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.

We are not pushing domestic versus off-shore, but instead the analysis of what using a third party call center can do for your business. One of our clients outsourced 300,000 phone calls off shore, resulting in a substantial reduction in costs. How substantial? This client’s fully loaded internal cost per minute was $0.72, while a fully loaded off-shore cost per minute for this client was$0.42—and most of the customer service remains in-house. Additionally, the client’s 90,000 mail/fax orders cost was only $0.15 per order: scanned, transmitted to Asia, keyed overnight and available on-line for picking and customer service the next morning.

Clearly, you need to look at the potential savings of outsourcing. How should you approach doing this type of study?

Know your internal costs. In order to compare your internal costs versus third party outsourcing, you need to identify your fully loaded internal costs. “Fully loaded” includes direct and indirect labor, occupancy and telecom costs. This needs to be converted to a cost-per-minute basis, which is how outsourcing will generally be proposed and invoiced. You may say that you can’t control occupancy costs, however, there may be other uses for that space, if call center is outsourced.

Competitively bid out to multiple vendors. It goes without saying that you need to competitively bid the call center functions in question to a short list of qualified bidders; both domestic and off-shore. This is the only way to get the lowest costs.

Formalize an RFP (Request For Proposal). This should include:

• A pro forma for your business, meaning the types and volumes of transactions (actual and multi-year forward projections)
• Required services and functions
• Service level standards for total call length, abandonment rate, and average call service level standards
• Request references, boilerplate contract, and reports available
• Details about order management systems needs and systems integrations including eCommerce site, etc.

Decide what to keep in-house. You should keep your call center customer service internal. This gives you a way to monitor the service levels of the outsource company. It also gives you the opportunity to have control and be the “front line” for resolving customer issues.

Ask other critical questions. Among the things you’ll want to know:

• How will training be conducted about your product(s) and company policies?
• Is the third party provider PCI compliant and certified? To what level?
• How will you monitor your customers’ calls coming into the third party call center?
• Who are the company’s references? Come up with standardized questions to ask each of the references so you can compare their responses.

Domestic outsourcing has some advantages over off shore. Here are a few that I think are important:

• There may be an advantage in the area of English speech. However, I am greatly impressed with how well the Philippines has performed for some of our clients.
• Shorter travel distance means you can visit call centers more often.
• Understands US culture.
• Keeps jobs in the USA. This may or may not be as much of a factor for you.

Of course, domestic outsource providers’ costs may be higher than some off-shore solutions, but that is not necessarily a dead end. We have one client, a major non-profit with a high average order, that outsourced 100% of its direct orders domestically while keeping customer service in house. They were able to successfully renegotiate with their domestic outsource provider so that the costs were not so widely different.

If you’re interested in potentially using a third party call center and want 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.

Now is the best time to asses your current systems infrastructure. Were you able to meet the demands of this past holiday season and meet your service levels of customer satisfaction?  Did you have the right inventory to meet demand at the right times?  Was your inventory forecasting accurate enough to get the inventory in time to meet your customer’s needs?

Does your current order management system have the functionality needed for future growth? Is it flexible enough to meet the changing needs of your marketing department?  What challenges will you face this year to get new functionality added to meet the demands of the business? What system functionality or business processes do you need or want to change?

You should look back now on all of the exceptions that you had this past holiday season – whatever they may have been – and determine how you will over come these this year.  It is time you asses your business processes and order management systems as well as prioritize what needs to be enhanced or replaced in order to better prepare you for 2010 and the upcoming holiday season.

Don’t hesitate to contact Jeff Barry at jbarry@fcbco.com or 804-740-8743 if you want to discuss your system needs and projects.

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: http://www.fcbco.com

Over 26 years of providing consulting services to hundreds of warehouses around the world, this is the highest concentration of contacts we have received from this vertical. The common theme for almost every one of these assignments or inquiries has been the desire to control and reduce costs. They are looking for ways to increase productivity, improve layout and space utilization, increase service levels to their customers, and to increase control over their inventory. By focusing on these areas, there is a good chance that costs can be reduced. Most other businesses have realized over the years, that warehousing and fulfillment can be viewed as a competitive advantage rather than a cost center only.

With all the attention focused on the healthcare debate, it is encouraging to me to see a segment of this industry trying to “bend the curve” relating to cost. I hope this is a sign of more to come and more companies in this arena contact us and others for advice on how to reduce costs.

If we can help you evaluate and cut costs will improving your productivity and space utilization in your warehouse, don’t hesitate to contact us.

Bob Betke 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: http://www.fcbco.com