Catalog and Online Unique Gift Company Taylor Gifts selects Taurus Software’s ManageMetrix Business Intelligence Solution to Streamline Inventory and Merchandising

Redwood City, Calif. – Taurus Software, a premier provider of business intelligence solutions for multi-channel retailers, announces that Taylor Gifts, an online and catalog merchandiser of retail gifts and novelties, will implement Manage Metrix business intelligence solution. Developed by Taurus Software and F. Curtis Barry & Company, Manage Metrix provides inventory, merchandising and marketing analyses that enable companies to track key performance indicators including inventory turns, fill rates merchandise assortment performance, vendor scorecards, as well as promotion and channel performance.  These analyses are supported by business consulting and guidance to measure and optimize improvements.

Taylor Gifts joins over 70 Ecometry clients that have been empowered with business intelligence from Taurus Software. As an application-independent solution, Manage Metrix is a robust business performance management program allowing the ability to increase efficiency, decrease costs and maximize profitability for multichannel retailers.

“Having been in business since 1952, a lot has changed in how we approach our merchandising and inventory. We look forward to the ability to more accurately determine our carrying costs and overall management of our product mix using Manage Metrix,” said Joe Falcone, Vice President of Operations of Taylor Gifts.

About Taylor Gifts
Based out of Paoli, PA, Taylor Gifts has been offering unique gifts since 1952. Their products include novelties, house wares, gifts, organizational solutions, pet products and accessories, and “As Seen on TV” products. Products are available both online at www.TaylorGifts.com and through their print catalog.

About Taurus Software
At Taurus Software, making liquid data means helping companies access their data easily. Taurus products include a variety of applications developed to help clients get more from their data by allowing them to Move, Map, Measure, and Manage data regardless of where it resides. Learn more about Taurus Software and our offerings designed for various data platforms and applications.  Call 650-482-2011 ext. 1, or visit www.taurus.com.

About F. Curtis Barry & Company
F. Curtis Barry & Company is a consultancy specializing in multichannel operations and fulfillment for catalog, e-commerce, and retail businesses.  F. Curtis Barry & Company offer clients expertise in direct commerce systems (order management, warehouse management, and inventory management systems); warehousing and distribution; call center; inventory management and forecasting; and strategic, financial, and operational planning for all business channels.  To learn more about F. Curtis Barry & Company, visit our web site at www.fcbco.com.

For More Information
Call Taurus’ Sales Department
Phone: 650-482-2022, ext. 150
Fax: 650-482-2010
sales@taurus.com

When the word negotiation is used, people tend to think of cutting price, getting a better deal, etc.  I will submit to you that given the complexity, expense and time frame to implement new systems, most companies should be more thorough in reviewing agreements, doing internal planning before signing, understanding the vendor and your responsibilities, estimating the total cost of ownership more completely,  etc. before signing the agreements.

Generally speaking 50% of all major IT projects are not completed on time and within budget for a variety of reasons. Author Jack T. Marchewka, Information Technology Project Management (third edition, 2009, John Wiley & Sons, Inc.), quotes several major international research surveys which attest to this.  Marchewka’s point is the lack of good project planning in the beginning and lack of project management throughout the process dooms implementations.  Our experience over the past 26 as independent consultants bears this out too.

 I have been negotiating on behalf of clients with vendors and also acting as an expert witness in law suits for 40 years.  I have found that after a successful vendor search, companies often fail to put in place agreements that are thought through.  The information provided in this article should not be construed as legal advice. For that, consult a qualified intellectual property attorney.

Before I go any further I want the reader to know that we have honest and reputable vendors in this space.  They have and will continue to bring innovative applications to the multichannel marketplace.  With this being said I will strive to discuss these points in a balanced way.

Some Pitfalls We See
Here are the problems I typically see with agreements that customers negotiate:

• Signing agreements prematurely to get a discount without completing due diligence;
• Not understanding about what is negotiable and why items may not be;
• Major decisions about project management;
• Lack of any detail planning before committing about the project plan, your company’s internal responsibilities and the vendor’s;
• Failure to document modifications as part of the Services Agreements leading to  misunderstandings about desired features and unexpected costs;
• Failure to use legal counsel that specializes in intellectual property (IP) law.

Keep Two Finalists in the Negotiation 
My recommendation is to keep two finalists in the selection process negotiating to see what the final plans and costs will be.  While this sounds basic, a large number of companies often communicate their preference for one vendor and the negotiating essentially stops.  I have seen a reasonable number of times that the favorite vendors in the end may not be the one that gets the final deal.

What’s Negotiable? 
Multichannel marketing has been an entrepreneurial market for a long time.  Owners have been good negotiators to get products and services for their business.  Here are a few points that managers want to negotiate all the time and what often happens:

• Negotiate total costs lower?  There may be some wiggle room.  Figure out where it is.  Generally, significantly negotiated price cuts is not a big area of success, especially for smaller companies.
• Fixed price?  Not a chance.  There simply are too many variables and many will not be in the vendor’s control.
• Guaranteed implementation on a given schedule?  Unlikely.  Half the time the installing customer doesn’t complete their internal tasks on time and holds up installations.
• Pay for progress?  Probably not.  Accounting best practices in larger software companies don’t allow software companies to recognize revenue (book sales) if you have strings tied to how you’re going to pay them.
• Payment for damage to your business from a faulty conversion?  Most contracts limit liability to the total of what you paid.
• When do you start paying for annual support?  Probably before the conversion is completed.

Get the picture.  As these are all things we’d like to think we can negotiate but the reality is you have limited control and ability change these things.  Put aside how you have negotiated with product manufacturers, other service providers, realtors, etc.  Those tactics probably won’t work with software implementations and agreements.  Demanding what is not workable may just scuttle your selection efforts.

Six Types of Agreements to Consider
When you review these, there are two over arching aspects that need to be taken into account as you review and potentially negotiate your vendor agreements.  One is the legal documents themselves.  The second, of equal importance, is what I call the “business aspects” of the agreements.  In the business category are the total cost of ownership, project planning, the capital requirements and payment schedules, the modifications required, their estimates and sign-offs, etc.

These are the types of agreements that you need to finalize and understand how the lack of planning up front will affect costs and schedule.

License Agreement
Some vendors have Master Agreements that a License Agreement falls under.  This governs a host of terms and conditions including the use of the application software, ownership, confidential information, publicity, termination of the agreement, limited liability, indemnification, right to assignment, governing law, dispute resolution and hiring employees are all things that we find need changing from time to time.    Your lawyer’s main concern will be to review these and make sure you understand them and insure they are fair and even handed.

Services Agreement
The Services Agreements include modifications and integrations, training, conversion, project management, etc.  Services will amount to 30% to 50% of the costs of the total implementation.  This is where you can make the biggest effect on the nature of your conversion planning and project management and coming to an understanding with the vendor.

Fully document all modifications and interfaces in sufficient detail that you can get a reasonably accurate estimate that you and the vendor can agree on.  I like to see both parties sign-off on the scope and estimate with the intent of keeping the cost within that estimate.  Make it an Addendum to the Services Agreement.  Modifications and interfaces will be a major portion of the Services Agreement costs.

What files are going to be converted?  Many people erroneously think too broadly when reality is often a limited number of files (e.g. orders and returns, customers, etc.).  There can be hundreds of tables and files in an order management system.  How will you create back orders, purchase orders, item master files, promotional history files, marketing files, etc.?  For many of these files, it’s faster and cheaper to rekey or key for the new season than to convert.  I’m not trying to generalize vendors won’t do this.  I’m trying to dramatize what you may be assuming too much.  Decide the files and be sure of the conversion estimate before signing.  Additionally, many older systems have problematic files that lack data integrity.

How much training is recommended and how much more do you think you need?  I find these estimates are often under-estimated.  Also, companies often assume that Services includes user documentation.  There is documentation provided that describes the application system.  But it’s not training materials and standard operating procedures.  Those are your responsibility.

Annual Support Agreement
What’s the vendor’s committed release version schedule?  How much has support increased annually?  Can you review some past release notices to see how they have enhanced the app?  Look at how many hours of 800# support you are entitled to per month – often it’s very small?  Realize that you have to learn to internally support yourself or 800# service will get expensive.  Costs are from 18% to 22% of License Agreement costs annually.

3rd Party Software licenses
If software is provided by major software companies such as IBM or Microsoft, you have little chance of changing their agreements but get your lawyer to review.  If it’s application programs from other vendors, there may language that can and should be modified.

Hardware
Now a days, hardware for the license and 3rd party applications is largely outsourced or purchased from other providers.  The application vendor should give you specifications and help you understand what you need but many have given up this as an area of sales and to some degree knowledge because you can buy it cheaper elsewhere.

What Part of Negotiating Agreements Can You Control?
Let’s switch to the many things that you can control as you negotiate and review agreements.  Here is a partial list:

• Finish vendor due diligence.
• Select an experienced IP lawyer.
• Don’t sign the agreements prematurely, shutting down decision making and negotiation.
• Make decisions about how you’re going to manage the installation within your company.  This will affect what you need in services from the vendor.
• Develop a project plan.
• Be sure you have a complete picture of the total cost of ownership.

Finish Vendor Due Diligence
Have you taken site visits to see the application in a business similar to yours?  Have you visited the finalists headquarters and talk to the management and staff in development and support?  “Eye ball to eye ball”, can you trust the newly selected company?  Not the sales person but the team that is going to implement your system and support you in the long term.  Have you checked long term references that tell you the good, the bad and the ugly?  Have you checked references of new customers to see how their conversions went?

Select an Experienced IP Lawyer
Software contracting is categorized as intellectual property law.  It’s a legal specialty with extensive body of knowledge, precedents and general accepted practices. Hire an attorney with that specialty.  We are often asked by clients to work with corporate counsels, real estate lawyers, and others that clients trust.  This is a slower and more frustrating process because the counsel doesn’t have experience with these issues.  Use an experienced IP lawyer.

Don’t sign the software license prematurely
Companies often sign the boiler plate License Agreement and Service Agreement without drafting the project plan and discussing your responsibilities, project management and what the vendor will provide.  It’s discussed but not at the level of detail that it needs to be.  These are key areas to spend your time in and truly make contributions and understand what you need to manage.

Vendors often use incentive discounts to sign by the end of a quarter or year.  The discounts are tempting but only take them if you have all the details we discuss in this article completed and you are sure this is the right vendor and software.  To many times it’s premature.

Don’t take the suggestion that you can sign the License Agreement and then work out the details of the Services Agreement and modifications later.  Most Licenses require a sizable deposit on the License (generally in the range of 50%) which is not refundable if you find later in the planning process you have reservations or made a mistake.  This deposit could represent 25% of the total cost of the implementation.  That’s a huge commitment without having all the planning and answers.

Commit Your Company to Good Project Management Principles
How accomplished is your company at project management of a conversion and installation of this magnitude?  Many companies will respond that they look to the vendor to do the project management.  My experience is that you need to have a strong manager on your side of the table to complete your tasks and responsibilities; keep the schedule on track; to report progress and problems to senior management; to monitor the quality of what’s being done by both parties; to decide with your senior management team how you’re going to change your processes, culture and the organization, to name a few things.

Understand the skill sets your staff needs.  We often see companies taking on technology that requires a much higher level of knowledge and experience than their existing system.  Are you going to hire this resource or train internally?

Project Plan and Schedule
Vendors will give you a Gantt or bar chart of how the implementation should proceed.  They are generalized and only a couple pages long.  Those are not project plans and should include all aspects of the project:  Requirements, modifications, testing and quality assurance, conversion, procedures and standard operating procedures, activities involving “go live”, etc.  The plan should include the website, call center, distribution, marketing, merchandising, inventory control, accounting, etc. The details should include estimates, elapsed days, start and stop dates for tasks; task dependencies, and who is responsible and the percent completion for the task.  A very key best practice is where in the plan do you sign-off with the vendor on key milestones to proceed?  Requirements, testing, file conversion testing, readiness for “go live” are a few.  Vendors may be reluctant to spend the time to work with you on a project plan before contract writing.  Again the devil is in the details.  A fully detailed project plan can be 10 to 20 pages when you get it specified.  Be sure to have your people understand the details and the responsibilities that you and they will have.  The project plan should be updated at least bi-monthly or weekly close in to the conversion date.  The status should be distributed to all stakeholders.

Interview the implementation team – the resistance may be to let you do that until you’re ready to sign because the availability of people may be such that they are assigned to other projects that were accepted.

In Summary
We know from experience that if more time is taken, a more realistic budget and a more achievable schedule for the total tasks delineated will result.  Your organization will have a better grip on what needs to be accomplished to deliver on time and within budget. Email Jeff Barry at jbarry@fcbco.com or call him at 804-264-8040 if we can assist you with your software agreements or other aspects of your systems project.

]]> http://www.fcbco-blog.com/negotiating-software-agreements-to-create-successful-system-implementations/feed/ 0 http://www.fcbco-blog.com/how-usi-laminate-turned-back-the-clock-on-aging-inventory-with-manage-metrix/ http://www.fcbco-blog.com/how-usi-laminate-turned-back-the-clock-on-aging-inventory-with-manage-metrix/#comments Tue, 09 Aug 2011 19:22:08 +0000 Jeff Barry http://www.fcbco-blog.com/?p=1294 Summary
In only a few months, USI has used Manage Metrix to significantly drive down aged inventory, pro-actively liquidate non-productive stock, quantify vendor delivery performance, reduce orders for items that are not needed  and understand trends in product performance and inventory. And as a result, the company is able to, “detect issues before they become problems or lost opportunities…gaining a greater return on investment for each dollar invested in inventory.”

Overview
The leading marketer of roll and pouch laminating machines and films, binding equipment and supplies, USI, Inc., serves a wide array of government, education and business customers through its multi-channel distribution network. To meet customers’ needs, the company relied on hundreds of vendors, providing thousands of products, representing more than 5,000 SKUs, housed in two warehouses – one in Connecticut and the other in Arizona. Yet, after more than 30 years of successful operations and growth, the company’s inventory processes were showing their age as people continued to rely on limited systems, manual processes and yesterday’s data as the basis for critical decision-making.

“Some of the things we needed to do were simply not possible with our existing tools or were extremely time consuming – involving complicated spreadsheets and countless hours trying to drill down to the level of detail we needed,” said Peter Frega, director of operations for USI, Inc.

Several years earlier, USI had implemented Ecomedate from Taurus Software to dynamically analyze real-time data from its Ecometry production system. Even with improved access to operational data provided by Ecomedate, USI still needed to reach critical strategic data beyond the operational databases – especially in such areas as fill rates, inventory turns and aging inventory.

Approached by Taurus Software to become an early adopter of the new Manage Metrix business intelligence solution developed with F. Curtis Barry & Company, it seemed a win-win situation.

Solution
“We have always had a great relationship with Taurus and appreciate the things their software enables us to do. With their knowledge of our systems and processes, it seemed part of a natural evolution to move forward with Manage Metrix” Frega said.

Manage Metrix was developed as an application-independent solution for multi-channel businesses to provide the strategic business intelligence tools that executives need. The solution offers users the ability to use information from their disparate systems (including Ecometry) in more meaningful ways. Manage Metrix utilizes the power of the open systems environment and the incredible capabilities of production systems with pre-built queries and tools that empower users to identify key issues, and more importantly, know what to do about them.

“Leveraging the information that USI was already able to get with Taurus’ Ecomedate solution, USI added Manage Metrix as a strategic layer in what they identified as their most crucial area – inventory,” said Cailean Sherman, President of Taurus Software. “They wanted to do more than simply see what they had in inventory.  They wanted to determine how old it was, how much capital it was eating up by having it on hand and how it was impacting business overall.”

With Manage Metrix, USI would have the ability to:
• Enhance its inventory management capabilities
• Establish key metrics and measure actual against them
• Examine inventory processes
• Improve inventory performance where possible
• Implementation According to Plan

Once approved, implementation began. Mapping of data from Ecometry (via Ecomedate) and other sources was completed by Taurus in advance to ensure that existing and pertinent operational data would be available to Manage Metrix. USI data was then imported into a Manage Metrix environment at Taurus as part of a preliminary test.

Beyond the previously available operational data, Manage Metrix incorporated additional business input such as item attributes “new versus repeat,” “imported versus domestic,” as well as “cost of back orders” and “carrying costs”. This combined data enabled pre-built Manage Metrix queries to present insights into turnover rates by category or SKU, initial fill rates, final fill rates and cost of back orders by vendor.

Using this data within the framework provided by Manage Metrix, systems and warehouse consultants from F. Curtis Barry & Company, along with Taurus technical resources reviewed the results with USI to define key business priorities and goals. This helped to prioritize the subsequent project plan for implementation, training and the collaborative inventory solution.

Following discussions of results, refinement of goals and final testing, the “live” version of Manage Metrix was installed on the USI server. Two days of training prepared the USI marketing and merchandising staff to use the new Manage Metrix capabilities. Ongoing contact, including inventory improvement follow-up calls, additional enhancements and progress reviews ensured that the tools were working according to expectations and that USI personnel were able to maximize Manage Metrix to meet goals for improving performance.

To support the onsite training, documentation provided details demonstrating how to use and interpret individual queries in managing inventory; detailed glossaries of each data element; terms and calculations from both system and inventory perspectives; the selection criteria that was possible; and screen shots of realistic examples.

“Taurus provided the scripts that enabled us to do in a week what would have taken a good part of six months. You can’t underestimate what the Taurus team did to help us to do that,” Frega said. “The implementation of both Manage Metrix and Ecomedate was designed to make us feel comfortable with our pace and understanding of the capabilities of the products in operations and marketing.”

Hit The Ground Running
Once Manage Metrix went live, Frega and the other users were ready to begin capitalizing on the benefits it was able to bring.

USI’s  highest priorities were to understand how to reduce the dollars carried in inventory, without negatively impacting customer service and also to measure  vendor delivery performance and its financial impact on the company in order to negotiate more favorable terms.

“The difference in what we were able to do with Manage Metrix was immediate,” Frega said. “It is so much more efficient at getting the data we needed, such as being able to drill down in seconds, as opposed to the time-consuming process of sorting through spreadsheets. Manage Metrix makes our data easier to grasp because you see a lot more of the costs.”

To answer his questions, Frega needed to see the issues impacting inventory turns, fill rates excess inventory and aging inventory – especially as it related to vendors. Manage Metrix allowed him to quickly see which vendors were most frequently associated with back orders, excess inventory and aged inventory.

“Aged inventory occurs from an assortment of reasons – maybe you only need 10, but you have to order 12, or you have items to support equipment that for some reason got canceled. But with Manage Metrix, you can drill down to the data you need to decide what these relationships are costing you and what to do about it,” he said.

Considering the fact that USI’s on-hand inventory is subject to state tax, it was critical that Frega could determine inventory in units and dollars to reduce levels to minimize the company’s tax burden. More importantly, he had to have the means to do something about it.

Benefits Beyond The Expected
Enter Fred Franco, merchandising manager for USI. In the fourth quarter, with the business intelligence provided by Manage Metrix, he was able to devise a process so that slow moving, canceled and oversupplied items would be flagged and the details provided to the Web group to be marketed quickly. What’s more, it ensures that more isn’t ordered.

“The ability to pull what you need and view it as close to real time as possible is important. We are able to generate a list, give it to the marketing department to get it up on the Web site and get rid of it. And we can do it in a matter of hours,” Franco said. “In the very first quarter, the process was already driving down aged inventory.”

This ability to view details that were not previously accessible and to see categories, products and inventory in new ways has implications beyond aging inventory.

“The exercise of categorizing allows us to see a lot more trends, especially relating to back orders,” he said. “We’re able look at the product data base and see if it’s an ordering versus a stocking problem, a category versus a product problem. It’s not just the ability to find what you’re looking for, but also to detect issues before they become problems or lost opportunities.”

Bringing Everyone Together With The Same View
Along with different views, Manage Metrix is allowing USI to better bring together the different viewpoints of various departments within the organization and allowing them to see “one version of the truth”.

“Manage Metrix is causing everyone to look at things a little differently,” Frega said. “Before, if there was a backorder, there was an interdepartmental difference of opinion. Now, we see what the actual cost is to the company, what it means to everyone and what to do about it. It’s brought us closer to understanding each other’s perspectives. We get the same data more quickly, so there’s a lot more nonverbal communication between us.”

For example, there were growing concerns that backorders had been increasing, inventory turns were slowing and that aging inventory was tying up capital. But, there was no definitive answer. Now, Frega and his team are able to view by product, by category and by warehouse to get product “in the right place at the right time.”

“The inventory aging analysis of Manage Metrix has immediate benefits in terms of inventory levels, liquidation and improving inventory turnover. With improved visibility, USI can increase the number of inventory turns and invest smaller amounts of money on inventory without harming the overall customer experience. Ultimately gaining greater return on investment for each dollar invested in inventory,” Frega said.

Results
With Manage Metrix, USI is seeing what it needs to see to respond to what customers want, to reduce costs that impact profitability and to identify areas where opportunity exists.

Installation and training were completed in June 2010 and already by the fourth quarter, USI had significantly reduced its aging inventory.

Because Manage Matrix offered the necessary insights, Frega says it’s helping them to think in more strategic terms to see where other categories are seeing a downturn or entering end of life – and know the difference between the two. It also enables them to see growth opportunities.

“The results of what we find can help us to decide if we need to refine our line or to broaden a category – knowing that the decision isn’t arbitrary or broad-based because we have the data to support it,” he said.

And, talk about getting more than you bargained for, USI discovered benefits beyond their initial focus on operations – with the marketing department continuing to find new ways of using Manage Metrix to their strategic advantage.

If you’re interested in more information on Manage Metrix, contact Jeff Barry at jbarry@fcbco.com, or call (804) 740-8743. F. Curtis Barry & Co. is a national consulting firm that works with eCommerce, catalog, retail, manufacturing and wholesale distributors on projects focusing on supply chain strategies, order management systems, warehouse management systems, inventory management, third party logistics, and to reduce freight costs.

At every step in the product and promotion life cycle, these three departments’ needs are different—but at the same time they all revolve around gross demand planning and results.  (By “life cycle” I’m talking about the Marketing side of planning a campaign, re-forecasting results once the initial demand is in, and then potentially re-projecting after half the campaign when the majority of sales are in.)

Merchandising’s needs are about the pre-season merchandise plan or the continual planning for the eCommerce site; the forecasting by catalog drop; and the end of the season.  What quantity of each product is needed across all promotions—print, eCommerce and store?

The thing that ties these three departments’ planning and results efforts together is gross demand data. Marketing arrives at the catalog gross demand plan based on their circulation plans by drop, by house file, and by outside list segment.  They also must think through all the “electronic” media in which specific products are featured—website home pages, e-mail, affiliate campaigns, etc.—and give some direction to Merchandising and Inventory Management.

Ideally, Merchandising’s catalog pre-season plans are built top-down by merchandise category, and bottom-up by product.  But they should come close to tying together with Marketing’s demand plans at the demand level.

Then we have Inventory Management.  It’s their job to interpret the plans and selling results and purchase product far enough in advance to be in stock when customers order.  From an inventory perspective, the Inventory Management plans aren’t going to tie back to the others’ plans exactly. Management allows Inventory Management to purchase more product than the demand plans indicate, based on vendor lead time, vendor discounts offered, etc.

Week-for-week, one of the hardest things to do is read selling trends and interpret them in a way that allows you to make the right decisions—which ultimately provide the base line projections for yet other departments, such as call center and supply chain logistics. Yet from an uninitiated perspective, it looks like a free-for-all, with many different versions of plans and results.

How can business intelligence tools, dashboard and executive analytic tools help with this critical decision-making?  The business intelligence tools can provide a consistent view of all the data, so that whether they’re analyzing demand or sales, all departments are utilizing a standardized view of the same data.  This allows each department to look at the segment of data that is meaningful to them.  Business intelligence tools allow users to take cuts of the data and compare them in multiple ways, whether it be this year to last year or actual to plan, as well as to reassemble the data and analyze it from one department to another.  Each department needs to maintain their own way of analyzing data, but also be able to bring their plans and results together in a consistent, uniform way.

The more we talked, the more the client’s managers got back inside their skins. And they realized how important having a single version of the truth, through business intelligence tools and executive analytics, would be to planning and reconciling results—day-for-day, week-to-week, and throughout the year.

If you’re interested in more information about business intelligence tools and would like to talk with a consultant, contact Jeff Barry at jbarry@fcbco.com, or call (804) 740-8743. F. Curtis Barry & Co. is a national consulting firm that works with eCommerce, catalog, retail, manufacturing and wholesale distributors on projects focusing on supply chain strategies, order management systems, warehouse management systems, inventory management, third party logistics, and to reduce freight costs.

Or, say management has tasked you with developing a report and you try and go back to prior results, maybe from a season or two ago. How many different versions of the sales, purchase and inventory plans are there? Which ones are the actual and which were prior versions?

Some might say “we could do a better job of controlling and eliminating versions of plans”—which is certainly true, and something every company should work toward. Or you may say “if we use only one enterprise system we can eliminate this dilemma”. But that isn’t really the solution; such order management systems aren’t viable for most companies, and anyway, there are multiple data elements that are all valid for whatever processing order management system is being used. There isn’t a “single version of the truth”—one official set of figures for sales, inventory, plan, history, etc.

Take for example a product’s inventory. You can find sales plans on a user-derived Access system or Excel spreadsheets. A product’s inventory on hand in units and dollars occurs on your order management system. A separate best-of-breed warehouse management system will also include the same product on hand, but needs to be synched up daily. The finance system will also carry the total company inventory in dollars—probably not updated real time, but daily or weekly. You may also have a specialized standalone forecasting and inventory management system, to project inventory by promotion or catalog campaign.

Additionally, because the major transaction systems require a high degree of training, management does not use them as the source for their information. Management has to go to extremes to get what they need, either by requesting that department managers pull data or by using business analysts to come up with reporting. Because these are manual efforts using sources not originally geared to management’s needs, they are delay-riddled, error prone processes. And they still don’t deliver a “single version of the truth.”

You get the picture. There simply isn’t a “single version of the truth” for the major data elements used in many businesses. For management to have confidence in the integrity of the data they’re getting, I think the time has come to advocate and budget for projects that resolve these problems. Such problems are not new, and I believe they inhibit the effective management and growth of direct businesses.

Here is a hierarchy of solutions you should consider:

• Extract data from major transaction processing systems into Excel or other reports
• Access databases, and business analysts using OLAP tools
• Data warehouse products
• Business intelligence tools with dashboards and analytics

It’s time to advocate with management for solutions to this problem. Especially in this recovering economy, knowing exactly where you stand is essential. You can only control expenses and inventory and know which products and promotions are working—and which aren’t—if you have accurate data on which everybody across the company can agree on. In our experience, companies that used business intelligence tools to overcome such information problems have been successful in getting a positive ROI from these types of systems within 12 to 18 months. And in today’s business environment, that’s a “single version of the truth” on which all companies can agree.

If you’re interested in talking more about business intelligence tools with a consultant, contact Jeff Barry at jbarry@fcbco.com, or call (804) 740-8743. F. Curtis Barry & Co. is a national consulting firm that works with eCommerce, catalog, retail, manufacturing and wholesale distributors on projects focusing on supply chain strategies, order management systems, warehouse management systems, inventory management, third party logistics, and to reduce freight costs.