Taking An Integrated Approach to Business Systems
In a time when technology puts the world’s knowledge quite literally at your fingertips, many jobbers still have to walk around their store to find out what the heck is going on in their own businesses.
That may not seem very progressive–even ridiculous, looked at in a certain light–but when you consider how the aftermarket has traditionally been underserved by technology, it shouldn’t be surprising. Thinking back only a few years, there were some excellent point-of-sale systems that counterpeople could use to effectively fill orders, and even some pretty decent back office and financial reporting packages–often custom-written–that served to make sense of sales and inventory. But they didn’t really talk to each other, and in a world where even small players aren’t so small, everyone has to be in touch with their business right now. Relying on re-keyed data, monthly reporting, and manually reconciling cheques, credits, and other niggling duties is simply not good enough.
Information needs to flow back and forth between the counter and management, between shipping and accounting–between, as it were, the front end and back office of the business.
“One of the goals of jobbers is to get integrated,” says Bob Worts, director of sales & marketing, Carrus Technologies Inc. “A lot will run a front end of a jobber system, and they will use Accpac (or any accounting package), but they will still have to physically move stuff from one to the other.
“And they lose time, a lot of time, moving the numbers over. It’s an expense that multiplies if you have multiple stores.” He says that in conversations with jobbers it is clear that frustrations can rise when a jobber tries to increase his inventory efficiencies by drawing orders from multiple stores, then has to wrestle with debits and credits between branches just to keep the numbers straight. “And it’s not convenient for the owners to look at the system at any given point.
“When you’re integrated, you can pull numbers at any time and have the assurance that they’re accurate.”
That’s only the beginning of the benefits of taking an integrated approach. (Worts admits that jobber customers are constantly finding new ways to use the computer tools, ways that aren’t always expected at the outset.)
The benefits can go beyond keeping track of the numbers.
“It’s improved our delivery times by 17 to 20 minutes a delivery,” says Steve Krieger, owner of Barton Auto Parts, Hamilton, Ont., who has a Carrus system in place. “And it has also improved our accuracy.” Why that is has to do with the fact that for many orders, the counterperson is taken out of the loop. With an integrated system, hooking up customers to do online ordering and to generate their own quotes not only makes sense; it makes him wonder why it didn’t happen sooner.
“In the increasingly complex technology puzzle, less actually translates to more when it comes to the number of vendors supplying services,” says Bob Johnson, president, AMS Computer Systems. “An integrated jobber management system is no different from the automotive supply chain, with many components needing to work as one. The days when the point-of-sale system need not be aware of the back-end financial reporting system, or be available to customers for online ordering, are gone.”
Johnson says that beyond the advantages of real-time access to management data, being integrated means that management can avoid making erroneous decisions based on erroneous information. Imagine what happens when a customer’s monthly total is entered as $5,235 when it should be $2,532, or when part numbers suffer from a similar transposition of numbers. It all leads to inefficiencies, which is really another way of saying that it costs the business money.
Going hand in hand with the desire for a more integrated approach is a more integrated approach to system suppliers.
“Installers, just like the jobbers themselves, expect to be provided easy-to-use tools that empower them to streamline business transactions both internally and with their preferred suppliers, and they don’t expect to pay extra for it. In order for these services to be provided, without additional workload for the jobber, systems need to be up 24/7, so that the business is never closed. And, when the inevitable happens, there must be a single point of contact for support, irrespective of the problem.
“This need is what is driving the move towards fully integrated, single vendor solutions.”
Johnson says that this trend goes beyond jobber management systems. Virtually every technology-driven part of our economy is moving toward the single supplier model. You simply have to look at the convergence of phone, Internet and television service providers to see a real world example. With multiple suppliers, if something goes very wrong, you might end up in the middle of a finger-pointing argument while the customer wonders where his parts order went.
Peter Quattro, president of CAPP Associates, says that even when things don’t go terribly wrong, having separate front and back end system suppliers can have other difficulties.
“If the person who has developed the front end does proper integration to the back end, that is fine, but why do that if you can get one that is in fact one piece of software? You know it’s never going to go out of sync because one company has taken [development] one way and another has taken a different direction.”
Quattro adds that given the increasingly complex set of tasks faced by jobbers, and an equally challenging marketplace, integration is really a matter of survival for many businesses. One of the key challenges for the people on the supply side of the equation has been to provide functionality that allows for seamless tracking of returns, credits, cores, inventory, customers, orders, accounts receivable, pricing, and margins, and to do it all in an affordable package.
“Our biggest challenge has been to provide the full-function system to a very small store, at a very reasonable price. They all need it, but can they afford it? We have been doing things to make it more affordable, but they also have to believe that they want to have more control.
“Now if someone is away on vacation and wants to log on to the system, can they see the total picture? If they can they are automated, but if they have to wait for their accountant for two weeks, then they aren’t.”
That much would seem obvious, but added to the financial imperatives is the more human element: does management want that kind of control?
Jerry Fugina, president, Rinax Computer Systems, says that understanding your own business is an important part of the decision on whether an integrated system is for you.
“What we have found over the years is that if you are a mom and pop jobber, the impact of having it integrated, while there is value, really requires some discipline on the part of the jobber and some expertise in accounting.
“If you have many stores, or a single store and a high volume of transactions, it definitely makes sense. Even a single small store can benefit, but not in all cases. With an integrated system, there is no leeway in the process employed. Orders have to be entered the way they are required. Inventory shipments have to be handled the way they are required by the system. That regimentation isn’t for everyone.
“What it comes down to is a question of the staff you have on hand and their understanding of accounting,” says Fugina. The benefit for large and small enterprises is the accuracy of information and the timeliness.
“Your financial reporting is up to the minute. If it’s not integrated, you have to wait till the end of the month. And then it’s some number of days before you can produce your financial reporting, and that is if you have somebody who is on top of it.
“The benefit is that it is more timely.”
“The answer is really dependent on the expectations of the business,” says Quattro. “If it is personally run, like a mom and pop shop, they do everything now. If they don’t aspire to do more, they can technically get by, but not if they want to compete in the future.” He says the trend towards online ordering is snowballing.
And even in smaller centres where technology has arrived more slowly, it’s coming. As the younger technicians come through, they are going to be versed on it.
“Everybody needs to give the [online] opportunity to the customer. If you don’t have that sort of connectivity, you aren’t going to be around very long.”
“We’ve been doing online ordering for five months and process 50 to 100 orders a day,” says Barton’s Krieger. “It has enabled us to be more effective with our counterpeople, because we’re able to listen to individual customer needs.”
Krieger says that rather than counterpeople having to spend the bulk of their time performing tasks that require little of their knowledge, they can spend more time dealing with issues that do require it. And, at the same time, it allows the trade customer to spend as much time as he wishes to when putting together an order. Customers can, for example, check on all their options for parts, selecting from premium to value line, should they so wish. The good, better, best decision process can play out in a way that it seldom does on the phone any more.
“The counterperson doesn’t have enough time to quote on three levels [of product]. In the last year, with the explosion of inventory, we have reevaluated our inventory on what provides the best value. Price is about fifth on the priority list, behind service, quality etc.” And, he says, the move to online ordering has resulted in an improvement in the average margin of sales, for when customers order for themselves, they generally opt for higher-quality products.
And Krieger has been able to track this movement as a result of the integration.
“I can look at the product lines that each individual customer orders.” He can also look at the purchase history, and slice and dice the data in real time, with current data. He is not restricted to broad strokes in his analysis. He can look at how each customer’s ordering patterns might be evolving, maybe even signalling a change for the better, or worse.
“Going forward, it will give us the ability to be better business managers,” says Krieger. “And that gives us the opportunity to work with our customers on how they can improve, too.”
Paul Dossman, vice-president and general manager of KC Automotive in Owen Sound, Ont., says that the approach has added a heaping spoonful of sanity to the business.
“It used to be that the women in accounting were working late at month end, and we wouldn’t get our report for three days afterward. Or I’d be paying people to work on the weekend. Now, on the first of the month the general ledger is up to date and the statements have gone out, and we didn’t even have to be here. At the end of the month, short of not getting a fuel bill or a hydro bill, we know where we stand.”
Dossman says that, short of his penchant for asking his accounting department for reports, the CAPP system the business purchased practically runs itself. And the real-time aspect of the data helps him stay on top of the business.
“On the 18th of the month, say, I can see how my sales and cost of sales and expenses are shaping up. It gives me the information I can react to.” Dossman says that knowing where expenses are at can allow him to plan for the following month if expenses need to be reigned in, and the ability to have current data on returns means fewer adjustments to commission statements, too. Because returns are immediately tracked back to the individual who sold the part in the first place, credits and debits of accounts and commissions happen in the current month rather than requiring adjustments in the following month. And it also allows him to determine whether there is an issue with personnel, inventory, or a particular line.
He agrees that it does require some discipline on the part of the staff. Nothing is purchased without a purchase order, for example.
“I’m probably the worst offender on that,” he laughs. “You can go back and plug a P.O. number in later, but we try not to.” The big benefit, though, comes when you have to match up the orders with the invoices. One, because it is done electronically, the job of stapling stacks of paper has simply gone away. And, because it flags price variances, it brings those to management’s attention so they can focus on those, rather than wading through a sea of numbers just to find out that everything is okay.
“It runs a tight ship. I have reports here right now and everything is right at your fingertips. Even just having the capability to get the statements out on the first of the month is worthwhile. Now I have 50% of my receivables in by the 10th of the month.”
And that is, quite literally, money in the bank.
Scanning for Speed and Sales
One of the technologies that is rising in usage at the jobber level and is linked to an integrated approach is the use of bar code identification.
Tony Belucci’s Lakeshore Auto Parts in Toronto, Ont. is an example of a business that has put technology to good use. Belucci’s business is a single-store operation that puts much emphasis on personal service, but uses technology to facilitate that.
Lakeshore has seen inventory demands rise and change over the years, changes that have required business systems to evolve.
When Belucci purchased Lakeshore in 1992, the business had the Triad Series 12 distribution platform in place. It soon upgraded to an Activant Eclipse store management system, and that was replaced with the Prism system in 2002.
“As a small business, we’re constantly on the run to service our customers,” Bellucci explains. “I rely on my store system to help make the right decisions as quickly as I can.”
One of the technologies that help speed service is the use of a bar code inventory module. Prior to investing in the system, Bellucci’s staff would spend two to three days checking, posting and stocking supplier shipments.
“Now when we get six or seven skids of product, either myself or one of my staff members comes in at seven in the morning, and within 20 minutes has everything scanned and in the computer,” he says. “It used to be a three-person job and now any person can do it alone in less than a half-hour.”
And once scanned, the parts are ready to be sold, so you don’t end up missing sales because the shipment is still sitting on a skid waiting to be entered into the system.
Still, bar code scanning technologies aren’t inexpensive, and many small distributors fail to understand their immediate bottom-line impact, according to some technology providers. “I’m sure there are a lot of small distributors like me who hate the thought of writing that cheque,” Bellucci says, “but our system paid for itself within the first year. It was a great decision.”
“We’re looking for ways to be faster and better in everything we do,” he says. “When you’re a small guy with a reputation for great quality and service, you have to do everything you can to protect and increase those advantages.”
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