounts.

Will Call Queue users and Order Entry personnel can also quickly see carton-level detail, to provide better service to customers. For example, a customer service agent receives a phone call from the customer indicating that they didn’t receive product A. The agent quickly finds the order, sees which carton that product A was packed into, and can direct the customer to re-check in the box that also included Products B & C. If the customer did not receive Products B & C either, the agent can immediately re-ship all of the items from that box and research the whereabouts of the undelivered carton.

A distributor does not have to be using the Epicor RF Warehouse Management System in order to implement Carton Packing. Non-RF facilities can actually obtain some of the benefits of RF by leveraging wedge scanners in the packing process to validate that the item ordered is the same item that is being shipped.

RF facilities that deliver orders on their own fleet can take advantage of the RF Load Carton function, which directs the user in reverse stop sequence to scan each carton ID for each order on the manifest, to ensure that everything gets loaded on the truck. A planned future integration with the Epicor Proof of Delivery companion product will allow a Bluetooth-enabled carton ID Scan to validate the package all the way to its destination. 

Posted by Justin Ward, Product Manager at Epicor Software Corporation

Epicor Salutes Concordia Publishing House - A Baldrige Award Winner

Demonstrating an ongoing commitment to continuous quality improvement, Epicor customer Concordia Publishing House (CPH) has been named a 2011 Malcolm Baldrige National Quality Award winner in the Nonprofit category.

CPH is the St. Louis, Mo.-based publishing arm of The Lutheran Church-Missouri Synod (LCMS), and was founded in 1869 to provide members of the LCMS with Christian ministry resources for worship, education, and nurturing of their faith. Today, the company supplies over 8,000 products in a variety of formats and languages. CPH has a workforce of 247 employees and revenues of $35 million.

CPH uses technology including Epicor Enterprise solutions and Epicor Precise POS to support the building of customer relationships, provide superior customer service, and facilitate order entry and product distribution. CPH monitors market trends by collecting and analyzing data from its own customers, as well as customers of competitors, and then categorizing sales and customer data in a variety of different ways to identify relationships between certain product sales and types of customers.

CPH’s Customer Call Center, which is also integrated with Epicor Enterprise, has been recognized as a “Center of Excellence” by BenchmarkPortal (The Center for Customer-Driven Quality) every year from 2009 through 2012, and CPH was also recognized as a Best Christian Workplace in each of the last three years.

With the implementation of Epicor technologies in 2004, CPH’s standardization of business processes has greatly improved. For example, in the distribution area, the integration between Epicor Enterprise and CPHs “Pick-to-Light” packing system has enabled CPH to achieve a 99.85 percent accuracy level for orders shipped.

Other areas of performance excellence at CPH cited by the Baldrige examiners included overall customer engagement scores at 98 percent plus, positive financial results, a robust Vendor Certification Program, and overall workforce engagement exceeding the AAIM (formerly known as the American Association of Industrial Management for Employers Association) national benchmark in 7 out of 8 categories.

Epicor congratulates everyone at CPH for this impressive achievement.

 

Is It Time to Review Your ERP System Settings for Inventory Control?

With the economy starting to make a comeback, your sales are hopefully increasing. Now is the time to review velocity numbers in your enterprise resource planning (ERP) system—because when sales increase, so does the forecast for the items, therefore increasing the velocity. Velocity should be reviewed every quarter to make needed changes until the economy stabilizes.

Next, look at the trend periods, as well as the average change per period. These settings dictate which items should be marked “trend.” For example, if you’ve been looking at the last five periods for when sales start to increase, but sales have actually increased for the last three, this would take much longer for items to be marked trend. By changing the setting to three periods, the item(s) would need to have an increase in sales higher than the average change per period, therefore possibly getting you to a trend pattern sooner.

Also don’t forget to look at the supplier cycle days and targets. As with purchases increasing from higher sales, these numbers need to be reviewed quarterly, as well.

Now is a good time to review your UPTO ABC classes and periods to supply, along with your thresholds and safety stock factors. You may want to examine and change all of these with increased sales.

Lastly, receipt periods to average for lead time are typically set to four periods. This should be reviewed and possibly shortened, as the lead times most likely are improving; thus a lower number of periods will reflect more current average lead time.

The settings discussed here only impact items set to a purchase replenishment of UPTO and/or EOQ, but they are still important to manually controlled Min/Max and OP OQ items, as well, for ABC classes and ranking.

It is strongly recommended that these and other system settings be changed in collaboration with an Epicor Professional Services Consultant, as every distributor will have their own specific business needs. There are also new features to learn about, such as safety stock by service level, where the UPTO and EOQ replenishment methods will calculate a safety stock for each item / location for you.

Posted by Neil VanWalbeck, Professional Services Consultant at Epicor Software Corporation

Reassessing the "Comfort Zone" of Your Homegrown ERP System

Why do you hesitate to consider a new software system for your distribution business?

There are several answers that immediately jump to mind: purchase cost, pain of transition, and short-term loss of efficiency in customer service. But each of these points can also be used to argue against remaining in the “comfort zone” of your current enterprise resource planning (ERP) system.

Maintenance costs are likely higher on your old homegrown system. Older machines require upkeep and upgrades to continue working properly at the maximum speeds available, and it becomes harder and harder to find support for the old operating system code and technology. But costs also appear in the form of maintaining a core group of knowledgeable employees who are the only ones at your company that fully understand your system. The time it requires to extract meaningful data for executive analysis out of your archaic database must also be included as a cost consideration.

The pain of remaining on your old system can be measured in many ways. There are business inefficiencies to overcome, work around or manually track, which are likely handled out-of-the-box by newer software programs. Gaps in your current software often lead to a patchwork of coded solutions that may address problems, but cause processing re-routes with multiple steps—again, less efficient than a newer program engineered to handle your business situations at its core. Your current system thus becomes larger in scope and harder to maintain.

There is also pain when training a new hire. Your old system may be familiar to your long-term employees, but it is quite foreign to a new generation of tech-savvy potential hires raised on Microsoft Windows and the Internet. The traditional character-based  interface is not going to be familiar to anyone who went to high school or college in the 2000s. This leaves you to fill positions at your company with more mature employees whose cost to onboard is certainly more than that of recent graduates.

Maintaining a high level of customer service is critical to retaining long-term customers, as well as winning new customers for life. A new system, designed specifically to provide exceptional customer service, can win and retain loyalty from your customer base. By contrast, your old system, with inefficiencies that require multiple call-backs, delays, and apologies, is not as attractive to new customers shopping for suppliers, and as the quality of services offered wanes, so does long-term customer loyalty. Lack of rapid access to required information also may be causing you to overstaff your customer service department, bringing the argument back to cost.

Is a transition to a new ERP system painful? Absolutely, but think of it like a knee replacement. You can limp along and compensate for the problems you have, being consistently hindered by what does not work, or have the surgery, endure that time of discomfort, and then learn to run better than before.

When you argue against a potential system switch with costs, pain, and efficiency concerns, remember to consider them as they exist in your current system. Staying put is not going to grow your business, and in today’s market, maintaining the status quo is not enough to keep your customer base happy. A system that offers a return on the investment you make, and uses today’s technology for greater processing efficiencies and access to business critical information, will help your distributorship thrive.

Posted by Dave Lusk, Industry Segment Manager at Epicor Software Corporation           

 

 

The High Performance Model for Wholesale Distributors

The Million Dollar Opportunity

There is a million dollar opportunity in your business right now that doesn’t depend on the economy and has nothing to do with your competition.  It’s hiding in underperforming gross margin, cost inefficiencies and slow cash cycles.  It’s draining out of the bottom of your service offering through customer loss and constant internal service rework.  It’s pickpocketing your growth potential.  Yet, its elusiveness has become so ingrained in your day-to-day business that you resign yourself to accept this million dollar loss as the cost of your culture. “It’s just the way it is.”

The issue is not with your people or your technology.  What you are missing is a model that you can deploy quickly and effectively in your distributorship to claim these hidden dollars and transform your distributorship into the high performance business you know it was meant to be.

Processes and Deliverables

A distribution business is its processes.  There are three key processes in distribution that drive your performance:

• Sourcing—the process of deciding from whom you buy and why
• Fulfillment—the combined cross-functional process of your insides sales, purchasing and warehouse teams
• Sales—the process of prospecting, engaging, acquiring and keeping customers.

(There are other processes in your business; Financial Management, IT, and Human Resources, for example.  But these processes are support functions and do not directly impact your business’ performance deliverables.) 

Processes have deliverables, and the three key processes above deliver performance.  The three high performance deliverables are:

• Fundamental Financial Performance—profitability, cash flow and asset efficiency
• Value Differentiation—logistics and account management
• Sales Growth—revenue growth, customer retention, broadened product line, pricing, and customer creation.

In other words, a high performance distributor performs well financially, differentiates value, and grows. 

The Million Dollar Challenge

The high performance model for wholesale distributors is stated this way:

“The combined capability of sourcing, fulfillment and sales processes determines a distributor’s financial, value differentiation and growth performance.”

For the math-minded:

(c)X1, 2, 3= (p) Y1, 2, 3

where (c) is capability, “X” is key process, (p) is performance and “Y” is performance deliverable.

This model is a tool for you to use to make decisions and focus your improvement efforts to drive sustainable, meaningful results into your business.  If you have not tackled these three key processes and optimized their capability to deliver performance, then there is at least a million dollars’ worth of annual improvement waiting for you to claim in your business right now. 

Here are three high impact improvement projects you can execute this year to find the million dollars hidden in your business:

• A coordinated attack on gross margin through sourcing and pricing actions should generate 1-2% of gross margin improvement.  That’s $500K-$1M to the bottom line for a $50M distributor.
• Improving your fulfillment process capability and reducing the cash conversion cycle while simultaneously becoming the service leader in your market.  That means less inventory, higher fill rates, and significantly reducing rework.
• Improving your sales management process and creating growth from the “inside out” in your company, by retaining current customers and broadening your product offering to them.  That’s more dollars to customers you simply refuse to lose.

Are you willing to invest focused and sustained effort working “on” your business instead of just “in” your business?  Use the high performance model to guide you to the million dollars hiding in underperforming processes, and make 2012 the year you find your million.

Posted by Andy Ray, Senior Business Consultant at Epicor Software Corporation              

Survey Says: Most Companies Lagging in Carbon Accounting Comprehension and Execution

Last week we announced the results of our first ever global carbon accounting survey. The goal of the survey was to gain insight into the ability and willingness of companies to identify their greenhouse gas emissions; to find out how they technically capture emissions; and to clarify the extent to which companies have to meet legal requirements for sustainability, as well as partner and customer demands in this arena.

The results – compiled from nearly 1000 companies surveyed across the globe – were pretty astounding. Fifty-eight percent of companies surveyed had not even heard of the term “carbon accounting”; less than a third could accurately describe what the term means, and a full 80% of companies surveyed don’t monitor their company’s carbon footprint.

So why are companies lagging in their comprehension of carbon accounting as a whole, and in the execution of said carbon accounting initiatives?

One reason is many companies see carbon accounting or energy management efforts as a distraction rather than something they can quickly and easily quantify. I also think there is some cynicism out there colored by individuals’ own personal opinions. Many people feel the whole carbon issue equates to acceptance of science behind global warming. Irrespective of your views on the science, if you choose not to believe it and bury your head in the sand, you do so at the risk of putting your organisation at a competitive disadvantage.  Legislation is here and if you are not mandated by it now, it will be coming your way.

Done right, carbon accounting can be a part of your normal course of business – not an extra task – and like other GRC initiatives; it has the potential to create process efficiencies for operational cost savings.

Another hurdle for carbon accounting is many companies don’t realize the significance of monetizing these efforts. What’s more, the trading of carbon credits is often way outside of their core business role. It’s a new skill set/competency that most people flat out don’t have – but expect to see the job market heat up over the next few years in The New Carbon Economy. Major financial institutions, including Goldman Sachs, Berkeley's and Citi Bank, already have carbon trading desks in London, the commodity market for carbon offsets, is the fastest growing commodity market in the world with companies buying and selling carbon credits like pork bellies or silver.

At the point when the economies of the world were in a more robust state, green initiatives and carbon were a lot higher up on both media and corporate agendas. But as the downturn took hold, organizations started looking inwards at themselves and less at their green credentials. However operational cost savings and a green corporate agenda are not mutually exclusive. By managing your operations in an energy efficient manner, there’s tremendous financial upside in the form of operational cost savings, and also possible increased revenues – not to mention compliance, as there’s going to be a “train” of increasing compliance requirements in this arena. We say – get ahead of the curve – start following it now. Compliance is actually a byproduct – you’ll actually save your company money and open up a whole new revenue stream.

Posted by Chris Purcell, Product Marketing Manager, Epicor

Tips from the Experts on New Year's Resolutions for Distributors

When it comes to your business, setting goals is imperative. Unlike personal New Year’s resolutions that are often forgotten after a short time, successful companies stick to their goals with organizational discipline, top-down leadership and support, and systems of measurement. Goal execution becomes part of the culture for those who desire to thrive.

With that in mind, Epicor asked a number of thought leaders in the wholesale distribution industry for the top resolutions that distributors can't afford to ignore in 2012.  These experts recommended the following:

1. Stop treating inventory as your competitive advantage
2. Stop always saying “Yes” to all customers
3. Stop allowing field sales to direct themselves

Making fundamental changes in the way you do business requires commitment, but achieving any one of these resolutions will put your distributorship on a better footing. Achieving all three will surely differentiate your business from the competition and open up new avenues for profitability. Read the complete briefing on these tips at: http://www.epicor.com/3resolutions/.

ERP Replacement as a Catalyst for Business Change and Growth

There is no better time to re-evaluate your business processes than when you are about to select and implement a new business system. While you’ll need a distribution software solution that conforms to your business, many distributors overlook the fact that today's technology and industry best practices can allow them to do things more productively. You should use this opportunity to architect new processes that will immediately impact your profitability and customer service levels.

According to a study performed by Cisco Systems, "Companies that changed their business processes at the same time they implemented new technology saw a 25-30 percent increase in productivity. Without changing their business processes to fit the new technology, businesses actually lost productivity at a rate of 6-9 percent."

As discussed in previous Connected Distributor blog posts, the best solution providers adhere to lean methodology when it comes to distribution functionality and processes. Be sure to inquire with each prospective solutions provider if they have staff certified in lean methodology. You must be convinced that the solution will help you achieve your objectives to keep your business lean and competitive.

You also need to be sure that your company’s distribution software solution will be able to grow with the organization and adapt to changes in the business, as well as continue to offer the best in ERP functionality as the technology evolves. For those business processes that are truly unique to your company, your new technology should be modifiable to handle exceptions.

Keep in mind that there is a big difference between modifying and customizing.  The former, by common definition, should not require tampering with the source code at all. Often, distributors insist on custom development for a process that they later admit could have been handled using the existing software capabilities. Be sure you are comfortable with the amount of flexibility your selected solution offers from day one.

Replacing your distribution software system involves a certain amount of innovation, as well as risk. Innovation creates market leaders, and market leaders are the first to achieve a return on their investment—usually a significant return. Look for a solutions partner that is passionate about inspiring that innovation in their customers, and knows how to manage the risk associated with it.

To learn more, read our white paper, 5 Mistakes Distributors Make When Selecting an Enterprise Software System.

 

 

Selecting the Right Provider for ERP System Replacement

Distributors may decide to replace their enterprise resource planning (ERP) systems for a variety of reasons. At the most fundamental level, the question is whether your current system supports or constrains your ability to execute business strategies that will make your company successful and establish it as an industry leader.

Your ERP system provider must be part of your vision. Selecting the right software provider for your business can be a daunting task for those who lack experience in this process. The last thing any person or company wants is to invest in the wrong technology and choose the wrong partnership. The following steps can help increase your probability of success.

First, the head of the organization needs to be involved in the decision-making process. Unless the IT team truly understands the vision of the company for the next 5-10 years, they cannot judge the value a software solution will bring to the business. Ideally, the team selecting your new enterprise software solution should include a high-level executive with long-range vision, line managers from each discipline to confirm proper functionality, and IT staff to ensure that you have the best technology infrastructure for the present and future.

Once the team is in place, the next important step is to define your compelling event. This is your definitive answer to the question, "Why now?" Compelling events are often tied to a process mandate from a key business partner, or an organizational change such as a merger or acquisition.

The cornerstones of your evaluation process should then be: determining your budget and ability to afford the investment, identifying your critical business issues and needs, and defining the selection criteria for the right software and technology provider.

You will want a solution provider who understands the nuances of your business and has the functionality to support your unique needs. Answers to questions such as the following will help you narrow your field of vendors: 

• How many customers are distributors? How long has the company been serving distributors? 
• Is there an annual users conference focused on the needs of distributors? 
• Is the company a member of associations and buying/marketing groups in your industry?

If done correctly, the work you put into selecting your new enterprise software system will pay huge dividends, by giving your company a solution that increases sales, improves customer service, and reduces operating costs. The results can be truly game-changing for any distributor.

To learn more, read our white paper, 5 Mistakes Distributors Make When Selecting an Enterprise Software System, available at: http://www.epicor.com/5mistakes

Theory of Constraints in Distribution

“In the midst of complexity, there is inherent simplicity.” --Dr. Eliyahu M. Goldratt, 1947-2011

The same critical thinking processes used in the hard sciences have led to the development of a holistic approach to business called the Theory of Constraints (TOC). The application of this approach to distribution has shown dramatic results.

TOC is a focusing technique that searches for the inherent simplicity in the midst of complexity. Dr. Goldratt theorized that improvement in the throughput of any system is governed by very few factors, the critical one being the overall constraint. Depending on the environment of the company, this constraint can be located in different areas, sometimes internally (production, warehouse, purchasing, policies, etc.) and sometimes externally (in the market). In distribution, the constraint is usually in the market (an estimated 70 percent of the time).

Let’s look at how TOC applies to the issue of inventory in the distribution environment. What is the distributor’s mindset when deciding on how much stock to keep at each location? Two main questions must be addressed:

1. How much stock to keep upstream in the supply chain?
2. How much stock to keep downstream in the supply chain?

The natural tendency is to keep the stock as close to the consumers as possible—the thinking is, if a product is not at the consumption point, then there is a smaller chance the item will be sold. Therefore, it only seems “logical” that the distributor should keep most of the stock as close to the customer as possible—as far downstream as s/he can manage.

This is a common-practice “push” behavior: pushing products downstream in order to increase consumption. However, this push behavior requires a good forecasting model, in order to predict where and when the stock will be needed at the stock locations.

Even with today’s advanced forecasting tools, we can’t effectively answer the availability question: What to hold at which place and when? This is because:

• The more specific (the narrower the aggregation), the less accurate the answer becomes—meaning that the question of “How much will be sold overall?” will be answered much more accurately than “How much will be sold at this specific location?”
• Many times, data is incorrectly interpreted. It is common practice to use statistics without a good understanding of the “law” of aggregation. The more sophisticated the algorithm, the more sophisticated the end user has to be in order to correctly apply it.
• No forecasting model can take into account a sudden change in consumption patterns.

So, first let’s kill all of the forecasts! Well, not exactly, but the TOC solution for distribution does call for a shift away from the common-practice push (forecast-driven) approach and towards a “pull” mechanism. The TOC solution is built on constant renewal of the consumed stock. It includes several steps that apply in most environments:

• Aggregating as much stock as possible as close to the source as possible—the supplier or central warehouse. Setting a higher inventory target there—called the Stock Buffer Size.
• Setting much lower Stock Buffer Sizes at all other locations.
• Creating the transfer of real sales data on a frequent basis from all stock locations.
• Shrinking the replenishment time as much as possible.
• Replenishing the stock locations as frequently as possible, with a strict focus on shipping only to replenish to real consumption or to re-adjust the buffer sizes.
• Continually monitoring the buffer sizes and making adjustments according to consumption.

A disciplined approach to implementing these steps can build a Decisive Competitive Edge (DCE) when linked to the timing of the constraint in the market. A DCE means satisfying a customer’s core need to an extent that no competitor can or will (as most companies do not have a DCE). It will also significantly improve cash flow—another possible constraint in today’s operating environment.

Within a period of three months after starting the implementation of a TOC solution, it has been reported that inventory turns have improved by a factor of 2.8, created by significant reductions in inventory while increasing sales through the lessening of stock outs. Finding the inherent simplicity in the midst of complexity can certainly pay off.

Posted by Tom Rodgers, Senior Business Consultant at Epicor Software Corporation