Inventory & Accounting ERP Software Blog

Managing Costing Methods with Blue Link Distribution Accounting Software [FIFO and Average Cost]

Any wholesale distribution business that buys and sells inventory knows the importance of assigning the right dollar value to the inventory items – especially in an industry where large quantities of product are sold at a time. Inventory costing methods can vary from business to business depending on the unique needs of the company. In general, there are four main inventory costing methods, each with their own advantages and disadvantages. They are specific identification, first-in, first-out (FIFO), last-in, first-out (LIFO), and weighted-average cost.  In this post, we’re going to be focusing on the two most commonly used and accepted inventory costing methods, FIFO and Average Cost.

FIFO and Average Cost inventory valuation methods offer businesses flexibility in their financial reporting, however, there are a few things to consider when choosing the method to adopt. One thing to consider is cash flow implications. Businesses need to evaluate what their cash flow will look like in the coming years and also consider the actual flow of inventory before choosing a costing method. This is especially important if the inventory does flow in a specific manner (such as FIFO method for non-durable goods like dairy products or fruits and vegetables). More on this below.

FIFO Costing

As the name suggests, the FIFO costing method is set up so that the oldest items in your inventory are sold first and corresponds to the actual physical flow of goods in your warehouse. This is particularly useful for companies who want to avoid large losses due to spoilage – for example, distributors selling dairy products, fresh fruits and vegetables, should use the FIFO method so that items are sold according to the earliest expiration date.

FIFO methods of accounting are also preferred by many wholesale distribution businesses because it provides a more accurate picture of the cost of an item based on its timeline, meaning the price paid at the time of purchase. This can be an advantageous costing method for wholesale distributors as it takes into consideration any cost differences in periodic inventory purchases which will maximize the net income.

Let’s say, for example, wholesale distributor, “ABC” bought 100 shirts over two different time periods.

ABC bought 100 t-shirts for $20 each on August 1.

ABC bought 100 of the same t-shirts for $30 each on August 20.

They sold 50 t-shirts on August 25th.

With the FIFO method, those 50 shirts sold by ABC, would come from the first batch of t-shirts that are valued at $20 each. The remaining 50 t-shirts from that same batch (also valued at $20 each) and 100 t-shirts at $30 each get recorded on the balance sheet as remaining inventory. The FIFO method accounts for the price differences in batch 1 and batch 2.

However, there are drawbacks to the FIFO method. There is a heavier tax burden if the method is used in periods of inflation as older items in inventory do not account for any market increases.

Weighted-Average Costing Method 

Under the average cost method, businesses are able to set a standard cost for items in inventory, regardless of what the amount paid when the actual item is purchased. The clear benefit of the weighted-average method is that it is very simple to manage as it does not track when the item was sold like FIFO. Instead, it only considers the amount of inventory in total dollar value and the quantity in stock for each inventory item. This method is good for wholesale distribution companies that want to standardize pricing across inventory batches.

Let’s take a look at the t-shirt example again…

ABC bought 100 t-shirts for $20 each on August 1.

ABC bought 100 of the same t-shirt for $30 each on August 20.

They sold 50 t-shirts on August 25th.

The average costing method looks at the value of the inventory in total – each t-shirt would be calculated as a total of the overall value.

So, the $5,000 paid by ABC for all the t-shirt inventory (100 x 20) + (100 x 30) = $5,000 would then be divided by the total number of t-shirts in stock to calculate the average cost of the t-shirt. In this case, the average cost would be $25 per shirt.

So when they sell 50 t-shirts they would price it based on the average price of $25. The remaining t-shirts would all also be valued at the average price of $25.

While this is a fairly simple calculation to maintain, one of the disadvantages of this method is that the average cost does not match or account for any inventory flow. If inventory prices vary widely depending on how much was paid per each round of purchases, the average cost may not recover the costs of the more expensive items that were purchased. The ideal situation, in this case, would be for company ABC to make up the loss when the t-shirts from the less expensive batch get sold.

Don’t Forget Landed Costs

When recording the cost of inventory, it is important to also include any indirect costs or “non-vendor costs” associated with the purchase of that product to gain an accurate cost of goods. These indirect costs account for the movement of inventory and include fees such as:

Brokerage
Freight
Custom and duties
Insurance
Storage
Shipping charges
Packaging

Automate FIFO, Average Cost, Landed Costs with Blue Link Distribution Accounting Software 

Blue Link distribution accounting software uses Average Cost and FIFO costing methods to accurately manage product costs. No matter which costing method and strategy you choose, Blue Link tracks all costing data behind the scenes so you can change your preferred method if your business processes change in the future. You can also add landed costs to supplier costs which includes the freight, storage, shipping etc.,fees that you pay per item, to get an accurate price per item.

 

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4 Challenges for Wholesale Distributors in 2018

Regardless of the products you sell, wholesale distributors face many of the same challenges every day. Finding a formula to maximize profits, minimize costs and find talented staff is an ongoing effort. For small businesses trying to grow and compete against larger organizations with more resources, it can seem like an uphill battle. However, small organizations can use their size to their advantage, as less bureaucracy makes it easier to adapt quickly to industry changes. And the industry changes a lot. Different consumer demands and increasing competition has transformed the way wholesale distributors do business – from omnichannel sales through eCommerce, EDI, tradeshows and more to trying to compete on shipping times, customers service and price – it is important to have an ear to the ground in the industry to succeed. The tools you use for managing inventory, accounting and other business processes also plays a significant role in helping to address challenges and the right system will help your business grow into the future.

Below we look at 4 challenges currently facing wholesale distributors in 2018.

(1) Efficient shipping is a must.  

Thanks to companies such as Amazon, same day and 2-3 day shipping is becoming the expectation for most customers. Efficient shipping starts with an organized warehouse which optimizes the picking, packing and shipping process so that customers receive the right product as quickly as possible. If you sell online, consider keeping separate inventory for wholesale and eCommerce orders through a virtual warehouse to better manage inventory levels. Keep high-volume items closest to packing stations for easy access and implement bin and shelf locations to help employees quickly locate product. Using mobile picking tools, and barcode scanning allows employees to access picking slips electronically via handheld devices and provides employees with an efficient pick route according to bin and shelf location. Mobile barcode scanning also enables employees to scan items during the pick process which helps to identify any picking errors at the source. As your business evolves and you add more product lines and sales channels, it is important to continuously evaluate your warehouse design and inventory management strategies. Generating orders is only half the picture – your business needs to be able to efficiently ship product to keep customers happy and grow the business.

(2) Automation is becoming standard.

Automation is no longer a differentiating factor when comparing inventory and accounting (ERP) software vendors. Instead, the ability to automate processes across all business departments is a must have in order to compete in the ERP space. In fact, the decision to move from introductory software such as QuickBooks is frequently made in order to automate processes that are currently being performed manually. Automation allows a business to share information and perform specific tasks WITHOUT human intervention. Instead, users set up criteria within the software that dictate what happens within the system and when. A common example is automating the flow of data from an eCommerce sale. With proper integration and automation, once an order is placed online, your ERP system will automatically pull the order information into your ERP (including product, customer and shipping details) and then automatically send the order to the warehouse for picking, packing and shipping – without the need for any employee to do anything in the system (assuming the criteria you initially set-up has been met).

All members of the supply chain want faster and more reliable services through automation – whether that be your customers, vendors or partners. To start automating processes within your organization, look for existing opportunities by evaluating processes. For example, instead of manually rekeying eCommerce orders into your ERP, integrate the two platforms and automate the flow of information. Instead of manually looking up and contacting customers who have overdue accounts, automate the process of A/R collections by setting your ERP to automatically email customers on a regular basis whose accounts are overdue by x number of days or dollar amounts.  The opportunities for automation are endless and the right software vendor will be able to work with you and your team to make recommendations on where automation can save you time and money.

(3) Supply chain partners need access to electronic data.

Partners throughout the entire supply chain want access to more information in real-time – whether this is sales reps, customers, vendors, 3PLs, eCommerce partners etc. Without the ability to easily accept, share and interpret data, bottlenecks arise in the supply chain, slowing down the time from order to shipment. The ability to communicate directly with partners through the integration of business management systems, eCommerce, EDI, mobile applications, etc. helps to standardize information between partners – reducing manual processes. This also makes it easier to add more partners to the supply chain around the world. Partners need access to important information such as custom documents, sales orders, reports, inventory and shipment notifications to operate efficiently.

(4) Scalability is key.

The ability to scale processes and corresponding systems is important to grow your business. As you add more product lines, you need to scale inventory and warehouse space, as you expand your customer base you need to scale sales channels, as order volume increases you need to scale the systems you use to manage orders. It should seem obvious, but as your business grows, your software needs to grow too. This means finding a solution that allows you to add more features as needed and does not restrict your business by setting a limit on file size and number of users.

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Is Your Wholesale Distribution ERP Software Adaptable to Changing Times?

Guest Post by Laura Hudgens

Wholesale distribution ERP software, also known as Enterprise Resource Planning Software, helps distribution businesses buying and selling product to better manage business processes—such as automated reporting, inventory management and even picking, packing and shipping through robust and advanced functionality. With typical features like a common transactional database and the ability to manage inventory and data in real-time, implementing wholesale distribution ERP software is a vital part of any business. However, look at the implementation as a marathon, not a sprint. Implementation can be a long process, so it is important to ensure the system you choose has future-proof features and capabilities to withstand company growth. Of course, all wholesale distribution ERP software is not created equal, and when deciding on a system that is right for your company, there are a few key points to keep in mind:

Integration Options

When incorporating wholesale distribution ERP software into a distribution business, chances are, you already have a few systems in place. The idea with true wholesale distribution ERP software is that it is an all-in-one solution designed to replace all your existing software. Having said that, sophisticated software is not a closed system, meaning it is flexible enough to integrate with other pieces of software or apps as the marketplace and your business changes. For example, a distribution business looking to expand its market online can integrate its wholesale distribution ERP software with an existing eCommerce platform and online marketplaces such as Amazon an eBay. 

While the cost of ERP may be higher than the introductory platforms that your company currently has, ultimately, the freedom and ease that comes with an open system will be worth it, especially as more and more companies are choosing to expand into the eCommerce market.  The competitive advantage that successful eCommerce distribution businesses have is that they have superior insight into their inventory and order fulfillment processes. An all-in-one wholesale distribution ERP software can help you better manage online orders, keep credit card information secure, improve customer service by saving on shipping costs and increase accessibility to your products, 24 hours a day, 365 days a year.

Another important integration is Electronic Data Interchange (EDI). When you integrate EDI with your wholesale distribution ERP software, the sharing of data between systems helps eliminate the need for manual entry of sensitive information like product, shipping, and customer data—which saves all parties involved time, money, and hassle.

Opportunities for Automation 

The ability to automate operational processes is the most valuable advantage of incorporating wholesale distribution ERP software into any organization. The reduction of manual processes provides many continuing benefits, so automation is key when making decisions on software.  Introductory and basic wholesale software tools that don’t provide opportunities for automation may cost less up front, but the time and resources saved through the automation of processes will quickly outweigh the costs of a new system.  Again, always think about the implementation in the long-term.

Wholesale distribution ERP software with one database that acts as a central hub to store all company data including eCommerce data, reduces the need for manual data entry, which in turn can improve productivity, boost efficiency, reduce processing times, and even decrease overall operating costs. Automation also helps improve accuracy and reduce user error.

Having well-managed data allows for more robust reporting functionality, as reports within the system get exported, edited, and shared in real-time. Wholesale distribution ERP software with specific reporting tools allow users to create rules in the system to automate data flow and the distribution of important information (for example, creating a workflow that automatically emails invoices to customers). With options to send reports and emails internally and externally, sharing real-time, accurate data is timely and simple. For example, you can set the system to send out a weekly sales report on the day that you choose and to the people/team you want to send to.

Improved reporting and analytics through the system offer clearer insight into how your organization is doing as well as providing better customer service. Workflows are also made easier through automation as tasks can be strategically set-up and managed.

Better reporting and analytics also help reduce supply chain friction by helping you keep more accurate tabs on inventory and developing a better a supply chain management plan. An integrated wholesale distribution ERP software also allows you to better monitor and measure your progress in real-time, and since everything is all-in-one, it’s easier to stay organized and know that you’re not overlooking any pieces of the puzzle.

Service-Oriented Business Models

Customer needs are always changing. Modern advancements in technology mean that consumers are now accustomed to having everything they need from a company, at their fingertips, any time they need it. Because of this, customer service is more important than ever, and it’s imperative that your business can keep up.

One way to ensure your customers are always getting the assistance they need is to offer self-service features, such as online order portals that clients or customers can access 24/7 to find information about products, pricing, or order status—all without ever speaking to an employee. Or, for those times when a self-service portal isn’t enough, accurate, efficient, service-oriented help is a must. Fortunately, with all of your information integrated and at your fingertips through wholesale software, it’s easier than ever to better serve your customers with accurate, up-to-date, and easily accessible information.

And while you are taking care of your customers, you need your wholesale software to be taking care of you. Every business has different needs, and what works well for one organization might be detrimental to the next. Ensuring your system is a good fit is a vital step in ensuring you are getting the most out of your system. Ongoing consulting services from the software vendor during the sales process and even after the software is purchased and implemented can help you review and re-evaluate the state of your business, your unique needs, and opportunities for growth. This information empowers you to make knowledge-based decisions about the best software selection for your business.

Of course, once you’ve picked out your software, it’s important you know how to use it. Look for a provider that offers training in-person, so you can feel confident that the implementation of your new system is going to produce the desired results. And be sure to plan out your implementation process in a documented and openly accessible place, like a company-wide project management tool. 

Just like you are there for your customers after they’ve made a purchase from you, it’s important to find a software provider that’s there for you even after the sale is closed, too. Self-service support options and free resources about the implementation and optimization add to the training you receive and enable you to reap the most long-term benefits from your new system.

Perhaps most importantly, when exploring wholesale software options, you want to look for one that offers customization of services. Your business and needs will change over time, and your software should too. Look for a vendor that is continuously improving their system and providing yearly updates that keep the functionality relevant and competitive as marketplaces change. They should also be open and willing to make the necessary modifications and customizing that address the unique aspects of your organization.

Laura Hudgens is a writer for TechnologyAdvice.com. She is a communications instructor and freelance writer who studies and writes about technology, media, science, and health.

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Managing Pricing Rules in Blue Link’s Accounting Inventory Software

Setting prices, maintaining margins, keeping customers happy, managing discounts and promotions – a company’s pricing strategy is a complicated yet imperative part of business management. Using accounting inventory software such as Blue Link will provide tools for managing different pricing rules and strategies, to help automate the process of maintaining and updating price. However, the terminology used to describe different pricing rules can vary from one company to the next which can be confusing when trying to find the right solution to manage your specific needs and understand the options for doing so. Here we look to explore some of the pricing strategies used by wholesale distribution businesses, and the functionality available in accounting inventory software to manage them.

List Price

A product’s list price is a price assigned to a product as a means to standardize pricing across an industry. The term “list price” is also referred to as the Manufacturer’s Suggested Retail Price (MRSP), the Recommended Retail Price (RRP) or the Suggested Retail Price (SRP). For the most part, this number is used by distributors and wholesalers for informational purposes only – for example, to print on labels – and not for actual customer pricing. A product’s list price can also be used as part of the calculation to determine actual customer pricing. For example, distributors might want to set the regular price at 10% lower than the list price.

Regular Price

A product’s regular price is generally the price charged to the customer, where the customer is not entitled to any other pricing (i.e. volume discounts, price matrix or contract pricing).  With Blue Link, the regular price for a product can be set in each currency accepted by the company and for each UOM. The regular price set by a company is completely discretionary and does not have to take into account the MRSP.

Contract Pricing

Contract pricing is used to allow for pricing other than the regular price. Contracts can be set up for one specific customer, or multiple customers and a contract price might apply to one product or multiple products. Contract pricing can have a start date and an expiry date – which once again can be applied to all customers and all products or some customers and some products.

There are many different reasons why a distribution business might have contract pricing in addition to regular pricing. For example, contract pricing might be a result of initial negotiations of doing business with a customer for a set period of time or a company may provide contract pricing to customers of good standing or high sales volumes to retain their business into the future.

Special Pricing

Special pricing is usually set-up through a specific price contract. Special pricing can apply to specific product promotions, time-sensitive discounts, holiday or seasonal pricing and volume discounts. A price contract with special pricing will often have a start date and expiry dated based on certain criteria. As of the expiry date, the pricing reverts back to regular or contract pricing for that customer and/or product.

Quantity Breaks

Quantity breaks are a certain type of special pricing where the customer receives a discount based on purchasing a certain amount of product. In Blue Link, quantity breaks can be set up for each currency and unit of measure and apply against the regular price of the item. Specific quantity break pricing contracts can also be set up to apply against customers with contract pricing as opposed to regular pricing.

Price Matrix

To set up a price matrix, you need to first group products into different categories and then set up different discount levels for each category. The next step is to assign customers a discount level. Then, where the discount level and product number meet within the matrix, is where the price is determined. Let’s look at an example.

You’re a distributor of food and foodservice products and your customers include restaurants, other distributors and bakeries. You set up the following product categories:

Matrix Category 1: dry goods, sauces, oils and condiments
Matrix Category 2: paper and disposable products such as napkins, straws and take-out containers
Matrix Category 3: apparel products such as chef hats, aprons and uniforms

You then go ahead and set up different discount levels for each product category:

Product Category
Discount Level 1
Discount Level 2

1
10% discount
15% discount

2
0% discount
5% discount

3
2.5% discount
5% discount

 

The next step is to assign customers to a discount level. In this example you decide to assign all your bakery customers to Discount Level 1 because they tend to buy a lot of product from Matrix Category 1, but not from Matrix Category 2 or 3. You then decide to assign all your restaurant customers to Discount Level 2 because they also buy a lot of products from Matrix Category 1 and also from Matrix Category 2 and 3. However, you have one bakery customer that is much larger than the rest and so you choose to also assign them to Discount Level 2 instead of Discount Level 1.

Minimum Price

A minimum price dictates the lowest possible price allowed for a product to maintain a specific margin. This can be used as a means to restrict salespeople from selling items at too low a price. Within Blue Link, the ability for sales reps or other employees at an organization to override a price is based on permissions – with the appropriate permissions, anyone can change pricing.

Fluctuating Pricing

In certain industries, pricing may change on a regular basis according to the market. In this situation, look for accounting inventory software that allows you to easily import and update pricing information across the product in question. Blue Link’s accounting inventory software allows a company to import price lists based on information from the vendor and have those lists automatically update pricing in the system. Product pricing can also be updated on a one by one basis or a global price change can be made where prices for all products or a range of products based on product code or product class can be changed (up or down) by a specific dollar amount or percentage. Global price changes can be applied to regular pricing, specific contracts or all contracts and against all UOMs, specific UOM’s, all currencies or specific currencies.

As you can see, there are a lot of different pricing rules available to a company. Depending on the type of customers and products you deal with, different types of pricing will be more appropriate. With robust accounting inventory software, you will be able to manage multiple pricing rules based on the customer and product and then set up a hierarchy of rules that can override one another depending on the situation. For example, you may want to set up a seasonal special pricing contract for a certain product that overrides the regular price, however, the system will not apply this seasonal pricing to customers where their contract price is already lower than the seasonal discount.

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Takes One to Know One – SMBs Should Look for SMB Business Management Software Vendors

Has your wholesale distribution business ever had to deal with a large company’s sub-par customer service? Did you have to wait for hours on end on the phone for support only to be bounced from one rep to another? Did you have to repeat information? Were they able to understand your issue and resolve it in a timely manner? Whether it’s your supplier, third-party logistics partner or your software vendor, poor customer service can certainly test the patience of the most understanding of individuals not to mention cost a business unnecessary time and money.

When searching for new business management software for your small-medium wholesale distribution business, you will certainly learn about how the functionality of software itself improves the customer experience (CX) for your own customers with fewer manual entry errors such as shipping information errors, but it is also just as important to learn about the type of customer service the vendor will provide YOUR business. Have they worked with a business similar in size and structure to yours? How accessible is their tech support? What type of expertise do their team members have? These types of questions are important to have answered during the initial sales conversations to avoid headaches down the line.

If you’re a SMB wholesale distributor, consider working with a  business management software vendor that is also a SMB as they are most likely to have a very similar company culture which makes for a better relationship. Consider the following when evaluating options.

Understanding Company Growth 

If you’re a small to medium size business that is growing and looking to implement new business management software to manage an increase in inventory, sales and customers, it is important that you find a software vendor that is also growing.  This means that the software itself is continuously in development and not stagnant, and that the vendor is always working to improve the system and update the software in response to changes in the marketplace or industry-specific compliance/regulatory changes. Be sure to ask the vendor directly about recent releases or updates to the system in the past year and future plans for improving the software.

Any growing small-medium size business management software vendor will have experienced the related pains and hurdles that come with adding employees, products and customers so will have a good understanding of what your business is going through with growth. Be sure to ask for references of companies similar to yours as you go through the sales process to see how they have managed projected growth for other companies your size (1-150 employees). A business management software vendor similar in size to your business will also be able to understand your budget much better than larger software companies who mainly deal with larger businesses where budget is not an issue. They understand that purchasing and implementing new business management software is a huge undertaking and will have insight into how to get the most out of the software to see a worthy ROI.

Similar Company Processes 

While the products you sell may be different, the organizational structure and processes of a business management software vendor your size will be fairly similar to your own. As a result, the vendor will be able to provide valuable insight into any changes you need to make to your internal processes to take full advantage of the various features of the software. SMB tend to have fewer resources available per department and therefore know how important it is that a system is able to automate processes as much as possible to avoid tying up those valuable resources on numerous manual tasks.

This understanding is especially important when it comes to the implementation of business management software. As a SMB ourselves, here at Blue Link we recognize how important it is that the individuals working on the implementation of our business management software fully understand our customer’s unique business needs to make the implementation process as efficient as possible. We are aware that our customers have limited resources available to dedicate to the implementation and we work with them to make joint decisions about the best way to manage each step of the implementation process. The Blue Link consultant assigned to your implementation will focus on only your business during the implementation and will not be distracted by juggling multiple installs at the same time. We will work with you to go over your current processes such as inventory management, accounting, order entry and processing, invoicing, purchase orders etc. to identify any unique business requirements and feature requirements you may need as well as provide suggestions on process changes to get the most out of the system. Our team will also review your existing data to jointly determine which information needs to be migrated over to the new system and which format is best for the migration – saving you from tying up your valuable resources for hours on end with manual data migration work.

Accessible Tech Support

An in-house, personalized tech support team means that you will be speaking with the same representatives each time. The benefit of this is that they will get to know you and your business on a personal level. You can feel comforted knowing that someone with the right expertise and knowledge of your specific business requirements is there to help.  Our Blue Link tech support staff know our customers on a first name basis and develop a clear understanding and history of the types of hurdles, issues and expectations you have so you spend less time repeating information.

“When we did our due diligence in searching for a new accounting system, we narrowed our search down to three different providers. Each offered, for the most part, the same type of software and features that my company needed. What set Blue Link apart from the other two was the level of engagement we received from our initial phone call. We immediately felt at home and had not just the right software, but the right partner to grow our business. That partnership remains even stronger today.”
– Michael Ricks, President, Furniture Classics Limited

 

1- on 1 Employee Training

When speaking with  business management software vendors, pay attention to the different personalities. Are they someone you and your employees will be able to work well with? This is especially important when it comes to training employees on how to use the new software. The success of any software implementation is employee adoption and you want to make sure that you work with a qualified individual who can adjust their teaching speed and methodology to your employees’ needs. Blue Link provides comprehensive on-site, face-to-face training to ensure that employees are comfortable using the system and address any questions or concerns they have on the spot.
Download the below resource to learn more about how to evaluate software vendors and take a look at our Software Services page to see what you can expect when you sign up with Blue Link!

 

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Managing Canada’s New Food Importing Regulations with Food Traceability Software

Even though Canada is recognized for having one of the best food safety systems in the world, the Canadian Food Inspection Agency (CFIA) still receives an average of 2,000 reports from consumers concerning food safety issues every year. Significant improvements to food distribution supply chains, food production and the speed and volume of food manufacturing and transportation every year continue to provide government entities with food safety challenges. Add to this changing consumer preferences, food-based allergen concerns and healthy eating trends and you’re left with a complex and ever-changing food distribution network. To address the concerns of businesses and consumers alike, the CFIA and other regulatory entities have long since implemented standards for managing and tracking food production and distribution across Canada and the world. The latest in food safety regulations, known as The Safe Food for Canadians Regulations (SFCR) will come into force on January 15, 2019.

What is SFCR?

Similar to existing food regulations in Canada, the SFCR works to further protect Canadian consumers by putting a greater emphasis on proactively preventing risks to food safety and making it easier to quickly remove unsafe food from the supply chain. These regulations specifically target food imports and exports in Canada.

The ultimate goal of any food regulation is to give Canadian consumers peace of mind that the food on grocery shelves is safe to eat – whether those products are produced in Canada or abroad. With SFCR Canadian consumers can expect:

Safer food on all grocery shelves
More strict regulations targeting unsafe food practises with a focus on proactive prevention
Tougher penalties for activities and businesses that violate these regulations
Greater control over imports into Canada
More efficient and faster processes for managing recalls and removing unsafe food from the supply chain

For Canadian businesses in the food industry, these regulations will continue to strengthen Canada’s reputation for food safety and increase opportunities for exporting Canadian products worldwide.

The 3 Key Elements of SFCR

The SFCR applies to all businesses that import or prepare food for export across provincial and territorial borders and will help Canada’s food safety regulations become in line with international standards. The SFCR recognizes 3 key elements:

(1) Licensing

New licensing regulations require all food import companies to have a license from the CFIA. Licensing requirements apply to any business that conducts the following activities1:

Import food or food products
Manufacture, process, treat, preserve, grade, package, or label food for export or to be sent across provincial or territorial borders
Export food (where an export certificate is requested)
Slaughter food animals from which meat products are derived for export or to be sent across provincial or territorial borders
Store and handle a meat product in its imported condition for inspection by the CFIA

The CFIA is making it easy for businesses to apply for a license online and will be phasing this requirement over a 12-30 month period depending on the food commodity, type of activity and business size.

(2) Preventive Controls

As a business that imports food products, it is imperative that you have preventive controls in place to ensure the food you import and sell is safe. This involves working closely with your foreign manufacturing and supply partners to understand and control the risks associated with importing their food products. More specifically, preventive controls require that all food import companies:

Know the food that is imported in terms of biological, chemical and physical make-up and any associated hazards that pose a risk of contamination to the food.
Be able to describe and clearly identify any potential risks and have a plan in place to control these risks.
Know the foreign supply partners with which you do business – are your suppliers using safe methods for preparing, storing and transporting product? This includes making sure foreign suppliers are aware of allergens in Canada and are properly documenting and tracking their existence. Food import businesses need to be able to show that the foreign suppliers they work with are meeting the same food safety standards that are required by Canadian manufacturers.
Identify and outline a written plan that dictates processes for meeting regulations.

(3) Traceability

Traceability is already an important part of the food distribution supply chain and requires businesses to trace where product comes from and to whom it is sold. This includes keeping detailed records of the food supply chain for each individual product and helps make the recall process easier by ensuring food is removed from the supply chain in the most efficient way possible.

Food Traceability Software

Food traceability software such as Blue Link ERP helps food import and distribution businesses comply with government regulations by managing and tracking inventory along the entire supply chain. As part of an all-in-one inventory and accounting system, Blue Link’s food traceability functionality provides specific features for tracking lot numbers and expiry dates and includes lot reporting features to better maintain product records and quickly identify affected inventory in the event of a product recall.

Blue Link’s lot tracking functionality aids businesses in achieving CFIA compliance and enables your business to track product end-to-end from your foreign or domestic supplier to your warehouse and then ultimately to your customer. This functionality works in conjunction with Blue Link’s inventory and accounting tools so that all business processes – sales through to invoicing, purchasing, shipping and receiving – are managed from a single database.

Next Steps
To best prepare for the upcoming SFCR in January 2019, start by doing an analysis of existing systems and processes. Does your business meet the specifications for needing a license? Do you have existing preventive controls in place for managing inventory and are you tracking product along the entire supply chain? How does your business manage product recalls? Consider finding a software solution designed for food import and distribution with traceability functionality as a way to help automate and manage these new requirements.

For additional information on the new SFCR we’ve included some resources below:

1Licensing: http://www.inspection.gc.ca/about-the-cfia/the-cfia-chronicle/special-edition-2018-/licensing/eng/1528488744086/1528488744335
SFCR for Businesses: http://www.inspection.gc.ca/about-the-cfia/the-cfia-chronicle/special-edition-2018-/food-businesses/eng/1528486120649/1528486120899
A Quick Look at the New SFCR : http://www.inspection.gc.ca/food/sfcr/videos/importing-food-to-canada/eng/1528315408961/1528315409226
The CFIA Chronicle: Special Edition about SFCR: http://www.inspection.gc.ca/about-the-cfia/the-cfia-chronicle/special-edition-2018-/eng/1528380073398/1528380073850

 

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Cautionary Tale for non-VAWD Pharmaceutical Wholesale Distributors – OptumRx Revokes Extensions

Many people do not know that the prescription drugs in their medicine cabinets have quite the tale to tell.  Its’ story ends with them, the consumer, a regular Joe going in to fill a prescription at a local pharmacy. The beginning of the tale? Well, that’s slightly more complicated. You know as a pharmaceutical wholesale distributor that the drug sitting snug in their cabinet has come a long way from the time it was made. For every single prescription drug a person takes, the product has passed through at least four different companies to end up at their local pharmacy – it starts at the manufacturer, the manufacturer then sells it to you, the pharmaceutical wholesale distributor(s) who then sells the product to either other distributors or a network of  pharmacies. The pharmacies then offer it to their clients. The requirement to track each drug throughout its journey along the supply chain is why the pharmaceutical distribution industry is one of the most complex and highly regulated systems to exist.

With every member of the supply chain, additional fees and markups get added to the cost of the drug, which is why the prescription drugs that end up in the consumer’s hands have such a high value. In fact, the costs of prescriptions drugs became so high in the 1960’s that health plans were not able to accommodate coverage and so companies called Pharmacy Benefit Managers (PBMs) rose to cover these prescriptions on behalf of the insurance companies, and in turn, the pharmacies that sell the drugs. OptumRx is one of the three major PBMs still in existence today. PBMs are responsible for negotiating drug prices to keep costs down for end consumers and to push the most effective drug out of the many options available on the market. While not everyone agrees with the existence of PBM’s (since they also make a nice profit from insurance companies through what’s called spread pricing), they are an important part of this convoluted cycle today to keep costs down for the end consumer.

So where do pharmaceutical wholesale distributors fall into this cautionary tale? Well, back in 2016, OptumRx introduced a compliance rule that restricts pharmacies within its network from accepting product from wholesale distributors, unless those wholesale distributors are Verified-Accredited Wholesale Distributors (VAWD) certified. OptumRx first announced this requirement in August 2016 but at the same time granted an extension to distributors to achieve their VAWD accreditation. Although not every pharmacy requires its distributors to be VAWD certified, it establishes your wholesale distribution business as a trustworthy trading partner in the US pharmaceutical market and opens the door to do business with more pharmacy customers. 21-months after the extension was granted, OptumRX ended the extension for almost all distributors that sell to their network of pharmacies and are still not VAWD certified. As of July 5th, the company decided to provide many, if not all distributors another extension which will retroactively be effective from June 30th through August 31st. This new extension was likely due to the law firm Frier Levitt seeking to file a class-action suit against OptumRx for unfairly ending the original extension. Even with this new extension, however, distributors who will not be able to make the new VAWD deadline by August 31st are positioned to lose clients, the integrity of their products and millions of dollars in revenue as it restricts the pharmacies they can sell to and will end with many of them having to shut down their doors for good.
For those who are unfamiliar with the U.S. accreditation, VAWD, read this blog post to learn what is required of businesses to achieve the accreditation.
Whether you agree or disagree with OptumRx’s decision, as a pharmaceutical wholesale distributor, you need to have accurate data to capitalize and maintain your position in the growing market and adhere to quality control and industry regulations. It is not unlikely that we will start to see a trend where more and more pharmacies work solely with VAWD-accredited companies, and so it is important for distributors to achieve their VAWD accreditation to remain competitive in the market.

The VAWD accreditation process cannot be achieved overnight. In fact, the accreditation takes several months to complete, which makes it all the more important for candidates to be fully prepared for the rigorous reviews to avoid having to re-apply. The time it takes to complete the program is greatly impacted by a facility’s readiness. Once you have achieved the accreditation, it is valid for 3 years which means maintaining the integrity of your data is also an important factor.

Feeling overwhelmed? Yes, the accreditation process will not be easy but the key is to start! The longer you delay the process, the more you put your distribution company at risk. Why live with that unsettling feeling? The first step a pharmaceutical wholesale distributor can take is to  implement the right industry-specific pharmaceutical ERP software with advanced abilities for “maintaining inventories and records of all transactions regarding the receipt and distribution or other disposition of all drugs and devices” to  help meet the VAWD criteria faster and to maintain the accreditation for years to come.
“VAWD accreditation is considered to be the “gold-standard” for distribution companies across regulatory agencies and trading partners within the supply chain. It requires adherence to specific standards spanning purchasing, sales,  inventory control and more – the right pharmaceutical ERP is crucial in achieving VAWD accreditation.” – Sumeet Singh, President, Five Rivers RX
Automation is Key

Having the right industry-specific functionality in pharmaceutical ERP helps businesses to not only comply with VAWD requirements but also help to meet the requirements of DEA, FDA and the DSCSA efficiently and accurately. The key to making your life a bit easier when it comes to maintaining compliance is automating your processes. The below pharmaceutical specific ERP features help to do this.

Lot tracking (traceability) – Blue Link offers lot tracking functionality as part of an all-in-one inventory and accounting ERP solution. Lot tracking, or batch tracking, allows for product traceability to keep track of which customers received specific groups (or shipments) of items and when they were received. The supplier and date these items were purchased are also tracked allowing managers to track an individual group of products (or shipment) from the supplier to their own warehouse and ultimately to the customer. Lot tracking is a core component in achieving FDA / ISO / CFIA compliance for many businesses. This feature of Blue Link ERP also allows users to perform lot costing – tracking actual costs instead of FIFO or average.

Serialization – Blue Link is in the process of developing SNI Serialization features. Specific functionality will include:

Ability to identify a product as Lot Controlled, Serialized, or both Lot and Serialized (a requirement by the DSCSA)
Ability to relate the Unique Serial Number with its applicable Lot Number
Ability to scan GS1 Datamatrix barcodes that include the NDC Number, Serial Number, Lot Number, and Expiration Date and parse the number so it can be stored and retrieved as applicable.

Inventory Control – Robust inventory management features such as backorder fulfillment, warehouse transfers, EDI integration, multiple units of measure, inventory counts and more!

Contact Management (CRM) – Track customer/vendor information and communication with a single point of entry into the system, store unlimited contacts, log communication, automate emailing etc.

Suspicious Order Monitoring (SOM) – Ensures distributors are in compliance with DEA laws. You can view average single or monthly order total amount or quantity of product by NDC #.

Learn more about advanced pharmaceutical features. 
Download the below Case Study to learn how Blue Link customer IPD was able to achieve VAWD accreditation using the above pharmaceutical-specific features.

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Is Blue Link’s Distribution Software Right for You?

You’ve decided to replace your existing business management system. There are many reasons why a company decides its time to update existing systems – perhaps you’re using an introductory accounting solution like QuickBooks and are looking for additional features such as inventory management, or maybe you’re looking to sell through new sales channels such as eCommerce or Amazon and want to integrate solutions. Maybe you’re using a product that is no longer supported and running on outdated technology. Whatever the reason, it is important that you dedicate the time and resources to finding a solution and make it a priority – for risk of letting it fall by the wayside. Theoretically, the process of finding, implementing and training staff on a new solution will be the biggest project your business takes on in any given year. And it should be – the right distribution software is the backbone of your company and will help to run every department from sales to accounting to customer service to warehouse management to eCommerce. So how do you find the right solution? Its no wonder people become overwhelmed when they start the search process – a simple Google search of distribution software yields over 402 million results! To narrow down your search, start by speaking with people in your industry and network to learn what system they are using, try to find unbiased 3rd party websites that offer simple comparisons between vendors, and dedicate the time to sift through some of the Google results until you have a shortlist of about 6-8 vendors to evaluate. To help you narrow down your search, we’ve included a break-down of information about Blue Link, and whether or not our distribution software is the right fit for your business.

About Blue Link

Blue Link is an owner-managed company and Microsoft Certified Gold Partner and has been in business since 1992. Blue Link provides all-in-one inventory and accounting ERP software for small to medium size businesses and is best suited for those in the wholesale and distribution industry.

As an all-in-one solution, Blue Link ERP helps businesses reduce manual work and automate processes by providing tools for inventory management, accounting, order entry and processing, warehouse management, contact management and advanced reporting. In addition, Blue Link includes various optional components that can be turned on at any point in time, such as point of sale, lot tracking, landed cost tracking, barcode scanning, and eCommerce integration with sites such as Shopify and Amazon.

Blue Link is available to businesses in North America and the Caribbean and can be customized to meet the specific needs of clients.

Industries Served

With a focus on wholesale and distribution businesses, as well as businesses that sell through eCommerce and retail, Blue Link provides functionality for a variety of sub-industries and niche markets. These include:

Pharmaceutical
Medical
Apparel, Fashion and Sporting Equipment
Baby and Children’s Products
Building, Construction and Home Supplies
Electronics and Technology
Consumer Packaged Goods
Garden and Floral
Food and Beverage
Foodservice Equipment Supply
Industrial Products, Machinery and Equipment
Salon and Cosmetics
and more!

Right Fit

As a SMB, Blue Link understands the mindset of other SMBs  and as such Blue Link customers typically have between 5-200 employees and under 150 users. Blue Link customers choose the software and trust our team as their business partner because…

They are excited about the opportunity to grow their business and expand into new markets
They are frustrated with using multiple, standalone solutions that do not interact with one another
They are anxious to start selling through other channels such as EDI, eCommerce and Amazon and need an integrated solution to do so
They are worried about their existing legacy systems crashing and losing data and productivity with no access to support

Who Are We NOT a Good Fit For?

Blue Link is not a fit for every company, and through our experience over the last 26 years, we’ve found that there are a few situations where we are unlikely to contribute high value to an organization. It is our job as part of the sales process to identify these unique cases as soon as possible to make sure we don’t waste anyone’s time. We are likely not a good fit for your business if:

You don’t want an all-in-one solution

Blue Link ERP software is designed as an all-in-one solution to manage all aspects of a businesses’ operations. We do not offer individual components such as just inventory functionality or just accounting. The nature of the system is to eliminate the need for duplicate entry and for information to easily flow between departments. Blue Link replaces the need for introductory solutions and does not integrate with accounting software (such as QuickBooks).  Instead, Blue Link provides more advanced functionality to help you grow your business.

You’re a manufacturing company

Many distribution companies identify as also a manufacturing business, even if all manufacturing processes are outsourced to 3rd party vendors. Where this is the case, Blue Link is a great fit and we even have functionality for light manufacturing – in terms of managing simple BOM requirements and kitting and assembly processes. However, if your business manages manufacturing and processing in-house in addition to distribution, and requires functionality for scheduling production, MRP and tracking waste/yield, you’re better offer finding a true manufacturing system as opposed to distribution.

You’re looking for catch weight functionality

Although we work with companies in the food and beverage industry, if you deal with produce, meat, poultry and fish, that require specific weight of a specific batch of product which is close to the average or standard weight used for that product (also known as catch weight)- Blue Link is not the right fit.  Where Blue Link is a good fit, is for those businesses dealing with canned, frozen and dry packaged goods, in which the weights and sizes will be standard each time. For these types of food businesses, Blue Link offers specific functionality such as lot tracking and landed cost tracking.

Ready to start your software search? Download our free guide to get started, or feel free to contact us today!

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Take Control of Your Business With Executive Dashboards – Wholesale Distribution Software

An executive dashboard is a powerful tool for the modern wholesale distribution business owner. A well-designed dashboard can quickly provide powerful insight into business health including summaries of complicated data translated into digestible views. Dashboards offer a visual display of organizational KPIs, metrics, and data that owners and employees can analyze in mere seconds. Information can be drilled down for a more granular, investigative view, which will help owners make smart decisions to improve their businesses’ bottom line.
But the key to the success of dashboards for wholesale distributors, is having a fully-integrated wholesale distribution software in place to store all business data, including key metrics of the business in one central hub. This means users can easily pull data to create and automatically populate executive reports. It is also best to only display the most important information and to make the dashboard as clean and uncluttered as possible in order to reap benefits such as:

Increased operational visibility:  With the right dashboards, you will know exactly what’s happening in all aspects of your wholesale distribution business instantly when you log in to the system on any given day, including information like views of sales outstanding in A/R, available credit, and A/R aging summary. For the best results, find a wholesale distribution software vendor that allows you to create multiple custom dashboards so you can switch back and forth between them. For example, you can have an additional dashboard that covers sales information such as sales by source, top selling products, top vendors, top customers, inventory quantities etc. You also want the flexibility to determine how this information is displayed, whether it be various types of charts (pie charts, column charts etc.), table formats, or simple text.

Data drill downs: The convenience of having all business data stored in one wholesale distribution software is that it is easy to “drill down” or further investigate information behind the metrics in the dashboard. By clicking on the metric, you can see more information such as factors influencing the summary of finances (A/R, A/P  etc.), current account balances, month-to-date and year-to-date net profit or loss statements, key financial ratios such as liquidity, asset management and debt management…all crucial information to have at your fingertips as a wholesale distribution business owner.

Smart strategic planning:  As you may have guessed, the primary objective behind dashboards is that they allow business owners to make smart decisions. It’s not enough to create a business plan and hope things go according to your expectations – you need to verify and monitor that your business is performing according to that plan. Dashboards allow you to actually measure key indicators of business performance throughout every part of your organization and analyzing the data helps you decide which areas need improvement and which objectives need to be adjusted.

Employee access: It’s always good for management/employees to have an idea of what’s happening in the business across all departments such as sales and accounting. Look for a software vendor that allows you to create user and group permissions so that each user login can have specific reports/dashboards available to them. This way, you are only showing employees the information they need in order to make better decisions about their day-to-day tasks.

Save time. Lots of it. How many hours do you currently spend creating financial and operational reports? How often do you create them? With the right executive dashboard, you will always have real-time results from all the reports you need, saving countless hours a month. When information in your wholesale distribution software is updated, so will the information in the dashboards.

Here are a couple tips to keep in mind to improve reporting for your business…

First and foremost, choose the right wholesale distribution software vendor.

This is crucial for business owners looking to improve their reporting capabilities. Chances are that every wholesale distribution software vendor will demo dashboards during the sales process, however, it’s important to not be distracted by the bells and whistles. Consider the reporting tools that are used behind the scenes to create the actual dashboards…are they easy to use? For example, Blue Link currently supports a variety of reporting tools depending on the nature of the report required. One of the reporting tools that we offer is SQL Server Reporting Services (SSRS), which is extremely useful for creating dashboards of information across departments. This reporting tool allows Blue Link customers to generate any report/chart in any format using information stored within the Blue Link system. The idea is to simplify the process of populating dashboards and to avoid having to manually enter data which is prone to human error, incomplete/wrong data or outdated information.

The dashboards are only as good as the integrity of the data behind them. The benefit of having an all-in-one wholesale distribution software such as Blue Link is that data from all areas of the business is collected and stored within the system and can be pulled to create various reports. Since the system handles everything from inventory management, accounting, warehouse operations, sales orders, purchase orders, invoices, lot tracking, landed costs, commission processing and more, you are able to report on any aspect of your business  You don’t have to input data from multiple sources and disconnected systems.

Be selective when choosing metrics.

It’s not necessary to view everything under the sun when it comes to your business, as this can become overwhelming quite quickly. The first step is to decide which metrics are the most important to your wholesale distribution business. For example, an obvious one would be net income.  After choosing this key metric, the next step is to figure out the “underlying” factors such as sales and revenues which influence the net income.

Remember, you don’t have to display everything in one dashboard. You can create supporting dashboards such as a sales specific reports that display sales activity influencing the net income. Think about what factors influence sales numbers in your business. Should you keep track of the number of proposals sent out? Which products sell better than others, or what the costs of products are? This is the recipe for creating clear dashboards and understanding which areas need improvement and which steps to take to meet those specific objectives.
Take a look at the below video which demonstrates how Blue Link’s executive dashboard views work, including displaying information in various formats, how to drill down into data, customizing the dashboard and more.

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4 ERP Tools for Wholesale Retail Businesses

The line between wholesale, retail and eCommerce continues to blur as more and more businesses are taking an omnichannel approach to selling product. Wholesale and distribution businesses now sell both B2B and B2C through eCommerce, marketplaces such as Amazon, at tradeshows and through retail brick and mortar stores. The ability for customers to purchase product through multiple channels allows your business to reach new markets and increase sales. As with any wholesale company in the industry of buying and selling inventory, those who also sell through retail channels require systems in place for managing product, receiving, picking, packing and shipping, accounting, order entry and processing, warehouse management and more. ERP software for wholesale retail management provides standard back-end inventory and accounting tools in addition to specialized features for the retail industry such as point of sale, CRM, warehouse management, eCommerce integration and more.

Point of Sale

Point of Sale (POS) refers to a physical check-out counter location where customers can purchase goods and services. For wholesale retail businesses, POS systems allow customers to place orders, submit payment and accept inventory while in-store. Although typically found in traditional retail brick and mortar stores, for wholesale businesses, POS is frequently used for front counter operations within a warehouse, for cash and carry type businesses, in showrooms or while exhibiting at tradeshows. Specialized features allow customers to pay on account and pay using multiple payment types and currencies.

CRM

Built-in customer relationship management (CRM) tools allow businesses to track customers, vendors and prospects. Employees can easily bring up customer accounts or create new ones when dealing with customers in-store. This allows tracking of communication, loyalty points, customer service requests and product returns.

Warehouse Management

Warehouse management functionality helps employees easily manage inventory for wholesale and retail orders. Proper bin and shelf locations allow employees to quickly fulfill orders and helps customers find product in-store. Inventory transfer features automate the process of moving product from one physical location to another to better serve customers in different geographical areas. This also accommodates the ability for customers to place orders online and then pick-up in-store.

eCommerce Integration

Taking an omnichannel approach, wholesale retail businesses are also selling online through B2B portals, B2C websites powered by platforms such as Shopify, through marketplaces such as eBay and Amazon and through customer-specific portals. Whichever channels you work with, it is important that all information is synced and integrated in real-time across the business. This prevents inventory from being sold online that was just purchased from retail locations.

Sophisticated wholesale retail ERP software will also include other important tools for managing the business including landed cost tracking, secure credit card processing, mobile apps for sales reps and robust reporting. If your business decides to sell through new retail channels, make sure you dedicate the time to finding an industry-specific system. The distinction between POS software designed specifically for retail stores and POS ERP software designed for those that also sell wholesale is important, as although both may offer similar features, they are geared towards different markets.

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