APRIL 24, 2012

FOR IMMEDIATE RELEASE

PRACTICON, A LEADING ONLINE AND CATALOG DENTAL PRODUCTS AND SERVICE COMPANY,

SELECTS MANAGE METRIX FOR PRACTICAL BUSINESS INTELLIGENCE SOLUTIONS

Redwood City, Calif. – Taurus Software, a premier provider of business intelligence solutions, has been selected to provide Practicon, a leading online and catalog dental product supplier, superior insights into business performance through its Manage Metrix application. Manage Metrix is a combination of software, data warehouse and business expertise developed by Taurus Software and F. Curtis Barry & Company, to help multichannel retailers measure, monitor and improve performance against goals and maximize efficiency over the long-term.

Manage Metrix gives companies access to operations and strategic analytics in areas such as Marketing, Merchandising, Vendor performance, Inventory and more. Included are key performance indicators for inventory aging, turns, fill rates and gross margin return on investment while also analyzing net contribution by sales channel, product category and individual item.

Practicon’s company mission is to help improve patient care and productivity for dental professionals. Their commitment to 100% satisfaction guaranteed will be better supported with Manage Metrix’s ability to help balance inventory levels, identify the true profitability on an item, recognize old or inactive inventory, and understand optimal price ranges for its products. Manage Metrix will enable Practicon to increase efficiency, decrease its overall costs, and maximize its profitability while ensuring customer service objectives are consistently met.

About Practicon

Since 1982, Practicon has provided dental professionals with innovative and continuously improved products and services to help maximize patient care, productivity and professional enjoyment.

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 & Co.

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.

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For More Information:

Call our Sales Department

Phone: 650-482-2022, ext. 150

Fax: 650-482-2010

sales@taurus.com

This is a case study of how one client made its decision to implement 3PL rather than manage their own operation. It is a small apparel company with 125,000 orders with 50%+ eCommerce orders. Product offering is 24,000 active SKUs and 75,000 calls annually. They needed to replace an outdated, ineffective, non-PCI/DSS compliant order management system, and they had no space for expansion. “People were sitting on top of each other” and the company had a huge assortment of core product to offer.

They were new to benchmarking and did not know their TOTAL cost per order. We analyzed the internal fulfillment costs and found that it was $14.00 per order without shipping and packing material costs. To arrive at this we took the TOTAL annual costs for the call center and fulfillment as shown below:

For the contact center expenses included: Direct and indirect labor; benefits, recruiting, vacation pay, payroll taxes, overtime, etc.; occupancy, communications, and depreciation, amortization/ lease costs for equipment and software.

For the backend fulfillment expenses included all the departments involved in the 4-walls functions of warehousing and order processing and returns. These costs include direct and indirect labor; hiring, benefits and payroll taxes, vacation pay and overtime; occupancy (equipment, heat, light and space); packaging supplies; and IT expenses for support to contact center and fulfillment operations.

The reason the internal cost per order was high is that the fixed expenses are high, such as managers and their benefits, occupancy, and IT expenses, etc. The business has two peak seasons per year. There are 26 “valley” weeks per year where the cost per order was very high, and the remaining weeks where the cost per order was efficient.

After surveying the client’s business, we developed a Request For Proposal and sent it to five 3PL companies that handled apparel. ln contrast the TOTAL 3PL call center and back end fulfillment initial, un-negotiated bids were between $5.98 and $9.01 per order. Additionally, the client realized a 10% decrease in outbound shipping cost by using the 3PL volumes with its carriers. The final pricing for three 3PLs was between $8.00 and $9.01 without shipping and packing material costs. This is very competitive pricing for the low volume of orders.

Some service level metrics that were part of the 3 year agreement included:

• 4.5 minutes average call
• Call abandonment rate of less than 3%,
• Online interface to the website and servicing web customer inquiries,
• 24 hour order shipping for in stock product,
• 2 day processing of returns and credits/refunds to the customer
• 24 hour stock put away
• $25 per hour fee for receiving, special projects in call center and fulfillment
• $125 per hour for IT special requests outside standard services and reporting

The business was implemented in 120 days.

With larger businesses it is often more difficult to show major expense savings. However, there are other reasons for considering outsourcing. These include avoidance of IT or telephone system upgrade costs, not taking on more space for fulfillment center expansion, ability to serve customers on an opposite coast, leveling peak seasons of the year and most importantly wanting to concentrate all management efforts on marketing and merchandising.

FCBCO has assisted many clients in finding the right 3PL DC and Call Center that meet their business requirements and are the right fit for their company and culture. We work with all types of businesses and product categories. Contact Jeff Barry at 804-264-8040 or via email at jbarry@fcbco.com to discuss how we can help!

It’s important for direct marketers to recognize that operations issues such as merchandise returns are, in fact, marketing issues. Smart, customer-oriented marketers like L.L. Bean and Lands’ End already know this and have always tried to make it as easy as possible on the customer if a return has to be made. Lifetime guarantees stating that a customer may return a product at any time, for any reason, go a long way toward making people feel secure about shopping by catalog or on the Web. Of course, at the end of any merchandise return, you, as the merchant, are still left with a piece of product sitting on your receiving dock, so the returns process must also be dealt with as an operational issue. In this article, we’ll take a look at the returns process—and what you need to do to ensure a streamlined flow of the product from the customer back into the distribution center.

Whether a returned item was the wrong size or was defective, you need a set of procedures for handling the product once it arrives back at your warehouse. This is called a reverse logistics strategy, and it accounts for what happens to all returned items from the time a customer decides she doesn’t want a pair of jeans because they are missing a button to the time the pair of jeans is repaired and put back on the shelf for sale. Here are ten steps to implement an efficient reverse logistics strategy:

1. Create clear, understandable returns forms that are easy for both customers and your staff to use. Post the policies clearly in the FAQs on your Web site.

2. Design your workstations with efficiency in mind (including allowing room for removal of returned boxes and other trash). Consider the desired flow of product and provide sufficient operating space.

3. Provide adequate work and staging areas for returns.

4. Institute a simple three-part transaction: Process the credit refunds or exchanges; update the customer file; and determine the product disposition.

5. Train your staff on handling returns. Provide a training manual and sufficient time for employees to become comfortable with the process.

6. Make your company’s written policies and procedures for returns accessible to all personnel at all times.

7. Use bar codes to identify product so that it can be returned to inventory or otherwise disposed of quickly and efficiently. Less keying means fewer errors.

8. Define return-to-stock procedures and be sure they are carried out in eight-hour to 24-hour cycles. Make sure enough space is allocated for storage of product to be returned to stock.

9. Cross-dock returns whenever possible. If the returned item is on backorder, you can ship it to the waiting customer rather than restocking it.

Designate experienced personnel to make decisions on routing of returned merchandise; assign less experienced (and less costly) personnel to repetitive keying and packaging functions.

Processing returns carries high costs that affect several areas within your organization. Here’s an example of the high price you might incur for processing one return of a $50 item: $8 to $13 for initial order processing and fulfillment, not including the shipping and handling costs, and another $8 to $10 for marketing, IT, merchandising and general/administrative costs. Plus, if your company’s error prompted the return and you have to pay the shipping, add another $4 or more. Back-end costs tack on an additional $3 to $4. If you have to re-ship a new product and bear that cost as well, throw in another $4. And if the transaction is not an exchange, the entire profit margin of $27.50 (at 55% gross margin) is lost along with the processing costs cited above.

Good returns handling practices are important for another reason in addition to the straight cost factor. The high price tag of mishandling returns also carries the danger of a potential loss of customer loyalty. If your return costs are just too high to handle, you may want to consider outsourcing all or parts of the process.

Returns are an unavoidable part of direct marketing. They can cost a bundle in the short term, and if you manage them poorly, they’ll cost even more in customer trust and loyalty over the long run. But by taking control of the process and streamlining it, you can minimize losses and satisfy your customers.

FCBCO has assisted our clients in developing their returns processing strategies in many of our warehouse projects. Our operations expertise and knowledge can assist you in developing an efficient and productive process. Contact Jeff Barry at 804-264-8040 or via email at jbarry@fcbco.com to discuss today.

Companies often struggle for six to eight months after implementation to regain their productivity and proficiency levels. Here’s how your company can shorten the OMS learning curve.

There are several types of documentation and training to consider: system user documentation describes the system (provided by the vendor); training materials which teach your employees how to use the OMS in your business; and Standard Operating Procedures which include company policies and its use with the system.

The vendor’s contractual responsibility is typically to “train the trainer”. This means training a limited number of people (less than 5) that can internally become the nucleus of your training team. Don’t under-estimate the amount of training hours you’ll need.

The development of training materials and the media used to teach the employees is your responsibility. While the vendor will provide documentation about how the system works for major functions, you need to have department managers take this documentation and produce materials that contrast your current system to the new system’s functions.

Identify who your “Super Users” will be. These are the business users and IT you are going to rely on to implement and train the organization. They should represent call center, fulfillment, accounting, management analysis and reporting.

Start early to understand the quality of the vendor’s on-line and printed systems documentation.

Browser-based Windows functions are more intuitive but you still need training materials. Less computer savvy employees may need additional materials and training.

Give considerable thought to your company’s internal training skills and the documentation you have developed before. Do you need to hire a training professional? Are there contractors that know the OMS and can help you?

One effective approach we have seen is to list out every transaction and function and develop a matrix of OMS users. On their own schedule they reviewed the training and documentation for the detail tasks. In this manner the department managers could plan and track the progress of each person.

Larger companies with more training skills and multimedia talent develop training programs about the new OMS. Contact centers which need to train larger numbers can best make use of more multimedia approaches.

Consider how you can use a conference room pilot test environment, normally used for total systems testing, to also be a training and procedures test tool. By running the entire system for testing, the department managers observe the entire system and the effects of all transactions; and you can develop training and procedures accordingly.

With the change over to the new OMS, what should you do to upgrade your Standard Operating Procedures. How do these procedures need to change with the new OMS?

Within a couple weeks after the “Go Live,” follow up within each department to see what additional training is needed. After you have the basic training completed, vendors often offer advanced classes in certain functional areas such as accounting.

Start early and make sure you have all the bases and functions covered. In the end you’ll cut down the learning curve.

FCBCO completed many systems projects annually and has the resource, knowledge and experience to assist you with your systems project. We ask that you contact Jeff Barry at 804-264-8040 or via email at jbarry@fcbco.com to discuss your systems project.

For this example we will use a multichannel retail company that has a 15% back order rate, processed 250,000 orders last year with an average of 2.5 items per order or 625,000 units. With its 15% back order rate that equates to 93,750 back ordered items. If we use the low end of $7 per back ordered item that comes to $656,250 of profit right off the bottom line. You can figure this out for your own company by looking at what goes into making up the costs associated with a back ordered item as follows:

• A three minute average Customer Service call at $0.12 per long distance minute = $0.36
• $9.00 as the hourly wage, plus 20% added on for benefits = $10.80 an hour divided by 60 minutes and that multiplied by the 3 minute average Customer Service call we have = $0.54
• LD charge for the “Where is my order” (WISMO) call = $.36
• Pick, pack and ship labor costs at the same labor rate as the call center staff and estimate that it takes approximately 5 minutes of labor time to fulfill the back ordered item= $0.90
• Carton and void fill = $1.20
• Freight out = $4.00

You are trimming $656,250 of profit right off your bottom line. And if your costs are higher than in this example; your profit reduction is even greater.

There are several other costs that can be factored in such as: the costs to obtain a new customer, administrative overhead costs, the cost of processing returns, lost margin opportunities, and expedited freight costs to bring in back ordered items.

But the consequences of backorders aren’t just increased costs, they are damaging to your customer relationship. Customers may give you the benefit of a back ordered item once, but they will find other store fronts to shop or alternative items rather than wait for another back ordered item.

Look for ways to try and minimize backorders without dramatically increasing your inventory position such as:

• Develop strong vendor relationships and keep them informed of any changes in your delivery schedules.
• Look for ways to improve your inventory forecasting, whether you are using percent complete or rate of sale and average weeks of supply.
• If your inventory forecasting is not taking into consideration vendor lead time you run the potential to be out of stock before you can get the merchandise replenished. Are your lead times being maintained to reflect any vendor delivery changes?
• Better understand your merchandise statistics and the impact they have on your profitability.
• Develop a plan for liquidating overstocks to free up cash for purchasing better selling items.
• Develop reporting or look for packaged software designed to aid the re-buying analysis (the use of exception reporting and time-phased item forecasting).

FCBCO can assist you in analyzing and developing an inventory strategy that will reduce your back order rate and the costs associated with them. We urge you to contact Jeff Barry at 804-264-8040 or via email at jbarry@fcbco.com immediately to discuss.

Companies that are feeling the most pressure are the ones that have a large ramp up for Q4 (large seasonal workforce), high employee turnover rates, excessive training costs, and less than optimal labor pool. In order to have a substantial reduction in expenses, it is vital to look at the major expense areas within the operation.

In a recent warehouse and operations benchmarking study for 20 catalog and eCommerce businesses, we looked at the major expenses for each department and function with the four walls of their operations. Our findings for those 20 companies were that:

• Direct Labor costs for all departments ranged from $339,456 to $5,517,365 ($1,514,048 average)
• Picking Labor costs ranged from $63,648 to $1,015,085 ($343,536 average)
• % of Picking Labor to Total Direct Labor costs ranged from 12% to 53% (23% average)

What if we were to tell you that there was a way you could potentially save 20 to 30% off your picking labor expenses and could have a 12 to 18 month ROI? Along with this substantial savings in picking expenses, you could also potentially increase your picks per visit to pick locations 7 to 9% and picks per visit to aisles 70 to 80%. For the average company in the above study, that would mean a $68,707 to $103,060 savings in 12 to 18 months with a major increase in productivity.

There is a way to achieve these savings and increase your productivity! Care to learn more? Contact Jeff Barry at 804-264-8040 or jbarry@fcbco.com to discuss.

The company president authorizes a project to investigate replacing the order management system. Immediately a turf battle ensues. IT is already researching the Internet for the most technically up-to-date IT platform. The users’ comments are predictable: “They’ll pick the most expensive, technology-driven order management system out there regardless of whether it fits our business.” There is a proverbial glass wall between the two groups in many companies.

The outcome: After months of no progress, the company president shrinks from his responsibility and says, “We’ll keep the current order management system.”

Unfortunately, this scene is played out on a daily basis in many companies both large and small. In defense of the IT department, they are often given responsibility for everything from telephone systems, to help desk, to advanced warehouse management systems, e-commerce systems and e-mail management systems. Most often they are under-budgeted. Management backs into a percent to net sales that the company can afford to spend. Additionally, the technology is diverse, complex and represents generations of different languages, databases and standards.

But in defense of the users, IT more and more takes a technological point of view rather than a business perspective. By a “business perspective” I mean that in many cases IT no longer knows the company’s business – not the mechanical things like how to enter an order. They lack knowledge of the industry overall. And they lack the understanding of how to help you grow and manage your business. Examples include details about what will make your marketing more effective; what do the merchants need to plan, grow and evaluate their merchandise selection; and how to help supply chain logistics become more efficient. In many companies, IT often looks at application function as secondary to technology. Additionally, they hide behind a lot of technical jargon that pushes users away from them.

And order management system vendor salesmen are no better off. Gone is the day when talented sales and support people really understood the industry. Many barely know their company’s system, and many can’t even demonstrate their order management system without the aid of a support analyst.

The result of all this is a collection of negatives.

A technically advanced order management system or a system that fits the IT standard is selected. It may be a weak system from a business perspective. Technology by itself rarely gives an ROI.

The IT department’s lack of a business focus means that users don’t ever make high-level use of the systems in place, because they don’t know what applications and capabilities exist in commercial order management systems or in previous generations of in-house developed systems.

Another result is that there isn’t a partnership between the user departments and IT, which optimizes the full, untapped potential of IT. The company suffers because the rather large investments in critical applications don’t materialize or they are years off of the projection.

Tear down the wall
You will have to start thinking differently in order to change things.

• Is there failure to recognize problems with IT? This amounts to costly neglect. Ask, is IT an expensive utility or a necessity in your company? Your management team and IT need to have a clear understanding of the mission and charter of IT, to provide information systems that assist in company profit and growth.
• Is there failure to get IT to realize it’s role in the future of the business? Put IT management in place that understands the bigger picture of your business and the information that is required to manage and grow it.
• Is there failure to make your IT director an equal partner in your strategic planning process? There must be exposure to the company’s direction and an understanding of where IT plays the crucial role. Get IT buy-in earlier rather than just handing them a list of requests after many months of meetings.
• Is there failure to fully utilize IT resources? Develop internally, or hire business analysts who are interested and dedicated to maximizing the user community’s use of the systems.
• Is there failure to hold users accountable? Don’t let the users hide behind IT flaws and shortcomings. They should know the business and they need to take responsibility for understanding the applications with which they’ve been provided.

Outside resources can help your company make this transition. In our order management system and warehouse management system consulting projects, we have successfully assisted companies in making these types of sea changes.

We believe that IT “for good or bad (and ineffectiveness is certainly bad)” governs the productivity and profitability of this industry. How well is your company tapping its potential?

If you’re interested in discussing your systems project 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.