Improve Your Implementation Experience with Wholesale Distributors

1. Improve Your Implementation Experience with Wholesale Distributors • Scott Pugmire • Sr. Vertical Industry Manager

2. Background on Scott Pugmire Eleven years in the software industry with experience in: VAR experience • ERP implementation (mostly wholesale distributors) • Project Management, implementation, training, light development Software vendor experience • Implementation methodology providing training and tools to VARs • Product Management in the areas of Distribution & Manufacturing • Industry Marketing in the areas of Distribution & Manufacturing vertical industries

3. Agenda • Overview of Concepts • Transition considerations from sales to implementation • Get to know your customer… the earlier, the better • Discover the most important things about your customer… What they don’t tell you • Turn knowledge into a plan, but carefully! • Communicate, communicate, communicate • Change Management • Don’t forget to write

4. Overview of Concepts

5. Overview of Concepts • How well is sales preparing the implementation team? • How well does the customer know themselves? • How well do you know your customer in the beginning? • What are the obvious and subliminal issues? • How can you and your customer best manage their process improvements? • How can you continue to build a relationship with your customer after they go live? Most Important Concept: They Own This Project

6. Transition Considerations from Sales to Implementation

7. Transition Considerations from Sales to Implementation • What has sales learned about the customer during the sales cycle? • Company Structure and Issues • Hot Buttons for Them • Inventory Control? • WMS? • ADC? • BI? • CRM? • Order Management? • Vendor Management?

8. Transition Considerations from Sales to Implementation • What internal procedures do you have to transition knowledge? • Face-to-Face Conference Meeting • SharePoint or other means of storing prospect/customer notes and information

9. Get to Know Your Customer… The Earlier, The Better

10. Organizational Dynamics • Who is project sponsor in the customer’s organization? • Who are the stakeholders? • Warehouse/Operations Manager • Director of Finance/Controller • VP of Sales • How well does the customer know themselves? • What are their other Interest outside of warehouse improvement and how do warehouse needs weigh-in against other needs of the company? • Are they any unusual/unique circumstances surrounding the dynamics of the company?

11. Organizational Dynamics • What are the dynamics among the leadership of the company? • Who will be the internal competitors? • Any family dynamics? • What is the status of the company within their own industry? • Are they an up-n-comer? • Are they the industry leader? Is this your Executive Sponsor? ▼ Hopefully it’s not this person 

12. Process Improvement Focus • How do the needs of the warehouse compare to the needs of other parts of the organization? • Complexity, Priority, Software Capable • Are there interdependent or pre-requisite improvements that must be made? • Can the customer give you baseline metrics for their processes with their legacy system and current processes? • If not, you should encourage them to consider postponing the start of the implementation until they are able to compile this information. • What types of information are important for them to measure success after implementing the new software and processes? • Receipt Time • Order Picking Time • Customer Fill Rates • Rate of Returned Goods due to packing and shipping errors • Employee Turnover Rate

13. Process Analysis • Set aside one or two day minimum to drill down into your customer’s current operations • Start with a brief meeting with the warehouse manager and others to get a high-level understanding of the warehouse • Take a warehouse tour • Perform process flow analysis on their key processes • “A Day in the Life” of an Inventory Item Process Flow Diagram • “A Day in the Life” of the Returned Goods Process Flow Diagram • Application Environment Diagram

14. Process Analysis Examples

15. Discover the Most Important Things About Your Customer… What They Don’t Tell You

16. Let’s Start With What They Do Tell You • Have an initial meeting with the warehouse manager to get an overview of their operations in their own words. • Do they have multiple warehouses? Do they use a hub-n-spoke method of inventory distribution between warehouses? • How organized do they think their warehouse is? Where do they see this project taking them? • What are all of the software programs in use to assist in tracking Inventory? Is Excel the main tool? • How much faith do they have in their people? Do they have high-turnover? How much shrinkage do they have? Do they drug test? • Do they know what items have the highest inventory turns? • Do they have a significant rate of stockouts?

17. Then Compare To What They Don’t Tell You • After hearing what the customer says their operations are like, have them give you a warehouse tour. • Look at their warehouse design – are zones, racks, and bins in use? If so are they labeled? Are there handheld devices in use? • How is the receiving dock setup and what is its proximity to the shipping dock? • Look for dusty pallets, boxes, or unorganized areas of the warehouse and ask about them. • Observe the staff at work and ask about various people that you see performing their jobs. • Overall, are the things you observe from the tour in agreement with the way the customer describes it?

18. Potential Personnel Problems • If it is uncovered that inventory shrinkage is a major problem, follow up with some possible reasons: • Do they drug test? • What kind of unsupervised access do employees or others have to the warehouse? • Do salespeople raid the warehouse for sample stock, or are there established and followed procedures? • If productivity or customer satisfaction is an issue, follow up with the following questions: • Are the best employees working in receiving? • Are there particular employees with unusual longevity? • Are there any morale issues?

19. Turn Knowledge Into a Plan… But Carefully!

20. Turn Knowledge Into a Plan… But Carefully! • As you begin to take what you learn about your client and turn it into a plan of action, be cognizant of the following: • Who benefits the most from an improvement? • Whose job changes the most from an improvement? • Are you really listening to your customer about the change they want, or filling in the blanks based on past experiences and how you solved them? • Is the individual change a process change, a software change, or both?

21. Inventory & Warehouse Control • Only the people receiving, moving, picking and packing material should be allowed in the area where merchandise is stocked. • Record all material that leaves a warehouse • If Sales uses sample stock, create a customer account for each salesperson. • Each location should have approved stock lists • Warehouse Organization • Establish Zones/Bins • Analyze the racking system • Clean up junk areas of the warehouse • Have a fire sale • Reconcile Inventory in a more timely manner by establishing Cycle counting procedures. This will help identify when shrinkage is occurring and help your customer solve this problem much faster

22. Analyze The Inventory • The fastest moving products, regardless of their product category, should be closest to the shipping, staging, and receiving. • If you decide to use this method of bin location assignment, base your decision of where to stock a particular product on the number of “hits” it has experienced in the past 12 months. • Research shows that the more often a product is received or shipped, the less accurate its computer stock balance Source: Effective Inventory Management by Jon Schreibfeder

23. Bin Categorization • Fixed Bins: used for products that you always want to store in the same location. Even when you are out of stock of an item, its fixed bin remains empty, reserved for the replenishment shipment of the product. • Random Bins: In a warehouse that utilizes random bins, replenishment shipments are stored in any empty bin. As soon as the stock maintained in a specific location is exhausted (i.e. an on-hand quantity equal to zero), the random bin that held the item is made available for the stock receipt of any product stocked in that warehouse. • Holding Bins: Holding bins are used to store any inventory that is not currently available for sale. For example, you may use holding bins for material awaiting inspection, repackaging, or return to a supplier. Source: Effective Inventory Management by Jon Schreibfeder

24. Receiving Dock Management • If a pick ticket is printed, fill the order. Most successful distributors have an order “cut off” time. Any order received before the cut-off time is acknowledged and a pick ticket is printed. Warehouse employees are expected to fill all printed orders before they leave for the day. • Stock Receipts should be put away within 24 hours of receipt. Many distributors put stock away when there are no customer orders to fill. Sure, the packing slips pulled out of the shipments are sent to the office to be entered in the computer. But the actual material often stacks up in the receiving area, waiting for a “lull” in activity. • Process customer returns the day the material comes back. Many salespeople have an aversion to processing credit memos. After all, credits usually have a negative effect on commission checks. If you look at salespeople’s desks (or search through their drawers), you’ll often find a stack of credits that will be processed “as soon as they find the time”.

25. Communicate Communicate Communicate

26. Communicate, Communicate, Communicate • Keeping consistent timely communications ongoing with your customer is the key to managing their expectations • Remember that this is what you do everyday. Don’t assume that they have understanding of the project status • Keep the Project Sponsor informed from time to time

27. Change Management

28. Change Management • Getting the employees at all levels involved from the beginning makes them feel as though they are contributing to the decisions that will ultimately affect them at a later date. • They will be more likely to buy into the project • Keep in mind that the new software and updated processes may mean better data tracking for upper management, but a lot more work for the staff. • When it’s time to go live, they suddenly seem to have an escalated interest in the system

29. Don’t Forget to Write

30. This is a Long-Term Partnership • Look for opportunities to continually help them grow their business • There are many ways to find revenue from additional consulting or software solutions • This will be an ongoing lucrative partnership for years to come

31. Thank You