By Russ Mellott
Internet trading networks streamline processes associate with electronic commerce. Information flows through the secure Internet network, increasing collaborative opportunities and streamlining processes, enabling distributors to increase sales and improve customer service while reducing operating costs.
Advanced trading networks synchronize your inventory so you can communicate using your own item codes, yet still be understood by your trading partners. For example, your customer service representative can, from within their order processing screen, query your trading partners in real time to see the availability of the item you sourcing. They can then send a PO using item codes in your business system, and your vendor will receive it in theirs.
You can create trading relationships to extend your distribution network, eliminate your dead stock, and source another distributor’s slow-moving inventory at discount prices.
Beyond sourcing dead stock, establishing trading relationships with other distributors creates new sales opportunities and gives you access to billions of dollars of virtual inventory. Customer service improves too. In the past, sourcing products from other distributors required several lengthy phone conversations or multiple Web queries. With an Internet trading network, you can source items from multiple partners in less than a minute directly from your order entry session, vastly improving your customer service response time.
In this highly digitized world, participating in an Internet trading network makes smart business sense.
Russ Mellott is vice president of Activant. Find out more about Activant at distribution.activant.com or call 1-800-776-7438.
Tuesday, June 1, 2010
Friday, May 14, 2010
Strategic Pricing Helps Distributors Increase Gross Margins
By Dan Kaminstein
For every product, for every customer, there is a price that produces an optimal gross margin. Until now, determining that price had been an extremely complex task. Technology has streamlined that process by adding strategic pricing functionality to ERP solutions.
Strategic pricing modules analyze distributors' databases for customer and order information and then classify a) customers by type and size, and b) items by relative sensitivity. The module then recommends how to best price items based on the combination of these factors.
Features, such as Pricing Structure and Customer SKU services, further enhance the pricing optimization functionality and help enable distributors to more tightly control pricing schedules. In addition to enabling optimal pricing, the strategic pricing modules also allow distributors to better manage freight recovery within their business to further ensure that they do not leave money on the table.
Distributors who have implemented a strategic pricing module report increases in their gross margins from two to four percentage points in the first year alone. For many distributors, that would mean a quick return on their investment in a strategic pricing module – for some in as little as three months.
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Dan Kaminstein is a product manager of Activant. Find out more about Activant at distribution.activant.com or call 1-800-776-7438.
For every product, for every customer, there is a price that produces an optimal gross margin. Until now, determining that price had been an extremely complex task. Technology has streamlined that process by adding strategic pricing functionality to ERP solutions.
Strategic pricing modules analyze distributors' databases for customer and order information and then classify a) customers by type and size, and b) items by relative sensitivity. The module then recommends how to best price items based on the combination of these factors.
Features, such as Pricing Structure and Customer SKU services, further enhance the pricing optimization functionality and help enable distributors to more tightly control pricing schedules. In addition to enabling optimal pricing, the strategic pricing modules also allow distributors to better manage freight recovery within their business to further ensure that they do not leave money on the table.
Distributors who have implemented a strategic pricing module report increases in their gross margins from two to four percentage points in the first year alone. For many distributors, that would mean a quick return on their investment in a strategic pricing module – for some in as little as three months.
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Dan Kaminstein is a product manager of Activant. Find out more about Activant at distribution.activant.com or call 1-800-776-7438.
Tuesday, May 4, 2010
Move over Gordon Graham
by Neil Van Walbeck
Advanced demand forecasting is quickly becoming the standard for forecasting item usage for inventory management.
While Gordon Graham's inventory management concepts and practices revolutionized distribution, distributors using his methods have a much higher percent error rate when compared to system generated forecasts, often 200 to 600 percent off. Advanced demand forecasting takes forecasting to a whole new level by including item trends and more complete forecasting formulas. Together with real time processing and advanced concepts, advanced demand forecasting can reduce the error percentage to 30 to 60 percent, lowering inventories and increasing customer service levels.
Utilizing such features as trend percentages, advance demand forecasting patterns your items using demand categories, identifying them as level, slow, seasonal, trend, or erratic. The system then applies best fit algorithms in real time to formulate a demand forecast based on the item's demand category.
Earlier versions of seasonal set-ups only looked at year-old data. Current advanced demand forecasting tools look back to at least three years of history to better predict upward or downward swings.
The real benefit is that buyers can now focus on inventory that needs attention and better manage items as they see fit; such as following items that have been identified with a demand category trend, or setting those items identified as erratic with a fixed purchase method.
Other features of advanced demand forecasting allow buyers to set safety stock for an item using that item's service level, which results in lower inventory values, lower safety stock numbers, and better service levels for the customer.
More accurate forecasting can result in savings from lower inventory levels, reduced time spent on analyzing inventories by buyers, and a better understanding of inventories overall, that are staggering and can lead to significant competitive advantages for distributors.
Neil Van Walbeck is an application consultant for Activant. Find out more about Activant at http://distribution.activant.com/ or call 1-800-776-7438.
Advanced demand forecasting is quickly becoming the standard for forecasting item usage for inventory management.
While Gordon Graham's inventory management concepts and practices revolutionized distribution, distributors using his methods have a much higher percent error rate when compared to system generated forecasts, often 200 to 600 percent off. Advanced demand forecasting takes forecasting to a whole new level by including item trends and more complete forecasting formulas. Together with real time processing and advanced concepts, advanced demand forecasting can reduce the error percentage to 30 to 60 percent, lowering inventories and increasing customer service levels.
Utilizing such features as trend percentages, advance demand forecasting patterns your items using demand categories, identifying them as level, slow, seasonal, trend, or erratic. The system then applies best fit algorithms in real time to formulate a demand forecast based on the item's demand category.
Earlier versions of seasonal set-ups only looked at year-old data. Current advanced demand forecasting tools look back to at least three years of history to better predict upward or downward swings.
The real benefit is that buyers can now focus on inventory that needs attention and better manage items as they see fit; such as following items that have been identified with a demand category trend, or setting those items identified as erratic with a fixed purchase method.
Other features of advanced demand forecasting allow buyers to set safety stock for an item using that item's service level, which results in lower inventory values, lower safety stock numbers, and better service levels for the customer.
More accurate forecasting can result in savings from lower inventory levels, reduced time spent on analyzing inventories by buyers, and a better understanding of inventories overall, that are staggering and can lead to significant competitive advantages for distributors.
Neil Van Walbeck is an application consultant for Activant. Find out more about Activant at http://distribution.activant.com/ or call 1-800-776-7438.
Sunday, April 4, 2010
Lean for Wholesale Distribution
by Kevin Roach
Lean is quickly becoming the next significant improvement initiative for manufacturing and distribution.
As major manufacturing companies move to lean systems, it will require that wholesale distributors follow to achieve manufacturers' requirements. Adopting lean processes in their own businesses will also benefit distributors through significant improvements in asset utilization, cost savings, and profitability.
The good news for distributors is that lean is relatively easy, fast, and inexpensive to deploy with quick and high payoffs. The bad news is that it takes tremendous discipline, rigor, and cultural change to succeed.
Distributors have to be careful, older ERP systems can inhibit lean activities through wasteful and tedious processes. Newer ERP systems are designed to support lean practices to enable pull and continuous flow for driving out waste.
At its most basic, a lean-focused ERP system provides business intelligence tools capable of providing graphical key statistics on orders, inventory, and costs. ERP systems are the visual source for driving and identifying where distributors are lean or need to be leaned out. This data is absolutely essential for continuous improvement initiatives such as improving workflow, minimizing variation, and improving quality.
ERP systems can also streamline processes. For example, a solution integrated with wireless handheld guns assure correct inventory items are selected and more importantly reduce the steps to pull, pick, or put away inventory by automating once manual processes. Among the hundreds of small processes modern ERP systems can streamline for distributors are automated faxing and e-mailing, receiving confirmations, making collection calls, and generating purchase orders.
They can also assist in minimizing variation and reduction in lead times. This reduction is the key to decreasing inventory while increasing customer service levels. Lean teaches that inventory should be treated like a precious resource, something that wholesalers know instinctively. Great ERP systems optimize inventory levels and drive down replenishment times though effective processes and reporting.
The savings obtainable through lean distribution is staggering. Entire tasks and processes can be eliminated with the resulting revenue used for expansion or taken as straight profit. The right ERP system can provide wholesalers with the tools they need to embrace lean practices and strengthen their businesses. Lean combined with and an effective ERP system, can lead to significant competitive advantages for distributors.
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Kevin Roach is executive vice president and general manager of Activant®. He is currently leading the company in implementing lean practices. Find out more about Activant at distribution.activant.com or call 1-800-776-7438.
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