F. Curtis Barry & Company » Strategic, Financial and Operational Planning

Online Sales Taxes Now Valid in Three States

Paul Sobota — Tue, 20 Oct 2009 20:07:41 +0000

In this past Sunday’s (10.18.09) Parade Magazine, which is read by millions, an article caught my eye on Internet Sales Tax – “States Push for Online Sales Taxes”. This has been a recurring threat that has now taken a step forward. The States of New York, Rhode Island and North Carolina are now requiring retailers to collect sales tax on all online purchases. What a way to inform the consumers in these states that they will now have to pay taxes on all of their online purchases regardless of the company having nexus in these states or not.

Consumers will now have to compare merchandise price + sales tax + shipping and processing charges, that also may be taxed in their state, to determine if they will make an online purchase or not. This is bad news in this economy where retailers are in need of all sales they can garner, especially during this crucial fourth quarter. Another way to inhibit people from buying.

Collecting sales taxes from multiple states and jurisdictions will cost businesses the expense of purchasing expensive sales tax software and integrating it in to their websites and order management systems as well as state tax reports monthly. This may be too costly for some companies and may force them out of business.

What will this do to the US Supreme Court ruling that only required businesses that had nexus (physical presence) in a state to collect sales tax?

What are your thoughts? Is the pressure increasing in your state with the budget shortfalls?

Paul Sobota is a Vice President with 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: http://www.fcbco.com.

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How Well Is Your Warehouse Treating Your Customers?

Bob Betke — Wed, 16 Sep 2009 18:00:37 +0000

It never ceases to amaze me how companies will spend untold time and money to source product and find someone to buy it and then provide poor enough fulfillment services that the customer never comes back. If you consider the cost of acquiring a customer, it makes sense to me that you would do everything in your power to keep them.

One situation to consider is when an error is made in shipping an order to your customer. There is the obvious cost of correcting the error including the numerous phone calls, extra warehouse expense to repack the order, freight cost to reship it, the packaging materials required, etc. These costs can amount to $15 – $30 or higher depending on your internal costs. This cost of correcting an error is significant but the cost of losing a potential life long customer is huge.

Another problem area centers on not meeting customer’s expectations for timely delivery. If you guarantee same day delivery or delivery within 7 days, you had better meet those expectations. Customers today not only have a very quick fuse when it comes to forgiveness for mistreatment, unless you have a corner on a particular item, they can and will go elsewhere. Thanks to the Internet, you are exposed to unlimited competition in many cases.

If you consider the statistics indicating that only a fraction of those who buy from you for the first time will come back, it makes it even more important to take good care of them the first time. If you combine those who will statistically not buy again along with those who you upset because of making an error or missing a promised delivery date, you can quickly see the importance of making sure the fulfillment function delivers on your company’s promise of customer service.

Making sure your fulfillment operation meets marketing’s promises centered around service levels and delivery times. We recommend a periodic assessment of your operation to get a handle on what it really costs you to fill orders, what your current service levels are, and what improvements are possible. An independent assessment of your fulfillment operation works best, but an internal review can still yield major short and long term benefits for your company.

This assessment should follow a receipt from the time of presentation at the dock door until the merchandise is ready to sell. In addition, a typical order should be followed from the time it is presented to the warehouse until it is shipped. Slotting and replenishment functions through picking and packing, the returns process, and inventory management including cycle counting should be added to the list of issues to evaluate.

Part of the assessment should focus on the capacity and utilization of the warehouse to determine if there are any opportunities to improve service and reduce costs. Also, a review of the systems in place to support fulfillment should be completed in the assessment.

One other important issue to evaluate is the warehouse staff’s capabilities and competencies. Although difficult to measure in some ways, getting a feel for the workforce and what they can do is a vital part of the overall assessment.

Take the time to learn how well your warehouse and fulfillment functions are operating and use them as a gauge to tell how well your customers are being taken care of.

Let F. Curtis Barry & Company assist you in conducting a warehouse and operations assessment to increase the productivity and efficiencies to boost your customer service to the next level.

Bob Betke is vice president of F. Curtis Barry & Company, a multichannel operations and fulfillment consulting firm with expertise in warehouse and distribution, warehouse management systems, order management systems, call center, inventory management, and benchmarking; Learn more online at: http://www.fcbco.com

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Transportation Turmoil

Bob Betke — Wed, 09 Sep 2009 18:00:52 +0000

Just when you thought things couldn’t get any worse, shipping packages becomes a little more uncertain. Certain events are adding confusion to an already unsettling situation. With outbound freight costs representing 6 – 8 % of sales and inbound another 2 – 4 % for domestic and 6 -12 % for imported product, changes to the cost of receiving and delivering product can be a critical factor in determining whether you make a profit this year.

Among the potential issues to be faced are:

The potential elimination of Saturday deliveries by the USPS. The effect on customer behavior is unknown at this point but could affect your operation to meet this change.
A potential strike by UPS aircraft mechanics. Many in the industry today do not remember the chaos of past work stoppages. The requirement to scramble to stay in business when carrier service is interrupted is no small matter and could be a life or death issue for some.
Moving FedEx from under the umbrella of the 1926 Railway Labor Act. If this results in the unionization of FedEx, can rate increases be far behind? Some sources are speculating that the increase could be as high as 30% over current costs.
Wildly fluctuating fuel costs are causing planning difficulties for everyone. Those that charge for deliveries constantly have to revise charges to stay current.
The “Employee Free Choice Act” affecting the degree of difficulty in establishing unions in companies could alter the landscape for some carriers.
Confusing combinations of package carriers that cloud rates and service level options. With all of the changes in carriers over the past few years and the increasing level of complexity required to make carrier decisions, a certain level of uncertainty surrounds carrier decisions.
Accessorial charges that may take a lawyer to accurately interpret. With over 90 different charges that can represent a significant percentage of the total cost of delivering product, a lot of time has to be spent understanding all of the potential charges that might affect your business.

With all of these issues and uncertainties facing us in the very future, we have to devote time to understanding our true freight costs and develop a strategy to control them to the point that they will not drive us out of business.

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Reducing The Risk In Using Third Party Logistics

Bob Betke — Wed, 26 Aug 2009 08:45:54 +0000

As we work with clients looking for a third party logistics option to meet their needs, a few recommendations come to mind. One of the greatest fears in giving your fulfillment function to someone else is the unknown factors of how your customers will be treated and what your cost will be for their services. The first concern is best dealt with by calling existing and past clients of the vendor to solicit their reference as to the adherence to the service levels. The second is a bit more complicated.

One complaint we hear often is the surprise that occurs when the first invoice for services arrives. In addition to a detailed Request for Proposal (RFP) outlining requirements and expectations, two additional steps can be used to reduce the risk of surprise.

The first is to make sure the vendor spends time with your operation to review what you do today. Even with all the care and attention you apply to your RFP, some things can be missed. You should ask your proposed vendor to evaluate your operational needs and metrics to make sure their submitted bid is appropriate. If any differences are noted during the site visits, they can be reflected in a revised bid for services. This will permit you to make the most informed decision possible. Make sure the vendor understands that it is their responsibility to discover and point out inconsistencies with the RFP and the actual operation. Your goal should be to have the actual cost per order come within 5% of the proposed cost per order in the RFP response by the vendor.

The second suggestion is to have a set of productivity metrics or standards as part of the contractual Key Performance Indicators (KPI’s). These should reflect the commitment of the vendor to meet certain productivity levels in specific warehouse functions. Many cost estimates are based on applying an hourly pay rate to the hours used to calculate the cost for a functional area. The estimates of cost in the RFP response assume some level of efficiency by the vendor. When the invoice arrives, you should be able to determine if any variance occurring in actual vs. estimated cost is caused by a different volume of activity being required or if the expected level of performance is different than that proposed. Having a committed level of productivity in your contract reduces your risk in this area.

If you are able to use these two suggestions, it should lower your stress level in dealing with the unknown factors of utilizing the third party fulfillment option.

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Low Hanging Fruit: Is Your 3rd Party Overflow Call Center Cost Effective?

Brian Barry — Fri, 31 Jul 2009 19:28:59 +0000

I spent this morning talking with a good friend who is the COO of a midsized business to business multichannel company. I wanted to get his take on what data and analysis they use at an executive level to make decisions and to develop strategies. He made a point that is something we believe very strongly in, and it didn’t take tens of thousands of dollars to make a $200,000 difference. It took a few weeks and very little effort from the employees.

He related that a few months ago they needed to understand why their call volumes were increasing, but not necessarily in line with revenue. So for a short time period they had each of the phone reps keep a tally sheet next to their computer, and on that tally sheet were 8-10 categories of call reason codes – called to place order, called to track order, called to return a product etc. After each call the rep would record the reason for the call on the sheet.

After a few weeks they measured the results. Only 30% of the calls were to place orders, the other 70% of the calls were true customer service calls. On top of that, they were using a third party call center for overflow to take a large percentage of the overall calls because of the increase.

As it was, the third party call center was not able to answer most customer service calls for them, and the problems quickly became:

1. The customer couldn’t get the answer they were looking for immediately.

2. The third party call center was sending emails back and forth to our client trying to get answers.

3. Most of the time our customer then had to make the outbound call to the customer to try and get them their answer and it usually meant more than one call to reach them.

Throughout this whole process the customer didn’t get an immediate answer and the costs for our client went through the roof. In the end they realized that they needed to do things differently. They needed to be more in tune with the customers and give them the tools they needed to answer their questions.

They opted to hire additional customer service reps in the short term to answer the questions immediately as well as provided more information to the customer to reduce the number of calls back and forth. With the elimination of the third party call center they were able to eliminate almost $200,000 annually. The real cost savings is much higher than that by not having to deal with the additional emails and additional customer service calls to the customer.

To some this may seem like a no brainer, but I guarantee you most companies could benefit from taking a step back and looking at things like this. Not just in the call center but the warehouse and other areas. Everyone has some low hanging fruit that could easily save them some money its just a matter of looking for it.

It didn’t take a ton of cash to find these problems; it just took some patience and the realization that audits like this are important. For assistance with thoughts on how to identify this and other low hanging fruit, give us a call and let’s see how we can help your business.

Brian Barry is a Senior Consultant with 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: http://www.fcbco.com.

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Escalate Retail Delivers Landed Cost Capabilities

Brian Barry — Thu, 30 Jul 2009 14:33:36 +0000

In a recent press release, Escalate Retail has landed a beta site for its newest release. And it’s the direction the application has taken that will really allow multi channel businesses to reach peak efficiency and profitability. Here is an excerpt and one of the most important pieces of the press release:

San Diego – July 13, 2009 — Escalate Retail today announced that Homemakers, Iowa’s largest furniture store, will launch as the Beta partner for the latest Enterprise1 version 12.1 this July. Additionally, Homemakers will upgrade its customer-facing solution by moving to the latest release of Customer1 version 4.2.

Version 12.1 of Enterprise1 provides Homemakers with functionality they can begin using immediately, including:

True landed cost tracking: Provides a breakout of all costs for freight, customs, and more for every item on a purchase order; also tracks that cost throughout the life of the item within Homemakers’ inventory until the item is sold

True landed cost is one of the most important cost aspects that a company can utilize. What is so significant about landed cost? Landed cost will allow you to understand the following:

1. It will allow you to really understand how much freight, duties, agent commission, etc. you are spending to bring in the product, and its true impact on the margin earned.

2. It also allows you to drive at the true net contribution to profit for that item.

3. A company can also utilize the landed cost to determine their buying strategy by understanding whether they can afford to bring in smaller shipments on a more frequent basis, turning the inventory faster and investing less cash in inventory.

I feel that this type of functionality will greatly improve a company’s understanding of product profitability while assisting with the development of a comprehensive inventory strategy. I encourage you to read the rest of the press release and to visit Escalate Retail online at http://www.escalateretail.com

Need help reviewing your inventory strategy, if so we offer inventory assessments for typically $6,500 – designed to be performed quickly with a high ROI and actionable recommendations – click here to learn more.

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One option for going direct to your customers

Brian Barry — Mon, 27 Jul 2009 16:04:09 +0000

In this economy, everyone is looking for some kind of advantage – a way to build their brand image, how to increase product margins, reduce warehouse and logistics expenses – all while sticking to their core competencies. This can be especially difficult for consumer product goods companies and manufacturers. Often times they sell through vendor networks or distributors in order to reach retailers and end consumers. Many manufacturers have addressed the potential channel conflict issues and have decided to develop direct to consumer business offerings. But in trying to go direct to the customer, it means these companies need to invest in software, infrastructure, personnel and a new logistics process.

More importantly this means the company is moving away from what it does well. For some this isn’t a problem, for most this can be a major problem. Managing call centers, small package pick pack ship operations, and dealing with customers for a direct business is entirely different than a manufacturing operation.

But this doesn’t mean that it can’t be done. For those not wanting to invest in operations necessary for a direct ecommerce or direct marketing business, there are options. One option that several manufacturers and consumer product goods companies have turned to is Jagged Peak. Not only have they developed a strong warehousing and logistics division, but they have also developed exceptional order management and ecommerce applications.

What does this mean – if you want to take your products direct to your end customers, Jagged Peak can provide all of the applications necessary but also provide end to end services to support order fulfillment. By doing this, Jagged Peak allows their customers to remain focused on what they do well and leave the rest to them. Third party options like this are often times a great way for companies to test new markets and new channels in order to meet their financial goals.

F. Curtis Barry & Company assists companies of all types to develop fulfillment strategies which include the sourcing of third party options. If we can help your company develop a plan or evaluate different third party options, please contact us today.

Jagged Peak can be found online at www.jaggedpeak.com

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Now You Have Access to Your Data, Now What Do You Do With It?

Brian Barry — Fri, 24 Jul 2009 18:34:15 +0000

I recently read a study by the Aberdeen Group regarding how users of BI, KPI and dashboard application benefit compared to their counterparts. This study validated several of the aspects that we have seen and gave us some new insight as well. I have added some summary points from the report, however the full document can be downloaded from their website. However there is one critical point missing from the study. But first, here are the excerpts from the impressive Aberdeen study – Executive Dashboards: The Key To Unlocking Double Digit Profit Growth.

Best-in-Class Performance

Aberdeen used three key performance criteria to distinguish Best-in-Class companies. That performance relative to their peers was as follows:

A 24% average year-over-year increase in operating profit, compared with a 3% increase for the Industry Average and a 27% decrease for Laggards
An 8.3% average year-over-year improvement in customer service, compared with a 2.3% improvement for the Industry Average and a 1.0% increase for Laggards
An 8.4% average year-over-year improvement in sales performance, compared with a 2.3% improvement for the Industry Average and a 0.6% decline for Laggards.

Competitive Maturity Assessment

Survey results show that the firms enjoying Best-in-Class performance are:

2.8-times more likely than Laggards to have clearly defined business unit performance metrics
1.7-times more likely than the Industry Average to have a process for prioritizing data for user access
60% more likely than all other companies to leverage performance reporting dashboards

Required Actions

In addition to the specific recommendations in Chapter Three if this report, to achieve Best-in-Class performance, companies must:

Create a training program to educate end-users on dashboards
Develop the ability to track the utilization of dashboard tools
Examine the use of outward-facing customer dashboards

The key to unlocking double digit profit to us is the missing piece from the study and one of the most critical in order for companies to recognize the benefits listed above. So what’s missing – it’s what to do with the all the data, metrics and results. Corporate dashboards, KPI’s and BI tools can tell you so much about your business, but if you don’t know what to do with the data or how to develop a strategy to improve the business, then you can never benefit from the investment.

The difficulty is that many of these software vendors are very good at developing best in class software but traditionally fall short in being able to assist companies with how to analyze the results, understand what the numbers are saying, and in assisting you with what to do next.

This is a significant reason why we decided to partner with Taurus Software – it’s about bringing together not only best in class dashboard, KPI’s and business intelligence but also to deliver world class consulting to assist you with not only how to utilize the application but what to do with the results. This unique approach we feel will benefit each implementation and allow companies to maximize the investment and realize all the benefits.

We encourage you to register and read the full Aberdeen Study http://www.aberdeen.com

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Analyzing Your Company’s Marketing ROI – 5 Problems Revealed

Brian Barry — Wed, 22 Jul 2009 17:53:40 +0000

Recently a few of us at our firm set out to develop a sophisticated marketing business intelligence module with our partner company Taurus Software. In order to do this we decided we would meet with as many multi channel companies from $10 million in sales to $100 million in sales as possible, as well as other industry experts. We found many surprising facts during this process.

1. We found a sheer number of companies that do not accurately use source codes and offers in a consistent and disciplined manner for all electronic media types including banner ads, natural search, paid search, shopping comparison sites etc. Without this, a meaningful ROI cannot be performed.

2. Companies did not accurately measure the true cost of the marketing initiatives by media type and since most didn’t use unique source codes they weren’t able to measure which media type and source code out performed others.

3. Marketing initiatives often compared gross margin earned to the marketing expenses, but very few allocated the cost of acquiring and processing those transactions to truly look at the net contribution to profit. One example of this is the percentages paid to affiliate marketing initiatives and not taking in to account the operation or general and administrative expenses to understand at what point an initiative is not profitable.

4. Most companies did not set goals for determining how individual media types should be measured to determine which was a success and which were failures. The stronger companies set goals for gross dollars generated per marketing dollar spent and aimed for at least a 3.5 to 1 for instance. If this type of goal wasn’t met the initiative was cut and the dollars were funneled towards other tests or successful initiatives.

5. Companies did not often accurately analyze what initiatives drove new customer acquisition versus customer loyalty and retention. We found that numerous companies could not truly say what initiatives drove these customers, and whether or not these new customers would become long term profitable customers based on the source of the transaction.

Can you relate to any of the five problems above – are they still problems for your company? In order to accurately measure the effectiveness and ROI of your marketing initiatives, both printed and electronic, it is imperative that you develop a well disciplined, consistent approach to setting up and measuring your company’s marketing initiatives.

If you are in need of revamping your marketing strategies and understanding how to be more efficient and profitable with your marketing spend, then call us and let us give you a hand. We would be pleased to assist you with this process.

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Does an “All in One” Software Solution Really Exist?

Brian Barry — Wed, 22 Jul 2009 17:41:05 +0000

15-20 years ago companies were often times buying most of their software from a single vendor. Order management software vendors were supplying everything – AR, AP and GL modules, manifesting, order entry and customer service, warehousing functions and a full reporting suite. Over time best of breed approaches were becoming more prevalent as niche vendors were filling in the gaps and it became easier for order management vendors to develop generic API’s. But several factors are driving people back towards finding a single order management systems vendor that can deliver everything. It’s a way to reduce IT costs, decrease the number of desperate systems/vendors and data silos to name a few.

But is an all in one order management system reality or utopia? Does it exist? The short answer to whether or not it exists is a definitive maybe… Read more of this story

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F. Curtis Barry & Company » Strategic, Financial and Operational Planning

Online Sales Taxes Now Valid in Three States

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How Well Is Your Warehouse Treating Your Customers?

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Transportation Turmoil

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Reducing The Risk In Using Third Party Logistics

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Escalate Retail Delivers Landed Cost Capabilities

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One option for going direct to your customers

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Now You Have Access to Your Data, Now What Do You Do With It?

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Analyzing Your Company’s Marketing ROI – 5 Problems Revealed

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