| In today’s competitive business
reality, companies must lower their operating costs and increase productivity just to
survive. Yet, many companies are reluctant to upgrade their computer system, remembering
their past experiences and not wanting to incur new expenses.
The tools and technologies exist but a fear of change
prevents some Manufacturers, Distributors and Retailers from making the cultural change
that’s needed to use a new technology to improve how their business operates. What
they fail to realize is that having aging software will result in higher operating costs
company-wide and excess inventory in the warehouse – meaning a decrease in bottom
line profits.
For example, at my first meeting with the company president
of a medium sized distributor, he informed me that he does not trust software houses due
to his previous bad experiences, and informed me that the only reason he sees me is
because I came highly recommended by his business consultant. Discussing the business
issues resulting from his outdated software, he summarized it to include three major
issues:
1. Wrong credit issued:
Rather then invoicing $1,000,000 to a major chain store,
the computer issued a credit instead. The accounting department did not catch the mistake
in time and it took nine months to get the money credited back, and the invoice paid.
2. Inventory issues:
Having an un-automated warehouse resulted in poor inventory
control, incorrect shipments and large number of returns. When new inventory was received,
shelves were consolidated and the computer records were not properly updated. This
resulted in inventory being misplaced and new inventory being bought. As a result of these
issues, the company ended with $2,000,000 in excess inventory that cannot be sold. This
inventory will have to be sold on the Web in a “fire sale,” trying to salvage as
much as possible.
3. Charge back:
The day I met the president he got $45,000 “charge
backs” from a major department store due to incorrect shipments and EDI errors. Being
very bitter about it, he showed me the “charge back” documents and said:
“This is the last upheaval my computer system has created.”
If any of the above business problems seem all too familiar
to your company, don’t worry there is light at the end of the tunnel. Poor invoicing,
excess inventory issues, charge backs, and many other unnecessary business consequences
can be a thing of the past. But, you must first learn to embrace a cultural technological
change and invest for the future. This includes automating your warehouse, and using the
web effectively
Automate Your Warehouse – My #1 Secret To Reducing
Operating Costs and & Improving Your Bottom Line Profit
One of the areas most affected areas by aging computer
software is the warehouse. Not having an automated warehouse will result in additional
personnel, higher labor costs, misplaced inventory, incorrect shipments and high rates of
returns. Often the misplaced inventory will not be found until the next physical inventory
takes place in the warehouse. This will result in excess inventory that might be obsolete
when found and will not be saleable.
When you automate your warehouse:
1. Newly received inventory is scanned and your computer
files are updated in “real-time mode,” resulting in data instantly available to
everyone company-wide.
2. Consolidating shelves will be easier and more efficient
as your “real-time” computer files will reflect both the consolidated and new
inventory location and quantity.
3. You will be able to find misplaced inventory and prevent
it from “collecting dust”.
4. Less shipping mistakes and returns will be made as
picked inventory gets scanned for accuracy. At the staging area before being packed, again
its gets scanned and verified confirming that the correct products and quantities are
being shipped to the right customer.
5. Labor costs will be dramatically reduced. Since
automating your warehouse will create a more efficient and effective inventory
environment, you can quickly reduce the size of your inventory management department
– or transfer them to other areas of the company where they are much more needed.
Another excellent way to lower your labor and operating
costs and increase sales and your bottom line profits is to effectively use the Web.
Using The Web Effectively – Use the Web For More Than
Just Placing Orders And You Will Find An Increase in Sales & Profitability And A
Decrease in Labor & Operating Costs.
Many companies don’t view the Internet as a valuable
vehicle to increase sales and lower operating costs. They feel their customers would
rather call to place the order rather than doing it on the Web. The reality is that the
Web has a larger function than just “placing new orders.” The Web can serve as a
very powerful tool for gathering information and lowering the number of calls the Customer
Service department receives.
For example, one of my clients, a very large Retail Chain
Store in the food industry supplied its franchisee’s with PC’s at a very low
cost and encouraged them to place their orders over the Web by giving them special
incentives. This resulted in a substantial drop in calls to the Customer Service
Department, allowing their staff to focus on matters requiring greater attention. Besides
decreasing the phone calls to Customer Service, the food chain store acquired additional
benefits. The franchisees, while placing the orders over the Web, purchased additional
products they ordinarily would have bought from the competition. Being a “one-stop
shopping” on the Web enabled the franchisees to get better prices and utilize their
time more effectively and more efficiently – resulting in an increase in sales, a
great improvement in bottom line profits and a reduction in operating and labor costs.
Nobody likes change, but today’s reality dictates
being as efficient as possible. As I have said before – the tools and technologies
exist. Higher operating and labor costs, poor invoicing and mismanaged inventory
operations and other unnecessary business disruptions that affect your bottom line can be
a thing of the past. |
