Renovate Your Reports

There is a general consensus among renovation professionals that the reciprocating saw is the best tool ever invented.

Better known by its Milwaukee brand-specific moniker of the “Sawzall,” it has changed the way renovations are approached. Need a new window? No problem, break out the Sawzall and make a hole. Need to shorten a two-by-four? No problem. Bring on the Sawzall. Need to slice and dice a job like never before? Sawzall to the rescue once again. It has virtually changed the renovation game with its versatility and ability to approach a problem in new ways.

New computer tools are like that; they are able to slice and dice data in ways you may never have thought of before, and do it quickly, almost on a whim. That new, high-speed number cruncher you have invested in can do things you never would have dreamed of only a few years ago: display graphics; allow customers access online, in real time; point and click to orders; pull up notes; pull down menus.

So why are you still running the same old reports?

“These new Windows tools do that same job quickly; on old systems you’d have to print reams of paper, get your red pen out, look at stark black-and-white reports, really concentrate and think about what the changes would be and then go back in and change everything manually,” says Jerry Fugina, president of Rinax Computer Systems.

“The new tools do it for you. And you don’t have to kill a bunch of trees either. You can see what the changes are and their effect before you implement the change. It’s a whole different world now.”

Bob Worts of Carrus Technologies agrees. “From the jobber side, there are all sorts of reports there: what the customer purchases, what they are on a monthly or weekly basis, and what their margin is to the consumer.” It is not just the types of reports you can run that have expanded, says Worts; it is their timeliness. Easy access to data means you don’t have to be tied to a monthly schedule for some reports, as used to be the case. He does offer some advice, though: with the rise in Internet ordering by shops–some are making up to 90% of their orders that way–some of the old benchmarks on employee productivity may not apply.

“You have to be careful with Internet-based ordering; you are having counterpeople with lower productivity than they used to have because they are not talking to anywhere near the same number of customers,” he says. “It’s different because they are spending time with the small guys, because the high-volume customers are online; there is more time to develop the smaller accounts and prospects.

“The features in our system allow you to look at the productivity of your counterpeople and your margins, up or down, very easily, and it is all live. You don’t have to wait till the end of the month.” There are, he says, a huge variety of parameters that can be looked at, but he offers one by way of example.

“What you have to take into account is how many credits have been issued. Numbers may be up on net sales, but what is the net when the cores and unused parts are returned? To understand the true picture of an installer customer, you have to take away the credits. A lot of people don’t think about that.”

Tracking sales and customer-generated activity is important, and so is getting that information in a timely manner. This can span the scope of invoice retrieval, up-to-the-minute financials for one or multiple stores via a “dashboard”, and, with the rising cost of fuel, the cost of delivery.

One example of such a tool is Autologue’s eDelivery Tracking System. It allows a jobber and customers to organize delivery services.

“When you press the invoice button on your management system, that invoice instantly goes to eDelivery and is time-stamped,” says Autologue president Jim Franco. “The driver or dispatcher then selects the invoice to be delivered and prints out a routing schedule, also time-stamped. Once the driver arrives at the customer site, he notes the time delivered on the invoice.” That can be automated if GPS tracking is in place.

“The real value of this tool is the great reporting feature that will show you how long it took from the time the customer called in the order to the time it was delivered.”

Time is money, as they say, but in this era of rising transportation costs, it is critical to be on top of delivery practices.

Indeed it can be boiled down to the old clich–as true today is ever–that it’s not what you make that counts, it’s what you keep. And keeping enough has become a much tougher thing with rising inventory investments and rapidly evolving popularity lists and pricing strategies.

At least part of the barrier to coping is getting over old habits.

“A lot of [jobbers] are quite happy with the report the way it was formatted ten years ago,” says Peter Quattro, CAPP Associates, IBM Business Partner.

“They do like consistency in format. It doesn’t matter how sophisticated they get; there is a need for that. That is a benchmark for people. They look for certain things and that’s what triggers action. Not everyone is a chartered accountant.”

But there is a way to better use the new tools at hand, short of launching a forensic audit.

“There is no question that you get folks who are trying to fine-tune their analysis. They need the basic reports, numbers that mean something to them from a history standpoint, but a lot of folks are thinking outside the box. More than anything, what other measurements can I make that are more meaningful?

“I have to look at my sales and my cost of sales to see if I made any money, but what other factors can I refine my reports to show?”

For systems of all architectures, trying reports on for size is easier than ever, which gives managers the ability to slice data in different ways.

Productivity reports are one area that Quattro says has been an increasing focus. “More people are looking at that, right down to the picker/shipper. They are getting concerned that labour is expensive. They have to analyze what people do. Who is putting the orders in, who is making mistakes, who has more returns, who is spending what amount of time to pick an order?”

Analyzing order picking is something that has come under scrutiny at larger operations, he says. “If one warehouse worker picks 100 lines a day, but another picks 1,200, what does it say?” Looking at this type of data is not as common as the tried-and-true reporting so many jobbers have come to rely on, but it can shed some light on inefficiencies.

And sometimes it can shed some light on customers who are costing you more than they are worth–either in terms of orders and returns, or payables.

“Those are absolutely necessary, because sometimes you have to fire a customer,” says Quattro.

Focusing on inventory efficiency has become critical, too; not surprising, considering the continuing pace of parts proliferation.

It’s one thing to know what your turns are; it is quite another to know if you’re paying too much to keep them where they are.

Quattro describes the tools as turning your data into a multi-dimensional cube. “You can attack it from any direction. These aren’t necessarily formatted reports; they are ad hoc reports.”

In analyzing your buyouts (parts you purchase at the time of an order to immediately resell to the customer), it is good to know what your percentage is, and what parts categories they are coming from, but you need to know the cost as well.

“We all know that we pay a premium for buyouts. If it comes off your shelf, it improves your turns; if it is buyout, you have satisfied your customer, but you have lost out on margin.”

It is conceivable, for example, that you may have been able to fill that order, but done so at a financial loss, particularly if you had to expedite the part from a remote warehouse.

“Getting out of the mindset that as long as you make the sale it is a good thing, as opposed to making a profitable sale, is important.”

The fact is that,
as long as data is being stored in your system, new capabilities mean that you can run far more types of reports than might be useful, and do so with only a few mouse clicks.

For managers who can’t fathom spending hours playing with the numbers, exception reporting is the strategy to employ.

Pat Lawson, who manages the Prizm Business Partner Program for Activant, has seen all sides of the jobbing business, having been a counterperson for many years before moving to a more training and consulting-oriented career, helping jobbers figure out what they might be able to do to help their business. He says there is no one-size-fits-all solution.

“It varies and it is surprising how much it varies.”

Whether an operation is large or small does not seem to have any bearing on the kinds of troubles its people can get into, he says. Inventory control issues, using old theories on pricing, customer management, not knowing how well they should be doing, not having a handle on the cost of sales are all stumbling blocks that seem to cross all boundaries.

“There is no rule about the problems. Different managers tend to overlook the same kinds of things year after year.” One jobber chronically added new items to inventory. It brought the business to the brink of failure.

“We took their turns from 1.25 to 4 and today that business is growing and booming.”

And that wasn’t because he brought new tools to them; the tools were there all along.

“The tools are there in the system to manage those situations, but they had not implemented them in their business. It is nice to have the part that nobody has, but when it sits there for three years, it is time to get rid of it.”

“It is a matter of changing stocking strategies for some of them. You have to bring in the new part number, but you have to clean up the dead stock. You can run automated reports that generate a list of the parts you shouldn’t have.”

That is, by definition, an exception report.

“It’s easy to get overwhelmed by the numbers when looking at reports; that’s why looking at the exceptions and narrowing the focus provides clarity,” adds Fugina.

“Most managers and business owners today are simply too busy to wade through reams of information to glean the really important stuff. They need to have up-to-date reporting tools that can do that for them. Traditional reports are helpful and necessary, but more up-to-date tools such as report generation with user-defined selection criteria, reports with drill-down capabilities (like a magnifying glass) and reports that can be represented graphically, such as bar graphs, can bring the information to life. The ability to export this information to spreadsheets and other documents so that it can be further manipulated, and the ability to email it to people who can make good use of it, can be very helpful too.

“Instead of printing a 30-page report, they need a half-page report that says ‘do this.’”

In addition to managing the activity within the four walls of a business–sales per counterperson, profit per invoice, returns per counterperson, fill rate, inventory turns, etc.–new tools allow for better customer data handling.

Rather than just knowing how much a customer purchased, and perhaps their warranty returns and core handling, you can also factor in more graphical historical data, sales activity per line by customer, and the cost of serving that customer.

You may find that you are spending more than it’s worth to keep a customer. And that only becomes clear when you have a clear idea of what some of the benchmarks are. Many of these industry benchmarks are available from the U.S. Automotive Aftermarket Industry Association, and there is some line-specific data available from manufacturers. But, in general, it is wise to really sit down and work out what you measure.

“We use benchmarks such as inventory turns, but we look at inventory turns as of today,” Lawson says of most jobbers. “We try to get to get a 12-month snapshot. What kind of segments are you in? A guy with a paint store has a different picture than a hard-parts WD.”

Lawson says he has some 250 questions he reviews in the first week with a customer: questions that probe who he should be compared to, what reports he should be running, and what he should be doing with them.

“Then we make benchmarks with their store and we’ll track against those.”

He offers an example of a distributor who had not run an order point calculation; instituting that automated function has created a flurry of activity.

“Their salespeople are panicking now over lost sales, because they had never recorded them before.”

That could potentially cause a reversal of the decision without the owner’s and management’s commitment. “And you have to get them to understand fractional order points, etc.,” says Lawson. ” Setting an order point manually is not a good thing.” You can’t be generating an order to replenish every time you make a sale. The key to it all is making management understand that functions such as this make sense.

“Automating their inventory can make them money.”

Overall, there are probably more reports possible to run than might be truly useful. It is wise to sit down with your system supplier and accounting person or financial consultant, and work out which reports might offer a useful new window on your business.

Tools are great, but only if you know how to use them, and what you want to accomplish with them.

“It’s like the Sawzall,” says Fugina. “You have to have some basic knowledge of what you want to do with it, or you’re just going to end up with a hole in the wall.”

SEVEN REPORTS TO TRY

There are plenty of reports at your fingertips, but here are seven you may consider. If you can’t run them on your own, ask for help from your system supplier.

1) By supplier: which part numbers are moving and which are not.

This will help you hone your understanding of rising and falling popular numbers.

2) By customer: which part numbers are moving and which are not.

If this differs by customer, it may help you get a window on customer preferences, and the type of work they’re getting.

3) By salesperson: which part numbers or lines are moving and which are not.

Look for exceptional performance in lines or brands, and try to correlate this to any training, promotions, or customer preferences.

4) Sales by part number, history (by month, by part number) for inventory.

Run this and deliver the findings to your sales rep with the question, “What am I missing, and what do I have too much of?”

5) Parts sold below the gross margin point.

This will highlight products that are not meeting your target profit. Then drill down by sales person to see if there is a correlation.

6) Out-of range-demand or inventory transactions list.

Are you selling more than expected of a part number? Ask why; you may have missed out on a price increase.

7) Live business report.

Run this whenever you have a whim. Don’t wait till the end of the month to know how things are going. Check on individual stores, if you have them, and the business as a whole.

Other reports you have found particularly useful? Send them to me at aross@jobbernews.com.