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.

Here are the 10 major mistakes that we see companies make in selecting order management systems:

- Not having the right team in place to select and implement the order management system;
- Failure to write requirements and develop a gap analysis between vendor order management systems;
- Limiting the search to a few vendors too early in the process;
- Not conducting a competitive bid process;
- Picking technology over application function;
- Planning too many modifications versus adopting the order management system’s business process;
- Superficial demos that aren’t scripted to critical functionality;
- Incomplete reference checks;
- Signing vendor contracts before the total investment for hardware, software, services and maintenance are identified;
- Not having an intellectual property lawyer review the agreements before signing.

If you’re interested in discussing your order management system project, 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.

A: Today’s comprehensive order management system performs integrated functionality for order entry, customer service, order processing, warehousing, marketing and merchandising.

There are literally hundreds of tables and files in these order management systems that have to be converted or built from scratch manually. These range from promotional tables, shipping tables to the more complex customer files, item masters and purchase order files.

For smaller businesses, the better approach is to minimize the automated file conversion. For larger companies (meaning tens of thousands of customers and products) it will be a blend of build manually and program file conversation.

The reasons are:

•Converting years of history often result in many file integrity problems because the data is not consistent over long periods of time. Needless to say it takes many more passes through the data and it may still not be totally corrected;

•Conversion programs take time to write and test. Many of the new order management system files and tables can be set up faster manually than writing programs and converting files;

•Setting up files has also proven to be a good way of training departmental users in what the new order management system will require in terms of maintenance. It gives you familiarity with the new order management system at a detail level. If you attempted to convert all files the users will never understand early what the order management system requires.

For larger businesses, it may be more compelling to look at automating a larger share of the file conversion. But we would still advise that this should not be taken to extreme.

Some Guidelines:

•Most companies under estimate the time required to develop specs, program and test file conversion and using copies of subsets of the live file in training.

•Don’t try to machine convert too much data – too many years back. How much history do you need to convert?

•Look at using your marketing service bureau to be a source of hygiened customer data. Get them involved with the file conversion early to see how they can assist you. If you use them, you’ll end up sending them the files once the conversion programs are tested, several days before the “go live”. This will assure that you’ll have an update, hygiene customer data file. Merge/purge to eliminate duplicates just before the conversion. Address correction and NCOA would be performed.

•Take into account the data file problems that multiple years of data may have. System created problems, changes in coding of transactions or tables, etc.

•Consider the amount of time required to make the file conversion during the order management system “go live”. Obviously, you don’t test with the live data file. Initially test with a copy of selected records from the files. Selected records which are illustrations of as many conditions as you can identify. Then, do a conversion volume test to see how long the actual file conversion will take. This is especially crucial with large files (e.g. customers and item master) being loaded to a relational data base.

•Schedule sufficient time to humanly review data. Can’t look at every record but you need to sample the converted file sufficiently to know the file conversion programs are working correctly. The user departments should all be involved in reviewing samples in the files they use. If you only review a few accounts you are taking a high risk.

•Plan out the final days of the conversion. There will be the need to begin the file conversion a few days in advance of the order management system “go live” date. Most businesses can not shut down the business during the file conversion, so you need to figure out how to update the key files during the “go live”. How will you continue to process new customer orders and returns, add new products, etc.? Need to go back and update the files during the “go live”.

•Can you keep your old order management system operational for some period of time to answer inquiries and compare records? Remember a very high percentage of inquiries and complaints happen in the first 90 to 120 days after the sale or return and then inquiries drop off quickly. Does all customer data need to be on the new order management system back 10 years? But for marketing purposes we don’t want to lose customer purchase activity and promotional history.

File Build Versus Convert

In our order management system consulting practice we look at each company’s file conversion and its file data objectively. But here are some generalizations about the types of files and whether should be built manually versus converted

These are the files that are typically file converted with programs customer files, item masters, customer order and return history, inventory files, purchase orders, subset of item master for warehouse management system, item locations, etc.

The majority of files and tables are set up manually by user departments. These include promotions, source codes, sales tax, shipping & handling, files which govern business rules (system control values which determine the functions of the order management system), open orders (keying the data gives you experience with order entry and all the order coding), general ledger chart of accounts, merchandise hierarchy ( div, dept, class, ) and employee files.

Types of files could go either way – build or convert – accounts receivables.

There are some types of files – like the historical promotions – that aren’t converted. The results may be sent to a data warehouse, spreadsheet or marketing data base.

Summary

Get with user management and get an early start on planning the conversion. Realistically, consider what it will take to convert files by program versus building them manually and giving the user departments more experience with the new order management system’s maintenance.

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.

As a company looks to update its order management software, departmental management is required to prepare a formal feasibility study and estimated cost savings. This is not a small order - what we see consistently is that replacing an order management software, telephone ACD, and e-commerce platforms requires major capital expenses for many businesses.

If vendors want to sell more order management software, they need to become far better at helping customers understand how the installed application will make their businesses more efficient. Just how will that significant help expand and grow the business? What are the tangible savings? We’re talking about head count savings; inventory turn improvement; reduction in expenses such as maintenance or outside programmers; reduction in the cost per contact, call, or order; reduction in the number of critical errors; improved cash flow; more targeted mailings at the category level.

What are the intangibles the buyer can expect from installing the order management system? Those might be anything from improved customer service to flexibility in management reporting from data-mining applications. The benefits will be different from company to company depending on the capabilities of the prior and new order management software.

The question is, how does the purchaser determine what the benefits will be, and whether they will be worth the cost. If a vendor can’t help provide the information, that obviously leaves more work for the company to do.

It’s a complicated topic, but the scale of possible expenses in purchasing an order management system makes it that much more important to pay attention to. For more ideas on how to proceed with an ROI study, contact Jeff Barry at jbarry@fcbco.com or call 804-264-8040 for more help with your order management system project.

Gorman has written about the company and its growth in the last half-century in L.L. Bean: The Making of an American Icon. This is one of the industry’s great books. It painstakingly charts the changes in marketing and merchandising that achieved these dramatic results over 38 years. The book discusses the synergy and the necessary tension between marketing and merchandising. The role that supply chain strategies, including call center, plays in providing exemplary customer service. Staying true to the principles established by his grandfather L.L., sourcing the best outdoor products at the right price, how the college and preppy trends accelerated L.L. Bean’s growth, trying to sell to women shoppers without getting caught up in fashion trends, providing a 100%, no-quibble guarantee (there are legendary stories about shoppers returning outdoor gear after extensive wear). It is the ultimate in customer service and kept customers coming back. Bean’s huge retail presence in Freeport, ME and the slow charting of retail growth outside the region. Gorman talks about how different these channels are for them.

I met Leon Gorman in the mid-1970s. Mr. Gorman was friends with Mr. Frank O’Reilly, the then president of Brooks Brothers. In a very forward-thinking strategy, Mr. O’Reilly launched the first Brooks Brothers’ catalog when BB had less than 20 stores. At that time I worked for Garfinckels, Brooks Brothers, Miller & Roads, Inc., in the corporate data center as the manager of research and development (systems and programming). Our team was invited to Freeport, ME for a week to explore all the aspects of order management software and customer service. Mr. Al Schmidt was in charge of the marketing at that time. Mr. Gorman and his team couldn’t have been more gracious and thorough in educating us on the basics. Back then there were no commercially available order management systems. I vividly remember Mr. Gorman walking us through how he guided the selection of product and worked with creative to paginate the catalogs, and his concern for developing new products. We designed and programmed our 370 mainframe system by emulating L.L. Bean.

In the book, Mr. Gorman continually talks about the top guy being thoroughly involved with the merchandising of a direct company, something which is obviously very difficult to do given this rate of growth. Without continual product research and development and sourcing, retail and direct businesses are essentially out of business.

What’s interesting about the way the book is written is that many people were interviewed, current and former L.L. Bean managers across the company and consultants as far back as Stanley Fenvessy. Mr. Gorman has his commentary and the other participants give their viewpoints (they are identified by name and position). This illustrates the contrasting viewpoints of various people who charted and achieved the company’s long-term growth. But one thing for sure, Leon Gorman was ultimately in charge, and he held himself and the company accountable to achieving the best results for all stakeholders.

This is a great read. Get your team reading it now. Especially for young managers it’s a great way to see how all the functions fit together.

–

Curt Barry is president of F. Curtis Barry & Company, a national consultancy focusing on warehouse, systems, and inventory management.

MICROS-Retail is continuing to further enhance their retail integration from Xstore Point of Sale System to the CWSerenade Order Management System.  This now gives the prospective multichannel retailer a software suite that can handle web commerce (Fry or eOneCommerce), catalog and other direct marketing sales (CWSerenade), and retail store sales (Xstore) from one combined package offering that is supported with one database for all sales channels transactions and a single view of a customer’s purchases across these channels.  Read more of this story