Immediate Reaction About PCS Shutdown
An email received this morning about PCS…
Dear Curt -
I was stunned at the PCS announcement. Certainly, there was a lot of hype over the last 2 years about PCS and the SaaS model. What do you think the lessons are?
Mark, CEO of $25 million catalog+e-comm company
Dear Mark -
Here are some lessons I think we all can say we “re-learned”. They apply to all client and vendor software relationships:
- It’s about trust. From the vendor’s perspective, if the software functionality isn’t available but the vendor says they can develop it, what’s the process for specifying function and getting it developed? Can the vendor be trusted to deliver on their promises? From the client perspective, are they a good partner to impart industry knowledge?
- Software development is a people function. How well do the vendor’s people know the application and your type business?
- SaaS model. It’s still in its infancy. It might not be appropriate for very large and complex companies. Order Motion and Demandware seem to have growing businesses.
- How do these points translate to cost, timeline and risk to your business?
Thanks for your email,
Curt
Hey readers, what other lessons have we learned about PCS’ shutdown? If you are a PCS user and need assistance selecting and installing a new system, contact us immediately at jbarry@fcbco.com or call 804-740-8743.
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Systemax Shutting Down PCS Software
As written in Multichannel Merchant Magazine by Melissa Dowling on 6-2-09
Computers manufacturer/marketer Systemax announced yesterday it’s getting out of the ProfitCenter Software (PCS) hosted software business. The company is working on transition plans with current customers and not taking on any new hosting arrangements.
Founded 2002, PCS is a java, Web-based order management and e-commerce system. Systemax chairman/CEO Richard Leeds said in a release that the company has been unable to profitably market, sell and implement the software on a hosted platform model.
The PCS segment generated less than $500,000 of the Systemax’s total revenue of $3.0 billion for 2008.
With its SaaS approach, PCS certainly blazed a new trail, says Curt Barry, president of multichannel operations and fulfillment consultancy F. Curtis Barry & Co. “Every time a vendor or resource fails in our industry, to me it’s a tragedy,” he notes.
Barry’s company began receiving several calls from PCS clients about the shutdown last Friday. It’s now working with several PCS users to help them make transitions to new vendor platforms.
An orderly decision and transition realistically “needs to happen in the next six to eight months for companies,” Barry says, based on a recent discussion with PCS president John Marrah.
Barry says that Marrah assured him that Systemax will do everything it can to help the current PCS clients. He also says Systemax is actively looking for a buyer for the application and technology used in the PCS product.
As a result of the consolidation, most of the PCS workforce will be leaving the company, while the remaining PCS workforce has been consolidated into the Systemax’s Port Washington, NY, location.
These and other PCS-related actions are expected to result in incremental one-time pretax charges to earnings during the rest of this year of about $4 million to $5 million. Excluding these charges, Systemax expects the consolidation will save more than $10 million annually.
Systemax bought the CompUSA brand, trademarks, and e-commerce business in February 2008, and late last month it won a bankruptcy auction for the e-commerce business and intellectual property of Circuit City Stores. The company also includes the Global and TigerDirect brands.
If you are a PCS user and need assistance with finding and installing a new system, contact us immediately at jbarry@fcbco.com or 804-740-8743.
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ProfitCenter Systems (PCS) Announces Shut Down
Last Friday we received several calls from PCS clients about the announced shut down notice they had just received. This morning I talked with PCS’ President John Marrah to understand better the reasons and what the time frames are for companies to make transitions to new vendor platforms.
Two things which I wish to pass along to my reader’s from John Marrah:
- Systemax and Mr. Marrah are going to do everything they can to help the current PCS client companies make an orderly decision and transition. The reality is that this needs to happen in the next 6 to 8 months for companies.
- On behalf of Systemax, Mr. Marrah also said that he is actively looking for a buyer for the application and technology used in the PCS product.
I’m not going to editorialize over the bones of PCS. Every time a vendor or resource fails in our industry to me it’s a tragedy. Certainly, PCS with its SaaS approach blazed a new trail. Our industry thrives on new approaches, no matter if it’s technology, data base approaches, printing technologies, e-mail marketing approaches.
We are working with several PCS users to chart their new directions. Contact us if we can help you.
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BI systems across the enterprise
The most serious business information problem companies face is finding a “single version of the truth.” Many companies are installing best-of-breed systems for order management, fulfillment, call center, marketing, product information, inventory, finance and e-commerce.
Yet no one vendor in the marketplace today can provide more than two of the best-of-breed components needed. Even most ERP systems available to direct marketers don’t provide specialized direct, retail or warehouse management functions that are as good as best-of-breed.
Such systems have given companies access to the best system functionally for end users. But even when they are integrated with one another, you still have numerous - and differing - occurrences of key data and metrics.
The result of all these silos of information is that no one system provides more than 30% of the data needed by senior management; for larger companies it may be only 10% to 15%.
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15 Ways to Reduce Warehouse Expenses
As it appeared in Catalog Success Magazine written by Paul Miller
At the recent NCOF, Curt Barry, president of Richmond, VA-based multichannel operations & fulfillment consultancy F. Curtis Barry & Company, presented “15 Ways to Reduce Warehouse Expenses.” Here is a summary:
- Efficient receiving. Inventory accuracy and product flow through the warehouse all start with receiving. The single biggest improvement companies can often make is to develop and implement vendor compliance policies.
- Reduce inbound and outbound freight. Outbound freight now exceeds direct labor in many centers. Don’t be too proud to ask consultants to help negotiate new contracts, even if it’s on a gain share basis. Too many dollars are at stake.
- Put away. Look to reduce warehouse back orders and “can not finds” which may cost anywhere from 20 to 60 minutes to resolve.
- Slotting. Efficiency techniques include “hot pick areas” for fast selling products. The old 80/20 rule holds for product sales.
- Order Picking. Reduce the picking time—which is 70% of picking time is walk time in the warehouse—by using the proper approach to fit your business (e.g. singles, cart/bin, batch pick and sort, zone pick, etc.). In many businesses, singles are more then 50% of the pick volume.
- Reduce number of replenishments. Hold the equivalent of a week’s unit volume in the forward pick.
- Packing. Picking and packing amount to more than 50% of direct labor costs in the warehouse. Put packing supplies adjacent to the stations, and ensure you have the proper number of insert compartments, sufficient table top square footage, and adjustable length stations.
- Returns processing. Returns cost more than orders. Eliminate the controllable reasons for returns (e.g. picking errors, copy and art errors, etc.). Streamline the receiving process to get returns processed efficiently and refunds back to the customer quickly.
- Inventory Control. Inventory is the largest balance sheet asset in most businesses. Without accurate inventory you can’t have sales or move orders efficiently in the DC. Use aisle mapping (proper location of product without counting) frequently.
- Bar code scanning. May be the most underutilized technology in our industry. Maximize its use from dock receiving, to put away, to picking, pack confirmation, shipping, returns processing, inventory control and cycle counting. Speed product and order flow through the center. Increase inventory accuracy to 99.9%.
- Effective warehouse layout. Look to increase capacity within the same facility and streamline product and order flow.
- Work standards and measurement. You can’t improve that which you haven’t measured. Apply benchmarking principles to set up internal benchmarks. Use external benchmarking to understand what other companies achieve, and for best practice ideas.
- Management of labor. Labor is more than 50% of the cost per order for call center and warehouse.
- Developing a world-class team. There are 11 key issues you need to resolve, including staff empowerment, delegation, hiring competent people, recruiting and training the person who will take your place eventually, etc.
- Use 3rd party logistics. Barry’s clients have used 3PL more in the last two years than in the prior 10. Internal costs have increased to the point where, for many companies, on a total cost per order basis it’s cheaper to use 3PL. Additionally, they avoid having to invest in infrastructure such as warehouses and systems, and have reduced management of fulfillment, call center and IT. They can instead concentrate on the critical areas of marketing and merchandising.
Curt Barry is president of F. Curtis Barry & Company, a multichannel operations and warehouse consulting company. Helping you understand inventory cost savings and warehouse management are just a few of the ways we can help your multichannel business. Please visit FCBCO.com for more information.
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Retail Pro, Page-Digital File for Bankruptcy Update
It has been brought to my attention that there are a few inaccuracies in our original blog on this subject that I would like to amend/correct as follows:
Retail Pro product sales have not in fact been declining over the past several years, nor have their annual maintenance renewals. Further review of the of the documents filed with the United States Bankruptcy Court in the District of Delaware, reveals that Retail Pro revenues have in fact increased over the recent past.
Also disclosed in public filings the Retail Pro source code is owned by Intuit and is not released to any third party for development or maintenance of the product. Retail Pro continues to develop, support and maintain its products exclusively.
To elaborate on the SEC filing on September 5, 2008 the Settlement resolves the SEC investigation into the Company’s financial condition, results of operations, accounting policies and procedures, internal controls, and internal revenue recognition investigation relating to the timing of revenue recognition for certain transactions during the fiscal years ended March 31, 2003, 2004 and 2005. “The Company settled the Lawsuit by consenting to entry of a permanent injunction in the United States District Court for the Southern District of California against future violations of the antifraud, reporting, recordkeeping, and internal control provisions of the Securities Exchange Act of 1934 (the “Settlement”). The Company entered into the Settlement without admitting or denying the allegations, and was not required to pay any civil penalty, fine, or monetary damages as part of the Settlement.”
Additionally, an Asset Purchase Agreement was submitted to the courts at the time of filing for protection under Chapter 11 of the United States Bankruptcy Code, demonstrating that Retail Pro will regroup. In these tough economic times we hope that Retail Pro’s restructuring under the protection of Chapter 11 will allow them to emerge stronger and better than ever.
Paul Sobota is vice president of F. Curtis Barry & Company, a multichannel operations and fulfillment consulting firm with expertise in multichannel systems, warehouse, call center, inventory, and benchmarking; Learn more online at www.fcbco.com
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Top Ways to Cut Costs and Improve Customer Satisfaction
Every smart business manager is constantly looking for ways to reduce costs and make the operation more productive. In today’s challenging economic climate, such efforts become even more crucial. Small steps that can help to save money may make a big difference. Our experience in the fulfillment and call center has been that often the same process improvements used to reduce costs also result in better service—and greater customer satisfaction. These are some of our top tips in four of the key areas.
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The Changing Software Vendor Landscape
For a long time, many prospective buyers of direct and retail systems have complained that there were not very many choices in terms of vendors and their offerings. The good news is that over the last couple of years, some truly new and good competitors have emerged for the multichannel industry. Some of this change stems from acquisitions; more is based on the competitive need to expand offerings to provide more functionality to customers.
Some e-commerce platform providers are expanding offerings into order management. Enterprise-wide systems are starting to be installed more widely in this market niche. There are multiple choices to manage the warehouse and supply chain. Would a service offering fit your requirements better than an in-house licensed implementation? These are just some of the trends we see emerging that give you, the software buyer, many realistic choices. Drawing from our multichannel consulting practice, we present what we see as those choices.
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Selecting the Right Software Vendor For Your Business
Selecting software, be it an Order Management System (OMS), Warehouse Management System (WMS), Enterprise Resource Planning system (ERP), E-Commerce solution, or some other system, is a challenging task. The process normally begins by documenting a set of requirements, constructing a Request For Proposal (RFP), identifying vendors, viewing web demos, and conducting site visits and reference checks. Recently a trend appears to be emerging to select vendors based on word of mouth recommendations and two-hour web demos. Is that really the right approach? Selecting the right vendor is critical to the success of your company. The choices in the software marketplace are overwhelming, and if the software solution meets your requirements, how do you determine if a vendor is the right vendor for your business? Here are a few points to consider.
No matter how many times I’ve heard businesses claim that cost is not the primary factor in the selection process, in actuality it always becomes a prime factor after RFP responses are returned. But is enough information provided in the RFP to ensure the vendor’s pricing is accurate? Does the pricing include the software, hardware, number of user licenses, transactional volumes, upgrades, maintenance, training, integrations, modifications, conversions and implementation services? I’ve seen instances where clients developed what they thought was a good RFP, which the vendor responded to appropriately with an initial cost based on the defined requirements—but after due diligence determined the real cost was more than double the original. The best course of action is to have an RFP that not only covers all the requirements but also identifies any and all unique business processes. The more detail provided to the vendor, the more likely the pricing will be closer to actual. Key areas that affect pricing are data conversions, integrations and implementation services.
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How to Select the Right Front- and Back-End Systems for 3rd Party Fulfillment
More and more companies today are outsourcing fulfillment to avoid making investments in that non-core area, or in the technology necessary for it. We’ve also seen hundreds of start-up e-commerce companies that simply don’t want to be in the fulfillment business. All of these companies are turning to third-party fulfillment (3PF) providers like you. With so much riding on it, it is very important that your front-end (call center, customer service, and marketing) and back-end (warehousing, order management, and fulfillment) systems and technology give you a continuing competitive advantage. The systems you select will have significant ramifications for your personnel’s productivity, as well as how effectively you serve your customers and help them grow their businesses—and the management information these systems provide can help you grow your business. No matter what type of system you’re considering, the purchase is a long-term investment. In short, selecting the right front- and back-end systems for your 3PF business is a major undertaking.
In this article, we’re going to lay out the major functional considerations for new software and the methodology for selecting a system. Over our past 25 years as industry consultants, we have both assisted companies in selecting third-party fulfillment providers and helped third-party providers select new front- and back-end systems to improve their fulfillment services, reduce costs and improve customer service.