Inventory & Accounting ERP Software Blog

Managing Multiple Companies with Wholesale ERP Software

There are many factors to consider when you evaluate wholesale ERP software for your company, such as functionality, on-going support, industry experience, costs and deployment method.  If you have an ownership stake in more than one company, another important consideration is whether or not you need the system to help manage each business and whether or not you deal with inter-company transactions. If you do require multi-company functionality, there are other factors to take into consideration, such as:

What information do you need to see for each company?
How do you need to see this information? Do you need to access information from multiple companies within the same screen? Through specific reports?
Are the companies in the same industry and does it make sense to use one system to manage them all?

The answer to the above questions will help dictate what software solution you implement, and whether or not you need a solution with inter-company functionality.  For the most part, your business will benefit from inter-company functionality when you complete a significant volume of transactions between companies.  There are a number of different transactions that will flow between companies, including the following:

1. Expenses

Expenses are a common type of transaction when dealing with multiple companies.  The idea here is that there are certain expenses that get paid on behalf of each company, but instead of dividing these expenses between companies and writing separate checks, one check is used to pay for all the expenses.  A great example of this type of expense would be rent.  One building may house 3 separate companies, each taking up different amounts of space.  Instead of each company writing a check for their percentage of rent, one company will write the check on behalf of all the others.  From an accounting standpoint, each company still needs to record their proportion of the rent expense.   Wholesale ERP software and inter-company functionality will streamline this process so information is automatically populated across companies.  This eliminates the need for entering data multiple times and reduces the errors associated with doing so.

2. Inventory

Inventory is another common inter-company transaction in which one company either sells or transfers inventory to another. In this situation, you record a transaction for the movement of inventory, but you also have to update inventory quantities.  With inter-company functionality, the system allows you to update inventory quantities on behalf of multiple companies and then recognizes that a corresponding accounting transaction needs to take place.  Proper functionality also accounts for the landed costs associated with actually moving inventory between companies when they are in different locations.

3. Transfer Pricing with Certain Inventory Transactions

Another aspect to consider is the possible need for transfer pricing when dealing with certain inventory transactions.  Transfer pricing refers to the price set for goods and services sold between two related companies, when for any reason the goods cannot be transferred at cost price. The transfer price is then the price paid for by the company buying the product.  The actual transfer pricing rules would depend on several factors, such as laws and regulations and ownership breakdown. There are different ways in which software can address this type of transaction, depending on which company records the transaction and when it gets recorded. For example, does one company create a purchase order, or does another company create a sales order? Do you record the transaction upon shipment of the goods or upon receipt of the goods?

It is obvious how inter-company transactions complicate business processes.  Proper wholesale ERP software and inter-company functionality helps you save time entering transactions across multiple companies and reduces the instance of human error when doing so. Depending on the group of businesses, there are several other factors to consider when evaluating software. Before you start speaking with vendors, consider the following:

Ease-of-Use: How easy is it to switch between companies within the software? Do you have to log out of the application each time and then log back in as a different company?

Inventory Availability: Are you able to see inventory availability for each company easily from within the screen? What if a customer wants to order product that is out of stock at one company and in stock at another – are you able to see this information?

Customer Information: If you have a customer with bad credit history, do you want them to be able to purchase product from one of the other companies? Will you need to look up customer information in the system for each company? Do you need the ability to copy contact details across companies?

Financial Information: Do we need to consolidate financial information across each company? Do you want to pull information from each company into one Profit and Loss statement? Will you have the same chart of accounts structure for each company?

 

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What is an API and How Does it Apply to Business Management?

API is a term frequently used when discussing integration between software applications. Even if you’ve never heard the term before, you’ve certainly been affected by API technology in some capacity – such as when ordering product online from Amazon or accessing information on certain websites. But what exactly is an API and how does it apply to business management? To explain the answer, let’s start from the beginning.

API stands for application program interface and is used to describe a means for systems to interact with one another.  Specific protocols, routines and tools that make up APIs help programmers build software applications and dictate how multiple applications will talk to one another. APIs provide limited information about a system’s internal infrastructure so that outside developers can use the information to build new applications that work with the original system. By limiting outside programmers access to specific information, businesses can integrate with other solutions without providing access to their entire data set/code infrastructure. APIs are typically divided into two categories, public and private. Public facing APIs expose data to the outside world and are readily available to all programmers, whereas private APIs expose data only to applications where specific access has been granted and where there is a relationship between the companies. APIs save businesses resources and time and eliminate the chance of legal ramification when information is not properly shared.  APIs reduce the need to build applications from scratch where the specific functionality or information already exists in some capacity.

The way in which APIs work may sound similar to how EDI works, but the two are quite different.  EDI allows businesses to transact electronic data between members of the supply chain, whereas APIs allow systems to retrieve, change and submit data within applications. APIs provide access to system data and system logic.

With EDI, information is electronically exchanged between systems in a universally understood language. In this situation, information is simply being shared between applications. For example, Walmart can send a purchase order through EDI for an order of product from one of its suppliers.  Both Walmart and the supplier have different formats for reading, writing and storing information based on the specific back-end ERP software they use to manage their inventory and accounting.  With EDI, information sent from Walmart is generated according to EDI standards, and then the supplier can retrieve the information and translate it back into a format that works with their specific ERP system.  This type of workflow will typically will involve the help of middleware to automatically read and translate the information sent via EDI in a format that is readable by both Walmart and the supplier’s specific software. This eliminates the work involved for both companies to send information in different formats depending on the partners in the supply chain.

With APIs, information can be retrieved, stored, changed and submitted depending on the specific communication set-up. In the example above, once the supplier receives the purchase order through EDI and it has been translated accordingly, an API can then populate that information into the supplier’s software system, automatically creating a sales order and also allocating the inventory where possible. Without the help of an API, these steps would be a manual process. In this example, EDI allows the transfer of information whereas APIs take action with the information received.

An API specifies how software components interact and allows two separate systems to communicate and share information with one another. This helps facilitates seamless integration with 3rd party applications and means that once a specific integration has been built, it can be reused over and over again following the same format.

A quick Google search for API provides public API information from a variety of popular platforms such as Google Maps, Twitter, and Instagram.  The idea being that when a system provides developers with API information, those developers can then go and build applications off that technology.  A good example would be how Yelp will show you the location of restaurants using Google Maps.  Yelp developers used Google Maps’ API to integrate maps into their website so that the technology did not have to be developed from scratch. In this situation, Yelp is accessing data exposed by the API.

As discussed above, it is obvious how APIs can be beneficial in a business setting to help facilitate integration across a variety of applications and to share information. Another common business example is eCommerce integration.  Let’s pretend the distribution company mentioned above also sells product online through Amazon. In this situation, APIs are used to dictate how much information and how often that information is shared between the distributor’s back-end ERP solution and Amazon. The ERP solution provides access to its private APIs so that Amazon can call information from within the ERP and then share information back.  In this situation APIs help share information both ways and also manipulate the information being shared.  Information is passed and manipulated from the ERP system to Amazon in terms of inventory availability, pricing details and product descriptions, and then from Amazon to the ERP in terms of order information, shipping details and payment information. When information is shared in this way, and API logic is accessed, information from both the ERP and Amazon gets automatically updated and populated within each system, eliminating the need for manual data entry. An API can be set up so that changing the description of a product in the ERP system automatically triggers an event to change the description of that same product on Amazon. When dealing with eCommerce integration between an ERP system and online store, there is frequently involvement from a 3rd party integration company to set this up.  This allows both the ERP vendor and eCommerce company to focus on their core competencies, and leaves the integration to a company like Virtual Logistics that specializes in integration across platforms and applications.

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Pharmaceutical Accounting Software for Start-Up Distribution Companies

If you want to start a pharmaceutical distribution business you must first purchase a license to sell product.  After you’ve acquired your licenses, you are then responsible for following specific guidelines in accordance with industry regulations around product traceability, supply chain management, and reporting. The licenses you acquire dictate what type (class) of product you can sell, and to what geographic location, and then the guidelines in place will vary depending on this information.  In general, regulations are based on specific types of products such as over-the-counter drugs, prescription drugs, and controlled substances.  Agencies such as the FDA are responsible for monitoring licenses and ensuring that each distribution company adheres to the proper regulations.

So, how does a company ensure they comply with regulations? The best solution for managing these requirements is to implement pharmaceutical accounting software as soon as possible.  Pharmaceutical accounting software not only helps your business comply with regulations but also provides tools for managing all other aspects of the business, including accounting, order entry and processing, customer relationship management, warehouse management, inventory and more. Given the nature of the industry, it is important that any system you implement is supported by a vendor who actively monitors changes to regulations in order to add new functionality as needed.

As a start-up business, finding the funds and resources necessary to implement software can be difficult, but the idea is that the right solution will help your business grow and reduce costs in the long term. It is important to compare any costs associated with the software against the costs of manual processes – in terms of the effort it takes to comply with regulatory requirements and the potential consequences in the event of human error.

Once you have applied for your licenses it can take a while before they are approved. However, this waiting period is the best time to start searching for appropriate software, so that you have a solution in place as soon as possible after you receive your licenses.  Ideally, you want a proper solution in place before you purchase product and receive items into your warehouse.  One of the biggest mistakes companies make purchasing pharmaceutical accounting software is underestimating the time it takes to evaluate, select, and then implement the software. Even as a start-up business, this process can take anywhere from 3-6 months which is why it is important to start extensive research and engage in discussions with vendors while waiting on your licenses to come through.

As soon as you receive inventory into your warehouse, regulations come into play. Once again these regulations will depend on the licenses you have, but requirements from a functionality standpoint center mostly around product pedigree, traceability, reporting and customer license management. At a minimum, you want functionality to track lot numbers and expiry dates of products, identify vendors along the supply chain to track the specific product back to the manufacturer, automatically generate and send reports to specific governing agencies and ensure that your customers have a valid license to purchase the product being sold.

Keep in mind that it is hard to coordinate the timing of receiving your licenses with implementing software and purchasing inventory.  This is especially true given that software implementations do not happen overnight.  However, even if you have to manually manage processes in the beginning, the sooner you get a new system in place the better.

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Hosted and On-Premises Software: Total Cost of Ownership

When your business decides to purchase inventory and accounting ERP software, the great debate remains: should you implement a hosted solution or on-premises?  For smaller organizations, the answer is obvious – when you compare the total cost of ownership per year, hosted software will almost always end up being the most economical choice (as shown in Graph #1).  Some software vendors do not even give you the option, but instead only offer hosted/cloud-based solutions. However, there are some instances where a cloud-based solution is just not feasible – for example, businesses in rural locations without a reliable internet connection, and for larger organizations, on-premises solutions can be the better option. Either way, it is important to fully understand both options and the implications they will have for your business. Hesitation regarding hosted software frequently stems from a lack of understanding and concerns regarding data security issues. However, even though data security will vary by the software vendor, the security and provisions put in place by vendors in general will be more than what you can provide in an on-premises environment.

Although “small business” is a relative term, it is often used to describe companies with a small number of employees, limited resources, low order volume and moderate revenues.  For these types of businesses, a simple comparison of costs will almost always show cloud-based solutions as the more economical choice, but let’s break down exactly why that is.

When you compare hosted and on-premises solutions, it is important to include all costs associated with maintaining the system year-over-year, and it is best to track the total cost of ownership over a 5 year period.  Evaluating the costs after year one is not a good assessment of which is more economical as it does not take into consideration all the costs associated with maintaining the system in the long run.  Given that software is designed to be a long-term investment, it is important that the costs are evaluated as such.

Hosted Costs

For hosted software, year 1 costs will typically include initial implementation and set-up, monthly license fees and support.  On-going costs are then made up of licenses fees and support, as maintenance fees for warranty issues and access to regular upgrades are built into the monthly fees. Under this model, IT maintenance and data backups become the responsibility of the software provider and powerful server hardware is not required. A subscription-based cost structure is beneficial for small businesses as it allows it to gain control over its software expenditure. Instead of a large initial investment, the costs of the system are broken down into a one-time implementation and set up fee and then on-going monthly fees. This allows businesses to plan and implement a predictable schedule of monthly payments.

On-Premises Costs

With on-premises software, year 1 costs will typically include initial implementation and set-up, license fees, support, and hardware and equipment purchases and management. On-going costs are then made up of managing the system infrastructure, support, and maintenance.  It is frequently these on-going costs that are not accounted for properly in the long run, but they have a huge impact on total cost of ownership.  One of the more costly aspects of on-premises implementations is server and equipment purchases and maintenance, especially for small businesses. Even if you don’t originally need to update your servers when you purchase new software, this equipment will need to be replaced give or take every 5 years and doing so can be very expensive. There are also costs associated with managing these servers, such as data backups, performance monitoring, patch installation and other software license purchases. Software maintenance is another on-going cost associated with on-premises solutions.  Implementing the right software system is a long term investment and maintaining an active warranty with regular access to upgrades will help to ensure that it is.

For those smaller organizations that choose to implement on-premises based software, the management of servers is frequently outsourced to a 3rd party IT company or someone is hired for the role.  This adds extra costs to an already expensive project and takes resources away from growing the business and managing existing customers, to managing IT.  For larger organizations, there is frequently already a team of in-house IT personnel who are able to dedicate their time to server and equipment management.

Technology and the business environment are two of the fastest changing aspects of our world and so it is increasingly important to make sure that your business is always taking advantage of the best that your software has to offer and that your software matches the business requirements of the time. Trying to save money by not upgrading your hardware or system on a regular basis can affect company performance and your bottom line.  When used and maintained properly, software becomes a strategic investment to help run and grow your business. As a small business it is especially important to invest in a system and software vendor that can become a trusted business partner, offering expert advice to help your business save costs, increase efficiency and take advantage of new opportunities.

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3 Types of People that Impede Accounting ERP Software Training

Software training is one of the most important aspects of the accounting ERP implementation process and is also one of the most costly and resource-intensive. This is especially true for businesses that transition from introductory software such as QuickBooks, or manual processes, as there is a significant learning curve when it comes to using true ERP software.  Unlike introductory systems, accounting ERP is designed to manage all aspects of a company’s operations from accounting, inventory management and order entry and processing to contact management and warehouse management.  As an all-in-one solution, accounting ERP is designed to automate processes and increase efficiency.  To best take advantage of the advanced functionality available, your team will be required to have a better understanding of accounting principles and good business practices.

The costs and resources required to properly train your team of employees will be worth the productivity gained from a successful implementation. When employees have received sufficient training and feel confident using software they will rely on it more to complete their tasks.  This will result in less time wasted learning how to use the system every time a new task needs to be performed, and can help automate previously manual processes, reducing the instance of human error. With all the benefits to be gained from properly training employees, it is important to identify and plan for issues during this process.  Every company is made up of employees with different personality traits, learning styles and attitudes, so it is important to develop the plan for training that will work best for everyone involved. Even when you have provisions in place to help make the training process as smooth as possible, you will still receive some negative push-back from employees.  Below we have outlined certain personality types to watch out for during training in order to make the process as successful as possible.

Negative Nancy

We all know a Negative Nancy who always sees the glass half-empty, seems to complain about everything and is never content.  This type of person can dramatically drag down company morale, stall projects and suck energy from a room.  If you’re dealing with a Negative Nancy during an ERP training session it can add to the stress of an already high-pressure situation, ultimately hurting the outcome.  However, Negative Nancy can also force you to remove any rose colored glasses and address issues head-on.

Although resistance from employees is a natural reaction to business change, when you have a Negative Nancy on your team the amount of resistance can become amplified. People with this mindset will not only strongly resist changing their processes, they will also complain about learning new technology and not make a conscious effort to learn the new system.

In order to avoid any issues when dealing with a Negative Nancy during training, it is important to first address all those involved with the accounting ERP project to review the plan for implementation. Make sure everyone on the team understands their responsibilities during the implementation and ensure that they have the resources in place to learn the new system while still keeping up with their regular responsibilities. Acknowledge the fact that there will be a significant learning curve involved with the new system, and come up with a plan that allows employees to voice their concerns in a constructive way.  Create a process for employees to document any issues they experience, but only if they also recommend a suggestion for dealing with these issues.  This ensures employees think of the solution and not just the problem, and will force them to think more critically about their comments.

Analytical Anne

Those we refer to as Analytical Anne are characterized by their attention to detail, analytical way of thinking and interest in technology.  These people are great to have on your team but can sometimes get too caught up in the details, which can ultimately delay and hurt the software training process.

Analytical Anne has very good focus in order to complete tasks and never misses a detail. This type of person understands complex processes and systems and can help train other employees from your company.  They have a very curious nature and will want to ask a lot of questions of the software vendor to make sure they fully understand the system.  However, their interest in every minor detail can lead to schedule delays and general irritation from other teammates.  Analytical Anne can get too caught up in the details and will want to know and understand every aspect of the software right away.

In order to keep implementation training on schedule, only involve Analytical Anne personality types when necessary, and make it clear that additional training can be provided at a later date as required. It is impossible to learn all the nuances to a new software solution in the short amount of time dedicated to initial training, and employees will only be able to take in so much information at once.  Set a specific schedule for the initial training process with the most critical tasks, and ensure you stick to it – even if this means not allowing Analytical Anne employees to ask all of their questions.  Most vendors will provide additional training resources in the form of video or written tutorials.  Have Analytical Anne review these resources after initial training, making note of any questions as they arise, to be answered after Go-Live.  Often these questions will be answered from reviewing the available material, or after employees have started to use the system on a regular basis.

Defensive Dave

Defensive Dave is the non-management employee who got assigned the task of managing the accounting ERP implementation project.  They have been at the company for a long time and know the ins and outs of each department.  They have a good relationship with everyone on the team, and will frequently volunteer to help with special projects. However, due to the magnitude of any ERP implementation, Defensive Dave will quickly become overwhelmed with the project assignment and the resulting defensive attitude can cause issues for the project as a whole.  This issue is magnified if the management team and owners have taken a hands-off approach to the implementation and Defensive Dave does not have anyone to turn to for help.  Because Defensive Daves do not want to look bad when the project starts to get off schedule, they will frequently place blame on the vendor and software system itself.  This will increase resistance to change from other staff members and give the new system an unwarranted bad rap.

To avoid creating a Defensive Dave, form a team of people responsible for the entire implementation process and involve as many owners and members of management as possible.  Have a team lead in place, but ensure the responsibilities of each team member are clearly outlined and accounted for.  Stick to the original implementation plan set out and agreed upon by the team and vendor, so that employees and Defensive Dave do not become overwhelmed with new information and processes.  Remember that additional training and consulting time can always be scheduled after Go-Live.

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Wholesale Distribution Software: Implementation Wish List Process

When you implement new wholesale distribution software, it provides a great opportunity to also evaluate existing processes with a view to increasing efficiencies and reduce costs.  This is especially true for businesses moving from introductory software and manual processes, and for those who lack specific functionality such as inventory management.  The first step in identifying process improvements will start during initial sales discussions – assuming each vendor takes the time to understand your existing processes and business requirements. A vendor with experience in the wholesale and distribution industry will then use this information to help identify specific opportunities for improvement based on their industry expertise.  This information will also help provide a benchmark for measuring ROI once a new system is up and running, in terms of certain advantages such as number of hours saved performing a task and number of errors reduced. However, during the actual implementation process, it is easy to get caught up trying to use a new system with old processes.  Although there will always be certain processes that get performed the same way, it is important to be open to change as to best take advantage of the functionality offered by the new software.  If there are certain processes or features you would like to see emulated within the new system, consider creating a Wish List during the implementation and then following the Wish List review process as outlined below.

Step 1: Work with Employees to Improve Processes

First and foremost – and before you even suggest creating a Wish List during the implementation process – it is important to define the project’s objectives for the company as a whole. As with any major organizational change, when you implement new wholesale distribution software, this will cause push-back from some employees. If employees are used to performing tasks a specific way, it is often difficult to get them to change and break their habits.  To mitigate this resistance, it is best to involve employees throughout the entire software search process to collect feedback and get input on specific functionality that will help improve existing processes.  The idea is that the right system will not replace existing employees, but will automate specific tasks so that they can focus on more productive work and less on mundane tasks.  This, in turn, will provide employees the bandwidth to take on a heavier workload, without having to hire extra staff in the future.  Once a system is selected, continue to involve employees in changing processes and using software to automate procedures.

Step 2: Document All Non-Critical Functionality Requirements on a Wish List

Now that you have made it clear that part of the software implementation plan is to improve upon existing processes, it is time to introduce the idea of a Wish List.  Even though employees should be open to changing their processes as per Step 1, it is still common for them to become frustrated during the implementation as they see how certain tasks will be performed differently. This can then lead to them asking for specific functionality or reports as part of the new software.  When this happens, it is common to immediately involve the software vendor in creating a work around or customizing the system, however, this is not the best approach.  Instead, in this situation have employees write down these ideas and store them as part of a Wish List for later review.  This allows the software vendor to focus on the core aspects of the implementation – which includes training and set-up – without getting pulled away to work on other projects. To best manage this Wish List, have one employee take ownership of storing these ideas and encourage all employees to make note of all requirement requests, no matter how big or how small. The idea is that the items put onto the Wish List are for non-critical pieces of functionality. Unless the required functionality being sought physically prevents someone from performing their job, it goes on the Wish List – no matter how important an employee believes that specific piece of functionality to be.

Step 3: Review Said Wish List 1-2 Months after Go-Live

After the business has been up and running on the new system for 1-2 months, it is then time to go back and review the items from the Wish List.  In most cases, you will find that the majority of the items on the Wish List are no longer relevant.  Employees have become familiar with new processes and the software has started to provide automation opportunities across departments.  If there are still items on the Wish List that you would like to have implemented, speak with your software vendor to schedule a time to review the specific requests.  Two of the major benefits to following this process are:

Software vendors are able to focus on training and implementation during the time they are on-site with your team. This ensures that employees feel comfortable using the new system to complete their tasks and improves the implementation process.
Extra work is not being performed that is unnecessary. During the implementation process, employees can become obsessed with using the software in order to perform their responsibilities exactly as before, however, this defeats the purpose of implementing a new system.  Frequently, a couple of weeks using a new system and adjusting processes is all it takes for employees to be productive on a new system.  Time is often wasted on what employees believe to be crucial processes during the implementation, but most of these requirements are usually dealt with in a new system or end up being unnecessary.

 

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5 Things to Know Before You Speak with Distribution Software Vendors

Evaluating software is a time consuming and resource-laden task.  With so many options in the market, it can be difficult to narrow down your search and distinguish between all the systems available. When you do finally create a list of potential distribution software systems to evaluate, you must then dedicate hours of time to actually speak with vendors and watch demos in order to make a decision.  Although the search process will always require significant work, to make conversations with vendors as productive as possible, do your homework beforehand. Many distribution type businesses will require similar functionality, however, it is important that you have a good understanding of how your company operates in order to have meaningful conversations with each vendor.  What might be an obvious piece of functionality or requirement to you, could be unique to other distributors in the industry.  The more information you can provide each vendor upfront, the easier it will be to narrow down your options throughout the process.  The right vendor will spend the time to get to know you and your company in order to make their own assumptions about whether or not the system will be the best fit for both parties.  You want to find a vendor who has experience working with distribution businesses, but also spends the time to learn about your specific requirements and processes.  In order to best prepare ahead of time for each software discussion, consider the following:

Number of Users

Certain introductory systems set costs and limitations based on transaction volume, number of workstations and data file size, however, as you begin to look at middle-tier software these restrictions and cost structures no longer apply.  Instead, distribution software vendors will quote a price based on the actual number of employees who access the software and required functionality.  However, in order to determine how many user licenses you need to purchase, it is not as simple as just counting those who access the software.  Instead, you must also take into consideration the ways in which each employee will interact with the system. Are some users sales reps who travel out of the office? Are some users people in the warehouse who pick, pack and ship orders? This information is important to consider as certain vendors will have different user licenses available depending on the functionality and system access required.  Alternatively, certain vendors will also offer specific functionality designed for certain types of users, such as travelling sales reps.  For example, many distribution businesses employ outside sales reps on a contract basis.  In this situation, these reps may only require access to inventory information and the option to enter orders from the field.  A company may also want to specifically restrict these reps from accessing the full distribution system, in which case functionality such as an online order portal would work instead. This will, in turn, reduce the number of users who require a full license to the system.

Sales Channels

Many distribution businesses who historically only sold product through their in-house or outside sales team are taking advantage of selling through multiple sales channels, such as eCommerce and through retail showrooms, both to the end consumer and to other businesses.  It is important to know what sales channels your business utilises and the volume of orders per channel, to better determine what functionality is most beneficial in a distribution system. If you sell online through your own website or other marketplaces like Amazon, consider distribution software that provides integration with each website.  This will allow you to share information between the two and reduce manual processes.  If you sell product directly to customers who visit your location, consider implementing point of sale software in order to create orders and accept payment.  However, this is where order volume is also an important metric to know.  If the volume of customers who visit your location to place an order is fairly small – do you need a full point of sale system or can you enter each order directly into your distribution software? Do you need to be able to accept payment for these orders or will they get entered on account?

Number of Locations

Another important factor to consider when you speak with software vendors is how many locations the business has.  If you have multiple locations – do these all operate the same? Some distribution businesses will have multiple warehouses and might even have their own brick and mortar retail stores.  In the case of multiple locations, are they owned by the business, or are they third party logistics companies? Does the company transfer inventory between the locations? Each of these factors will play a role in finding the right distribution system.

Preferred Deployment Method

When implementing distribution software you will have to decide between a cloud-based or on-premises deployment. If you have a preference, this can help narrow down your search in the beginning as certain vendors will only offer one option. If you do not have a preference going into discussions, make sure you do some research beforehand on the pros and cons of cloud vs. on-premises software.  Cloud-based solutions are typically based off of an on-going subscription model whereas on-premises solutions usually require a large upfront investment.  Certain factors can help aid in making the right choice about deployment such as budget, available IT resources including personnel and infrastructure, internet access and physical storage space.

Reasons for Shopping

It should be fairly obvious that before you start searching for new distribution software you need to have a valid reason for doing so, but this is not always the case. A clearly defined motive for finding new software will aid in making the best decision and provide a way to measure ROI once a new system is in place.  If you want to automate processes and save time, make sure you know how many hours of work are currently dedicated to manual processes. If you want to reduce the use of paper in the warehouse, know how much is currently being used and in what capacity. A clear picture of the pain points and opportunities you wish to address with new software will help keep the search a priority so that you find the right system within a reasonable time frame.

It is important to consider all of the above factors before you start the search for distribution software in order to make the most of your discussions with software vendors.  Of course, there are several other factors that you will want to also address right away, especially if your business has specific unique needs.  This can include the need for the system UI to be available in multiple languages, specific functionality such as lot tracking and catch weight, and remote access. Be sure to ask vendors about specific requirements, and never assume they will have the functionality you need built right in.

 

 

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Business Management Software: When to Ask for Customer References

With any major purchase it is good practice to evaluate reviews and speak to references whenever possible. This is especially the case with any major business purchase, such as business management software. When searching for a new system, it is best to narrow down your options to 3-6 vendors as a starting point for evaluating the software as well as the vendor itself.  Certain factors, like cost and functionality are obvious areas of comparison, but you will also want to consider factors such as ongoing support, company size and customer satisfaction.  The best way to evaluate customer satisfaction is to actually speak with some of the vendor’s existing customers, and while you may want to get this information during your initial discussion with each vendor, it is best to wait until a later date.

Example: Pretend that you have narrowed down your search to 6 software vendors, and each vendor provides you with information on 3 references during your initial discussion.  That means that over the next several days or weeks, someone from your organization is going to have to contact and speak with no less than 18 references (assuming all are contacted).  Most of these references will confirm a happy outcome and satisfaction with the vendor, and so the final result will be many hours of conversation to determine that you have correctly narrowed down your options.  But is this information going to help you determine which business software is best for your company?

Even if the above scenario is a bit of an exaggeration, you get the point.  You might be able to glean some useful information from speaking with references right away, but usually not enough to actually eliminate any given vendor.  A faster way to find similar information is to simply spend some time searching online for vendor reviews; you can get a lot of the same information without spending as much time doing so. This can aid in a more thorough software evaluation and then actual references can be contacted at a later date.

A better way to eliminate the various business systems being considered is to perform a comprehensive evaluation process on each vendor and system in question. Although each vendor will have their own recommended process, a good strategy to follow includes:

Step 1: During the first step in narrowing down your software options, a good vendor will try to schedule an initial and short conversation in order for you and them to get an idea of scope, needs, costs etc. at a high level only.  This allows each party to identify any red flags or show-stoppers right off the bat. Be wary of a vendor that jumps right into a demo of their product as the first step in the process – although software UI is an important factor to consider, it should not trump a system’s ability to meet your needs, and a vendor that understands your business and can help you achieve your goals.

Step 2: Assuming no issues are identified during Step 1, a good vendor will then schedule a more in-depth discussion to further review processes and requirements.  This will provide information on existing processes and needs and the primary pain points and benefits to be addressed by a new solution. This discussion will then allow you to further narrow down your list of potential vendors and eliminate those who would not be a good fit.  During this conversation it will become evident very quickly if the software being offered can meet your company’s needs.  Be cautious of too many responses of “we can do that”, and find out the specifics of how certain functions will work for your business.

Step 3: The next logical step will be a demonstration of the software based on specific information gathered during Step 2. Each demo should be no longer than 1.5 hours and with no more than 2-3 vendors, in order to avoid information overload and fatigue. Make sure that before going into a demo you have outlined and discussed with each vendor a specific agenda to follow, and try to stick to that during the presentation.  It can be easy to get bogged down with certain features and processes, but focus on the bigger picture and which features will be most important.

Step 4: The next step will vary based on the company in question, but is usually reserved for subsequent demos and discussions to focus on specific areas of the software, or processes that have been identified throughout the first couple of steps.  By this time you should only be left with 1-2 vendors as potential options for your business.  It is at this point – and while you’re also ready to receive a formal proposal from each of the vendors – that you will want to ask for Customer References.

Most software vendors will offer 3 references, and most of these references will only have good things to say about the vendor in question.  However, to get a true representation of what the vendor is like to work with and how good their software is, ask instead for more references (even if you don’t actually plan on calling them all).  In addition, ask for references from customers currently using the software that have had issues in the past (such as implementation or support issues). Every vendor will have customers who have been dissatisfied at some point or another: it is important to speak with these in order to understand how the vendor then addressed the issues.

Customer references are a vital step in the evaluation process of implementing business management software, but it is best to request them once you have already determined which systems will be the best fit from a functionality standpoint.   Don’t waste time speaking with references if the software has not been determined to work for your company.

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POS for Wholesale Businesses: What to Look For

Point of Sale (POS) software is not just for use in traditional brick and mortar retail stores.  Many wholesale businesses can also benefit from POS functionality when they also operate as a cash and carry, have a showroom for walk-in customers or have separate retail locations. In these situations, businesses often start by assessing point of sale software that can also help run the wholesale side of the business.  However, this can often lead to gaps in required functionality and a better approach is to look for back-end inventory and accounting ERP software with built-in POS functionality. An ERP system will provide tools to manage back-end processes such as inventory, purchase orders, sales and financials, while POS functionality will allow users to create orders and accept payment on the front-end.  In addition, ERP systems often include specialized features that are designed with specific processes and businesses in mind, such as lot tracking, eCommerce integration and landed cost tracking.   Although POS is an important piece of functionality for any business selling directly to the end customer, it should not be the first consideration for wholesale businesses when evaluating software.  An all-in-one ERP solution with built in POS will allow a wholesale company to manage sales from all channels – not just retail – such as eCommerce, tradeshows, EDI and external and internal sales reps. Having information stored in one database means that inventory information is always up-to-date so you’re not able to sell product you don’t have – no matter what channel you’re selling through.

Just like standalone POS systems, ERP with POS functionality is designed to work in-store with barcode readers, cash drawers, receipt printers and display poles to allow businesses to process debit, credit and cash sales. POS for wholesale businesses often means having POS stations set up at the front of your warehouse as a cash and carry business, within your showroom or even as part of your display when exhibiting at tradeshows. If you operate multiple retail storefronts, the right software will be able to pull reports based on individual location performance, or consolidate information across the entire business.

When evaluating ERP with POS, specific functionality to look for includes:

Ability to support payments in multiple currencies including split currency payments
Ability to support split payments between types of payments such as cash, credit card, gift card and others
Ability to support payment on account – this is especially important for those who wholesale product in which their customers maintain a large balance on account
Automatic calculation of sales commissions
Inventory detail lookup including multiple warehouse locations, items on order, items on backorder etc.
The ability to manage multiple ‘in-progress’ transactions on the same terminal
Integration with back-end ERP in terms of GL, AR, inventory, customer information, pricing, commissions, booked sales reports, taxes and more

Another important piece of functionality to look for is offline access in case of a connectivity issue. The ability to work offline means employees can continue to process orders while customers are still in-store. Once an internet connection is re-established, any new orders will be automatically uploaded into the back-end ERP system so that information in the database is resynced and up-to-date.

If you sell through multiple sales channels as a wholesale business (including retail), POS software is not the only type of system you will need.  Instead of implementing multiple, standalone solutions, focus your search on ERP with built-in POS functionality. This means all information is stored and managed in one database, and eliminates the need to enter information into multiple systems.  This in turn will save users time looking up information and entering data, and thus reduces the amount of errors associated with doing so.

 

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5 Questions Small Business Owners Should Ask When Searching for New Inventory Management Accounting Software

As a new business, one important consideration to make is what (if any) business management software is required.  For most small wholesale and distribution businesses, this usually means acquiring software for managing accounting procedures and then using manual processes or Excel for tracking inventory and other business processes.  However, as your company grows and evolves over time, there will come a point where making a strategic investment in more robust inventory management accounting software is important to continue to be successful. Once you have made the decision to start looking for new software, take the time to evaluate your existing processes and future plans, and educate yourself on the software options available to you in the market.  Speaking with multiple vendors and spending the time having detailed discussions and viewing demos can become overwhelming if not properly prepared.  As part of your search process, consider the following before engaging with potential software vendors.

1. What is the reason you’re searching for software?

Are you searching for new software as a strategic investment and because you believe in the productive power of technology and applications? Or are you searching for software because you feel it is time to make a change? As you begin to plan for company growth and expansion, consider the implications software can have on helping you achieve your business goals and meet your growth projections. The inclusion of more advanced software within your business plan can help make sure you have ample time to find and implement the right solution, before your processes become unmanageable with your existing system. In order to best prepare for implementing advanced inventory management accounting software, it is important that you understand the limitations of your existing software.  Knowing when to transition systems will depend on several factors, such as:

An increase in transaction and order volume. Does your existing system have limitations on the amount of transactions it can handle and size of its database?
Need for additional features. As your business grows, it is likely that you will require additional features to accommodate selling through new sales channels, opening multiple locations and expanding to new geographic markets.
Opportunities for automation across departments. Manually managing specific tasks can start to hinder company growth as you experience an increase in order and transaction volume, and can result in time spent fixing errors associated with using multiple, standalone systems.

 2. Is your company ready to accept new software?

When implementing any major change within your company, it is expected that there will be some resistance by staff.  This can often be one of the biggest barriers to overcome and is a natural reaction for those used to certain processes, however, it is also something that can be easily addressed by management with the right preparation.

First and foremost, be prepared for this resistance and start by educating employees on the differences between introductory type systems and more advanced inventory management accounting software.  Explain how making the switch will benefit the company as a whole.  One of the biggest reasons why employees are resistant to change when it comes to software is because they are afraid they will lose their jobs.  Another reason is because they are also worried that they will not be able to do their jobs with a new system.  Although implementing more advanced software can save you from having to hire more employees down the road, typically it does not replace existing employees.  Instead the idea is that the right system will replace the more mundane and administrative tasks those employees are responsible for, and provide new features previously unavailable.

Getting your employees on-board for new software and internal changes requires:

Clearly illustrating the need for change and how it can have a positive impact on the company as a whole
Involving employees throughout the process of selecting a system and changing procedures
Making incremental changes and setting realistic expectations – let employees know that there will be a learning curve involved in getting used to new software, and that the company is prepared to help manage this
Provide as many resources as possible to support the change, including proper training material, a channel where employees can voice concerns and on-going support resources

3. Is the system right for your business?

When you start to evaluate software you want to make sure you find a solution that is right for your business.  This means being open to hearing from a variety of vendors and approaching the search with a thorough understanding of your existing processes, and requirements moving forward. Although cost is an important consideration when evaluating vendors, focus first on specific functionality and industry experience, as well as cultural fit.  Does the vendor have experience with companies in the same industry? Do they have additional functionality that can be added on as your business continues to grow? Although you might not need all the bells and whistles upfront, understanding the direction you want to take your business in the next couple of years will give you a better idea of specific functionality you may require down the road.  It is also important to evaluate vendors based on their company size, on-going after sale support and customer satisfaction.   You want to work with a vendor that can become a trusted business partner, offering expert advice to help your business save costs, increase efficiencies and take advantage of new opportunities.
Download our eBook: 6 Factors for Evaluating Software Vendors
4. What is the Total Cost of Ownership (TCO)?

Another important factor to consider when evaluating different inventory management accounting systems is the total cost of ownership over a span of several years.  This often comes into play when deciding whether or not to implement a cloud-based solution or on-premises based solution. Although there is no easy answer as to which deployment method is best for your business, there are certain instances when one may be more appropriate over the other. Aside from some of the pros and cons of infrastructure management, it is also important to evaluate long-term differences in costs.  When speaking with vendors, get them to help you prepare 1 year, 3 year and 5 year TCO analysis of each deployment method to better determine which one is the best economical choice for your business.  Specific factors to include in a cost comparison are:

On-going monthly fees
Maintenance costs
Initial server set-up and implementation
Back-up media and on-going server management
Server hardware
Other software licenses

 5. How will you measure Return on Investment?

When investigating a possible inventory management accounting software purchase, some companies try to use the return on investment (“ROI”) as a tool to justify the project, select a vendor, and/or measure the project’s success. This is typically seen more so with larger companies as opposed to those in the small-medium enterprise space, as it can be difficult to quantify some of the expected benefits – particularly when the project is part of a strategic plan to aggressively grow the company. There is also a debate to be had over the validity of trying to build an ROI model for software implementations that result in an annual spend of less than 0.5% of revenue.

However, assuming the implementation is at least moderately successful, one simple way to ensure that your company maximizes its ROI on a software investment is to use it properly. Although this seems like an obvious answer, it is surprising how many businesses implement new software and then continue to use old methods and work around the new system.  To avoid this issue, make sure you follow up with your vendor of choice a couple of months after go-live on a formal and scheduled basis, to discuss using the entire system properly, and to make sure you’re taking advantage of available functionality.

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Accounting Wholesale Software: Profit and Loss Monthly Reporting

Picture This:  Your wholesale and distribution business has been up and running for a year now, and in that time you have been successfully entering all of your transactions into your all-in-one accounting wholesale software.  The system is showing that you have a lot of money in the bank, and therefore the company must be doing well, right?

Not necessarily.  No matter what business you’re in, money in the bank is only one part of the picture when it comes to measuring a company’s overall health.  An abundance of cash can be the result of much more than just sales revenue, and money in the bank could come from a loan, an initial contribution by the company’s owners, or a recent influx of payments due on accounts receivable.  However, just looking at cash in isolation does not take into consideration other important factors such as interest or payments due on the loan, your accounts payable balance and other expenses and credits owed.

In order to get a better understanding as to how your business is actually performing, there are other metrics and data points that will need to be evaluated.  Most accounting wholesale systems will provide specific tools used to report on overall/departmental company performance and health.  For example, certain systems will automatically calculate specific financial ratios based on numbers pulled from the GL, allow users to review general ledger details, generate reports on specific business activities and create financial statements such as balance sheets and profit and loss statements (P&L). While some combination of the above can usually give you good insight into how your specific business is performing, P&L statements are especially useful in doing so.

You may have heard the term P&L before with a different name – Income Statement.  Both refer to the same type of statement which covers a period of time, usually a month, quarter or year and provides insight into a company’s revenues and expenses.  The revenue section depicts the income earned from the sale of product or delivery of a service.  In the case of a wholesale distribution business, the Cost of Goods Sold (COGS) is then deducted from the income.  The resulting difference is referred to as Gross Profit (or Loss if negative), and reflects the profit the company has made on the sale of product, without taking into consideration the costs of operating the business.  Operating expenses is where the next section of the P&L report comes into play.

All expenses of the business other than COGS are reported below Gross Profit, often in detail by type of expense (i.e. advertising, rent, salaries or travel).  These expenses are then added together and the total is subtracted from the Gross Profit.  The result is the company’s Net Profit (or Loss) for the specific period being reported on.  This allows a business owner or manager to see if the company has made a profit for that particular time period, how much of that profit came from the sale of products and how much it was lessened as a result of operating expenses.

If the P&L shows a profit for the specific period, than great – the company must be doing well.  Once again though, this is not necessarily the case.  Evaluating P&L statements over multiple periods can give you a better indication of company performance, compared with just evaluating one period in isolation. This is why it is important to find accounting wholesale software that allows you to easily create and review P&L statements on a regular basis, such as once a month.

Example:

If you were to take a look at your P&L statement this month and see a $15,000 profit, this would probably make you pretty happy.  But would you be just as happy if you then looked at last month’s P&L report and saw a $30,000 profit?  This information might result in some questions such as:

Why did my profit drop 50% from last month?
Was last month’s profit amount an anomaly or is this month the anomaly? Or neither?

Evaluating and comparing your Profit and Loss statement period over period, can provide indications of the health of the business, growth direction and also highlight reasons for differences between periods.  In the scenario just discussed, a quick look at the expenses may show a $10,000 increase in tradeshow expenses and a $5,000 increase in travel expenses in the current period over last period.  Everything else being relatively consistent, that could be the reason for your decrease in net profit.  If tradeshows are a one-time expense every year and usually help generate future revenues, it might be safe to assume that the P&L results are not showing a trending decrease in revenues.

Reviewing P&L statements period over period and especially month over month can allow you to see trends as they occur, giving you the opportunity to try and fix any negative ones and take advantage of opportunities. Monthly P&L statements can also highlight anomalies associated with certain business transactions and they can aid in catching posting errors close to when they occur.

In summary, looking at any piece of financial information in isolation may provide some benefit, but the better option is to review specific information over a collection of periods, and to combine that with reviewing other complementary financial information and departmental data.

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Preparing Your Wholesale Distribution Business for Global Expansion

Expanding your business to serve the global market can refer to many different things, such as: opening new physical locations, working with 3PLs in different locations, importing product from new suppliers and exporting product to new customers.  Many businesses are already operating in a global capacity through eCommerce sales – both on the Business-to-Business and Business-to-Consumer side.  Whatever the situation, it’s important to make sure that you have the proper systems and processes in place for managing the complexities of working with people and businesses from other geographic locations.  Frequently, global expansion is part of a strategic plan to grow a business which requires an internal review of current operating procedures.  Do you have the systems and resources in place to handle this growth? If not, it is time to start evaluating your options.  When it comes to managing growth, a business’ first instinct will often be to hire more employees, but consider implementing more advanced distribution inventory software instead. The right solution can help you grow above and beyond hiring an additional employee and will automate many other tasks across the business. Find a system that provides functionality for managing operations across different geographic locations and has experience working with companies who import and export product. Specific functionality to look for includes:

Multi-Currency: An important aspect to operating on a global scale is the ability to handle multiple currencies. When buying from and selling to different markets, it is important to record transactions using appropriate foreign exchange and to be able to manage multiple currencies for banking and financials.  The right system will allow you to set currency defaults by customer and vendor, and convert transactions from the currency in which they took place to your home currency for G/L and reporting purposes. Other important functionality is the ability to perform bank transfers between accounts with different currencies.

Landed Cost Tracking: Landed cost tracking allows you to track the landed cost factors associated with bringing product into inventory, such as shipping, handling and import/export fees. Rolling these factors into the actual cost of goods is integral is determining margins and the true cost of inventory. Proper landed cost tracking functionality will allow you to automatically compile all the costs of bringing product into inventory – from within the system – as opposed to having to manually calculate these costs in a spreadsheet and then move the data over.  In addition, within the software default landed cost factors can be set based on product SKU and then calculated as a fixed amount or a percentage of the product cost, with the ability to adjust these numbers according to a specific order.

Different Tax Authorities: Even when operating domestically, there will often be multiple tax authorities that will apply when buying and selling product from different regions.  A good distribution inventory solution allows you to set these up according to area so that they automatically get applied when buying and selling goods.  In certain areas, where tax rates vary significantly from one area ZIP code to another, specific functionality will automatically calculate this information for you based on the location you choose, so that it gets applied properly to every order.

Multi-Lingual: If you’re opening offices in new locations it is important to consider language requirements. Will you have users at different locations accessing the software who speak a different language? If so, consider the implications this can have on your vendor of choice in terms of support, training and user interface.  Some vendors may offer a full multi-lingual system and interface, while others may only provide reporting and specific information in a second language. Even if language is not an issue, keep in mind the time difference between your locations and the vendor’s hours of support and how this will affect business.

Multiple Locations: If you’re operating a business with multiple locations there are a couple of considerations to make from a software perspective.  If you have inventory stored at each location, do you need to transfer and track this inventory movement? Another consideration with multiple locations is accessing the system of choice.  Although you can access both cloud-based and on-premises solutions remotely, with an on-premises solution, where will the server live?

eCommerce Integration: Opening an eCommerce store provides the perfect opportunity to sell product to customers all across the world.  Certain eCommerce platforms can help you manage some processes such as accepting payments and creating accounts, however, it is important that your back-end distribution inventory system also communicate with your website. Proper eCommerce integration means that data is stored in one central database – your distribution inventory system – so that information can easily be passed back and forth from your website, without the need to enter information into multiple systems.

Shipping: There are lots of considerations to make when it comes to shipping product around the world, and when buying goods from overseas.  Specific functionality to look for includes: a system that allows you to track shipments while in transit, inventory tracking by individual container, and re-order point tracking that takes into consideration lead times based on supplier location.

 

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3 Points of Comparison for Selecting the Right Wholesale Distribution ERP Software

As with starting any business, when starting a wholesale distribution company one of the most important considerations is the choice of what software to implement in order to manage your inventory, accounting and sales.  When first starting out – when order and transaction volume is low – many businesses can get away with using manual processes and introductory systems such as QuickBooks.  However, these types of processes and systems are specifically geared towards small and start-up businesses and so there will hopefully come a time when a more sophisticated all-in-one solution is required.  Most often this comes as a result of an increase in order and transaction volume and a need for additional functionality such as inventory management, robust reporting or eCommerce.  Upgrading to an all-in-one wholesale distribution ERP system will also provide opportunities for increased automation across departments, reduce the amount of manual work and data entry errors, and prepare your business for growth .  Although every business will have different requirements and processes, as a wholesale distribution company it is important to consider the following  in order to make the right decision about software.

Customer Management

Customers are the heart of any organization – without them you would not be in business very long.  Even if your company does not have a complex sales process, managing existing and potential customers is important for maintaining and growing sales.  Your business’ ability to reduce the amount of order and shipping errors, respond to customer concerns in a timely fashion and provide quality products when and where the customers want them will be what separate you from the competition.  For this reason, it is important that you chose a software vendor that understands how you interact with your customers and provides the best tools for doing so.

The right tools for your business will not necessarily include an actual CRM system.  Some software packages include built-in contact management tools that will provide enough functionality as is. These tools are designed to manage customers, vendors and leads and will include functionality for logging communication and tracking notes, automating the emailing of invoices and other customer information, and the ability to manage multiple company contacts and business locations.  True CRM functionality on the other hand is designed for more complex sales processes.  Common features include: additional functionality for tracking leads through a comprehensive sales cycle, setting statues, next action dates and appointments, sales dashboards to track follow-ups and an individual’s sales funnel, and the ability to manage marketing lists.

In addition to standard contact management and CRM functionality, there are various other tools that can aid in customer management.  Examples include:

Mobile sales applications for taking orders at tradeshows, while visiting customers on the road or in showrooms. These tools allow sales reps to show customers available inventory through attractive images and place orders on the spot. When integrated with wholesale distribution ERP software, this allows sales orders to be created at the time the order is placed, and will also allocate the inventory.
Online Order Portal tools are designed for use by sales reps or B2B customers, and provide an easy-to-use 24/7 ordering system. Inventory and specific customer pricing is available for each customer account and past orders can be easily replaced or new ones created. Once again these systems are integrated with back-end ERP software so that inventory and order information is up-to-date.

Inventory Management

As a wholesale and distribution business, proper inventory management can greatly impact your bottom line. The ability to fulfill orders, ship the right product, process backorders and customer returns, and track shipments is important to keep your customers happy and returning. In this day and age it is easier than ever for customers to buy elsewhere if they are dissatisfied with the service you provide. Relying on manual counts or spreadsheets can misrepresent inventory information and lead to product stock-outs. As a wholesale distribution business grows, inventory management is frequently the first indicator that new software is required.  A system that reports on what product is available on-hand, what product is allocated to specific orders and what product needs to be replenished can reduce costs and save time.  Proper inventory management software will allow you to:

Scan barcodes when receiving and packing product to ensure you always have an up-to-date inventory count
Integrate sales across multiple channels in order to allocate inventory to specific orders
Track re-order points taking into consideration lead times
Account for landed costs when managing the true cost of inventory
Track specific lots or batches of items with lot tracking

These basic pieces of functionality can reduce the amount of time spent correcting errors, manually counting product and updating data across multiple, standalone systems.

Scalability

Most software vendors will assure you that their system is scalable and can aid in the growth of your business.  But what does that mean exactly? It is easy for vendors to claim that their system is scalable, if they provide upgrades every once in a while and are continuing product development.  However, the best vendor will not only provide scalable software, but also invest in learning about your business and industry to aid in growth and provide guidance for doing so.  It is important to continue to work with your software vendor after the initial implementation to evaluate whether or not the solution is being used to its full potential.  A vendor that provides regular upgrades from a technology and functionality standpoint will allow your business to keep up with the competition, and new technology can aid in efficiencies and process improvements. In addition, some vendors will provide access to additional functionality on a module basis.  These types of more advanced features can then be turned on at any point in time as your business grows and evolves.

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Still Don’t Trust the Cloud?

When searching for enterprise business software, one choice that has to be made is whether to implement an on-premises solution or cloud-based/hosted solution.  Certain vendors may only offer one or the other which can help narrow down your search if you have a preference. If you don’t have a preference though, unfortunately there is no easy answer as to which method is best for your business. Instead, factors such as your company’s existing infrastructure, business processes, available resources and growth projections will all help make the case for one over the other.  Some of the advantages to an on-premises solution are: no internet connection is required, the software physically lives at your company’s location and the software licences are paid for upfront as a one-time initial investment. However, with this method of implementation there are some disadvantages as well, such as: more money is required upfront, hardware upgrades and maintenance must be taken care of internally by the company or outsourced to a 3rd party and physical space is required to actually house and run the system. Deciding which method is best for your business can have a significant impact on your processes down the road and so the decision should not be made lightly.  This is also why it is important to fully understand the differences and especially what the term “cloud” means to your vendor of choice.  Deciding against a cloud implementation because you do not have a clear understanding of the technology or because you don’t “trust the cloud” should not be a valid reason to choose on-premises and can ultimately hurt your business.  Below we outline what cloud-based implementations entail to help you make an informed decision.

What is a cloud-based solution?

Often used interchangeably with the term SaaS (software-as-a-service), and hosted, cloud software is a deployment method whereby a customer accesses a software solution off-premises via the internet and pays an ongoing subscription fee to the software provider.  The software itself physically lives on the vendor’s hardware and so system maintenance, upgrades and backups become the responsibility of the vendor.  Even if you have not implemented cloud-based solutions as part of your business processes, you’re most likely utilizing them in your personal life.  For example, programs like Netflix are cloud-based solutions – users pay an on-going monthly fee to access software hosted on servers and computers off premises. To elaborate further:

Cloud Computing – Refers primarily to the fact that the software is physically located off-premises and accessed via the “cloud” (internet).

SaaS – Refers primarily to the payment method of accessing software whereby a customer pays a vendor an on-going monthly or yearly fee for access.

Hosted – Refers to the fact that the software provider is responsible for managing the software and the hardware that it is installed (hosted) on.

How do you access the cloud?

If you have decided to consider cloud-based solutions as part of your software search, keep in mind that different vendors have different means of accessing cloud-based solutions.  One common method is a browser-based system in which a user types in a URL and then enters login and password information to use software via a specific website.

Another option is to connect to software via an RDP connection.  RDP stands for “remote desktop protocol” and is a Microsoft licensed technology available for a large range of computers, tablets and other devices, including most Windows and Mac computers, iPads and iPhones, Android devices, and systems running Linux or Unix. Essentially, RDP allows a user at a remote computer to log into a server or a specific computer on a network over an internet connection.  Once logged in, the remote user has access to that server or computer as if they were sitting in front of it. An RDP Client is the software program, or app, that’s actually installed on your computer, tablet, phone, etc. – most commonly referred to simply as Remote Desktop – to run all kinds of software programs which physically reside on one or more servers somewhere else and not on your computer or device.

In general, there are a lot of benefits to both of these approaches – like being able to access a Windows program from an iOS device or a Mac, or being able to run software that requires powerful processors and lots of memory from a minimally configured workstation.

Where is the information stored?

With cloud-based solutions, the software you’re accessing and data stored within that software will typically reside on servers housed either by your vendor at their physical office space or, more likely, at a dedicated data center.  Data centers are essentially storage spaces for servers and hardware.  Any given data center will have servers on site with information from a variety of different places – they could house servers with sales data from a wholesale distribution business employing cloud-based ERP, they could house servers belonging to government bodies with administrative information, and they could house servers with financial information being stored from other businesses around the world. Geographic consideration is also important for software vendors who store their data and their customer’s data outside of their organization.  For example, some businesses have data centers located on both the East and West coasts of North America to further mitigate risk in the case of a geographical catastrophe or event.

Given that data centers are in the business of keeping data safe and secure, they will have their own processes and security measures in place in conjunction with what a software vendor has. Specific measures offered by both include:

Redundancy – In order to ensure the highest level of security possible for your data, most data centers and cloud providers will have a number of fail-safes in place. These can include multiple power supplies, processors and hard drives per server and multiple data back-up locations. A bonus is the option to keep a copy of your data in-house as well.

Automatic Fail-Over – A proper hosted solution will employ back-up servers that immediately take over if one were to fail. This means that in the event of total server failure there is always another server to take over the task of running your business.

Data Centre Security – A good data centre will offer multiple levels of security for physical entry to the building such as Biometric scanning, PIN code, access card etc. and 24/7 monitoring to ensure the servers and data are secure.

Disaster Prevention – Back-up power generators as well as state-of-the-art fire detection and suppression systems are all imperative in buildings where servers are being managed.

Who owns the data?

Although with cloud-based solutions your data is physically located outside of your organization, it is still owned by your company.  Backups can also be deployed locally and in the event that your business decides to move systems or close operations, it should be very easy to get your data back from the vendor in question (assuming they are willing to cooperate).  Some concerns that arise from cloud-based solutions concern the geographic location of the data.  If data is physically located in a different country, it may be subject to laws of access different from those in your own country which leads to the very legitimate fear that a foreign government may be able to legislate its way into your confidential business information. However, just like there is a risk of storing data onsite if you do not have the proper security measures in place, the risk of your data living in a different part of the world must also be assessed.  Keep in mind that storing information locally may also be subject to access from governments and other regulatory bodies – information on the cloud is not the only information that can be accessed.  When all is said and done, you must consider the sensitivity of your data, and weigh the pros and cons of each area of risk to make the best decision.

So is your data safe?

From the above information it is clear that there are several benefits to choosing a cloud-based system.  There is no large upfront cash outlay, infrastructure costs are pushed to the provider, you receive increased access to expert support (in lieu of an IT department), and don’t have to worry about backups.  But one of the biggest benefits of employing a hosted solution is that your data is often far safer than it ever would be if you kept it on-location at your place of business. Ultimately when it comes to data safety, there are two main areas of concern: (1) security and the act of managing risk, and (2) privacy and the appropriate use of information.  When it comes to security, most small/medium size businesses are not equipped with the proper level of disaster prevention systems, nor do they have the same level of safety measures in place at their different locations. The implied benefit with a hosted solution is that, if your entire business was to encounter a disaster such as a fire, your system would still be accessible and all your data would be safely running in the data centre.  When it comes to data privacy, this will depend on the vendor you work with and the country in which the data lives. To further protect against privacy concerns make sure to check that sensitive information is being encrypted by the cloud vendor and conduct a privacy assessment.  Although it will be rare that all the data you manage will require the same form of privacy, it is important that sensitive data gets encrypted to prevent access from outside parties.

The Future of Cloud

Cloud-based technologies have been around for a while and will continue to grow in the future. According to one study, the global SaaS market is projected to grow from $49B in 2015 to $67B by 2018.  When all is said and done, you have to choose a solution that makes the most sense for your business – whether that is cloud-based or on-premises.  Finding a vendor that offers both options gives you more flexibility upfront and down the road should your mind (or business processes) change.

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The Benefits of ERP Software with CRM Functionality

Customer Relationship Management (CRM) tools can be very helpful to a company’s sales and marketing team in driving sales growth. Tools that enable a team to track leads and prospects through a comprehensive sales cycle can help ensure they don’t allow any leads to ‘slip through the cracks’. Having a centralized location of customer information such as meeting dates, archived emails, and other notes allows your sales team to maintain a strong relationship with potential clients, hence the name CRM. With a multitude of options in the market, it’s important not to forget about your ERP software, which often has its own CRM functionality included. Here are few reasons why it’s wise to look inward to your ERP before exploring other CRM options:

Avoid Integration Issues and Create a Better User Experience:

When a company decides to move to a more sophisticated software system such as ERP, often the reason they are doing so is to consolidate multiple systems into a central location. By choosing an ERP system with CRM capabilities you eliminate the need for a secondary standalone system that is used primarily to manage your sales processes. Consequently, you avoid having to coordinate with multiple vendors to ensure the two systems will integrate properly. In addition, you also eliminate the need to train employees on two separate, and often distinct, systems. For many companies, moving to a new software system can be an adjustment for its employees, and so reducing the amount of systems and functionality an employee needs to learn can avoid additional stress.

Enhanced View of Customer Needs:

One of the major advantages of CRM software is being able to have a comprehensive view of specific customers and maintaining a single access point to all pertinent information. Having all information related to a customer in one database (such as current order history, shipping addresses, email communications,  and main contact details), allows you to create a centralized hub that can be accessed by different employees from your organization. For example, if your accounting department needs to know a billing address of a customer, or perhaps the sales and marketing team wants to call and check in on how things are going, all the information needed is easily accessible. CRM tools are often only associated with sales and marketing, but the information that is maintained is also useful to other departments in your organization. Keeping the information in one system, not only makes employees’ jobs easier but ensures you are promptly meeting customer needs.

Enhanced Sales Efforts:

It’s important not to neglect one of the main reasons a company would require CRM functionality and that is of course, to drive sales. Having a system that enables your sales and marketing team to perform tasks such as logging customer details, recording notes about prospects as well as uploading email conversations for reference is incredibly beneficial when trying to close sales. Once again, it is crucial to keep prospect information accessible across your entire sales and marketing team. For example, a situation that often arises is when a sales person is away on a vacation. By utilizing CRM tools and maintaining all previous conversation history and notes in one place, it will allow another member of your sales team to continue discussions without missing a beat.

There are plenty of CRM options available in the marketplace that can help organize a company’s sales process. But for those companies already in the market for an ERP system, it doesn’t hurt to explore what CRM functionality is available to them. Hopefully it is sufficient and you can ultimately avoid the added stress of a second standalone system.

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