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Three Trends Behind the E-Commerce Explosion

Shopping online with credit card on laptop

Scott Benfield, principal of Benfield Consulting, sees the rapid growth of e-commerce as an unstoppable trend, but also as an opportunity for distributors to boost the efficiency of their operations, protect market share, and acquire new customers. He recommends careful planning to avoid “digital washout”—that moment when you’ve invested heavily in building a modern-day customer experience, only to find that no one is using the new system and it isn’t generating sales.

In this interview, Benfield traces three trends behind the e-commerce explosion.

1. Better Software

Software has improved dramatically since the early days of web ordering, but Benfield says distributors still need four separate packages to deliver a good customer experience: a transaction module that monitors orders, status, and finances, a product information management (PIM) system to populate a distributor’s content management platform, faceted search software, and a procurement management or punch-out system that allows a customer to search the distributor’s catalogue and place an order on their site.

Most systems are sold à la carte, and that’s a problem for mid-sized companies, Benfield says. The software itself is pricey enough. But the cost of combining the components and integrating them with in-house systems makes for an even more expensive proposition.

“That bundle is a real concern for mid-sized companies right now,” Benfield says, “and it’s also a concern for the enterprise systems.”

But “as you would expect, software is getting better for the mid-market. Products are getting developed that answer the need for companies like TUG members.”

2. Integrated Platforms

Some of the newer enterprise systems are beginning to bundle two or more e-commerce components into integrated platforms that aren’t quite perfect for distributors—but Benfield says they’re getting there. Some vendors are also introducing unique features—like one transaction module, developed in California and embedded in a cloud-based enterprise system, that has top ratings.

Another breakthrough in the making: Most e-commerce platforms require duplicate databases, rather than relying on the existing one in an ERP. But a vendor recently entered the United States with a product that dovetails nicely and cost-effectively with databases in SAP, Microsoft, and a couple of other large ERP platforms.

“You buy the ERP, and the e-commerce platform is fully integrated, so there is no duplication of data,” he says. “Most people I know will buy that.” With new and better options hitting the market every day, Benfield is convinced that costs will continue to come down.

3. Avoiding Digital Washout: Integration with Workplace Practices

It’s a story TUG members know well: Any new software package is only as good as the implementation and support plan behind it. Digital washout is what happens when software is acquired without a plan and fails to deliver results. “It’s a problem when wholesalers don’t transform their organization to use the software,” Benfield warns.

The disconnect could be as basic as not having a plan to migrate existing customer accounts to the new system. “Yeah, I’m serious,” he says. “I’ve seen it happen.”

With a sophisticated new e-commerce system in hand, a company shouldn’t miss the moment of opportunity to rearrange its sales and redeploy its sales force to make best use of the technology. By measuring and categorizing accounts by net profitability, distributors can separate out the more marginal customers and hand them over to the e-commerce system. The sales rep cuts the frequency of his or her follow-ups, leaving more time for the highest-value relationships and customer segments.

E-commerce also opens the door to operational efficiencies, from shipping policies and costs to the location of warehouse hubs.

Across the board, “you have to sit down and plan it out before you go online in a big way,” Benfield says. “People are going to compare you against the leaders out there, the Graingers, the Amazons, and your functionality has to be as good as theirs in what you do.”

For more bright ideas on e-commerce, register today for TUG Connects! 2016, February 14-17 in San Antonio, Texas.

TUG is Your Gateway to Infor’s Enhancement Request Process

By David White
Chairman, TheUserGroup.org

The new year dawned with Infor putting the finishing touches on a more streamlined, technology-enabled enhancement request process that relies on the TUG portal as a gateway for distribution businesses.

As TUG’s representatives on Infor’s Customer Experience Board since the spring of 2013, Past President Suzanne Minard and I have had a window on the development of the company’s new Enhancement Review System (ERS). Its purpose is to do away with the spreadsheets that all of our Special Interest Group (SIG) leaders have worked so diligently to maintain, just to keep track of the requests members had put forward for different Infor products.

A Universal, Interactive Request System
Through the Customer Experience Board, we learned that the challenges with the previous enhancement process were not limited to distribution: Around the world, and across multiple industries, Infor product managers were constantly trying to manage and balance a continuing flurry of requests, with little transparency for the users whose needs they were striving to meet. So the Customer Experience Board agreed on an audacious goal. Working with Infor, we set out to create a universal, interactive system for all enhancement requests that would be transparent to all licensed users of Infor products.

It took a lot of time and hard work. But as of February 9, SX.e users have access to a system that:

  • Brings all enhancement requests together on a single platform
  • Creates a space where users can comment on current requests
  • Gives TUG members a one-stop platform to help Infor deliver solid products and enhancements that will help keep our businesses viable for decades to come.

The system is available for SX.e and Infor SyteLine during the initial rollout. It will be extended to all distribution ERPs later this spring.

Volunteering: The More You Give, the More You Get Back
With TheUserGroup.org actively searching for volunteers to serve as committee members and chairs, the saga of the Enhancement Review System has really reinforced my sense that the more you contribute to your user group, the more you get back.

It’s a hard message to swallow when you’re scrambling to fit 10 hours of work into an eight-hour day. But when I look back on my years of involvement with TUG, I know that the professional network I’ve built—with my peers across the industry, and with dozens of key contacts at Infor—is a cornerstone of my ability to work smarter and faster, more globally and more profitably.

Your active participation in TUG gives you the knowledge and exposure to help your company get the most out of its investment in Infor products. And your contact with other volunteers is a constant opportunity to learn what they’re doing in their businesses, giving you ideas that you can bring back to make a difference in your own work.

What a Difference a WMS Makes

Photo: delphinmedia/pixabay
Photo: delphinmedia/pixabay

For most distributors who use them, Warehouse Management Systems (WMS) are an essential tool, providing greater visibility and insight into stocks, supply chains, and transactions. They can deliver basic process improvement, performance measurements, and often some improvements in materials handling.

But for the many businesses that haven’t yet made the leap, WMS is still a bit of an unknown.

In conversation with TheUserGroup.org, distribution specialist Howard Coleman and Andrew Weith, chair of TUG’s TWL Special Interest Group, talk about the difference a WMS can make.

TUG: What is life like without a WMS?

Coleman: The thing about life without a WMS is that it seems perfectly normal to someone who’s never experienced anything different.

Think about someone who consumes a lot of red meat, and can’t remember the last time they had their cholesterol or blood pressure checked. As far as they know, everything is fine. Even if something small goes wrong in their day-to-day functioning, they may not initially notice. Everything still feels normal. But that doesn’t mean there isn’t trouble brewing below the surface.

A wholesaler-distributor has to look out for signs and symptoms that might affect their blood pressure. Symptoms like low warehouse productivity, uncontrolled costs, processing errors, inaccurate inventory, or customer service failures. In other words, all the performance attributes that can make or break your competitive advantage.

By providing the means to “do the right things” and showing “how to do them right”, a WMS becomes a big part of your life as a distributor.

Weith: When I stroll through a warehouse, there are signs that indicate there is no WMS in place: people walking around without direction, looking for inventory, looking for things to do, rather than being directed to inventory or their next task.

I also talk to people who are looking to implement solutions that take them from green screens to a simple GUI interface. That’s no quantum leap. It isn’t even catching up with what’s current! We shouldn’t be struggling to implement technologies that were revolutionary decades ago—barcode scanning is from 30-plus years ago, and if you’re still not using it, your operations are not relevant at all.

Imagine if your grocery store or department store didn’t use these technologies, either. What would your shopping experience be like? For the most part, the reason wholesale-distribution has been able to survive without these essential tools is that we’re typically not consumer-facing. We can hide our inefficiencies behind the big steel and concrete warehouse walls.

TUG: Is my distribution company too small for a WMS?

Weith: I’ve implemented WMS at numerous five-person or less sites. The hardware costs are relative to the number of people and the size of the building, so scale isn’t necessarily a factor. Smaller companies do have trouble shouldering the cost of consulting and labor to set up the software, set up the building, and train end users. Consultants and programmers can be used sparingly when their services would be more cost-effective.

People may think a WMS is only for large operations, but it can actually be of great benefit to many smaller locations. In an operation with very few employees, staff is already multi-tasking and often consumed with day-to-day operations. Automating and simplifying those duties can free up overburdened staff and allow them to focus on improving operations, not just living with them.

Coleman: There’s room for continuous improvement in any distribution business, regardless of size. Especially when you consider that only about 40% of warehouse activities add value that a customer sees and is willing to pay for. That means you have to understand where the waste exists, which is why processes are so important.

A WMS typically makes most sense for a warehouse that is at least 20,000 square feet in size. But that doesn’t mean smaller wholesale-distribution businesses can’t benefit from WMS concepts like bin location management, or by storing product by “order hits velocity”. There’s ROI to be captured, even in smaller operations.

TUG: How much money can I save by implementing a WMS?

Coleman: The savings you can achieve with a WMS depend on your current cost structure and baseline transaction costs and the level of improvement you can sustain. But a distributor can expect a minimum productivity increase of at least 10 to 15%, or as high as 50%.

For any wholesale-distribution business that anticipates significant sales growth, introducing a WMS now could be the key to future cost avoidance. If your warehousing system can absorb steady, incremental increases in volume without incurring new costs, that’s a benefit that rebounds right through the business.

Weith: Like Howard, I often see businesses benefit from WMS by growing their throughput year after year without adding staff to compensate, and also by eliminating redundant quality control steps. Perhaps even more important are the qualitative savings on the customer service side. If you can reduce your errors, improve inventory accuracy, provide up-to-the-minute status on orders in process, improve your lines per hour, and increase your on-time deliveries, that translates into fewer dissatisfied customers. At a time when a click of the button gets you what you want (and delivered the next day, even on a Sunday), wholesale distribution customers are coming to expect these service levels in their work lives, just as they do in their personal lives. It’s time to become relevant!

Infor Next: It’s All About Making Connections

Infor Next Chicago Sept 30 & Oct 1With more than two dozen sessions for wholesale distribution in a smaller, more intimate conference setting, Infor Next is a fantastic opportunity for TUG members to make connections: with each other, with the latest Infor software, and with the opportunity to use that software to optimize operations.

“Instead of running a major Inforum this year, we’re going to local cities to connect more directly with our customers,” says Kelly Squizzero, Infor’s Senior Director, Industry & Solution Strategy. “Chicago is a great location for Distribution, it’s centrally located and easy to get to, and this is a great place for TUG members to get connected with new solutions like Infor CRM, Pricing Science for Distribution and Infor Rhythm for commerce.”

Mark your calendar and take advantage of Early Bird registration! Infor Next takes place September 30-October 1 at the McCormick Place Convention Center in Chicago.

Leading by Learning

The Distribution program at Infor Next covers the cutting-edge topics that will help you protect and increase market share in a fiercely competitive marketplace. Squizzero points to sessions on service management, project job management, mobility, and the internet of things as essential learning for wholesale distribution executives.

“Distributors have to differentiate themselves, build tighter relationships with their customers, and streamline operations to compete more effectively,” she says. “Embracing technology is the way to achieve these goals.”

Squizzero’s own session at Infor Next will focus on the broader shifts driving transformation in the industry, from cloud computing to the new expectations and opportunities that Generations X and Y bring to the workplace.

Building on Each Other’s Success

The Infor Next format is tailor-made for TUG members to network and learn from each other. “It’ll have that feel of a conference within a conference, with a very tight focus on the distribution industry,” Squizzero says. “It’ll be a more intimate environment, with access to senior management, product management, development, and strategy, all in one place.”

There will also be ample opportunity for TUG members to learn from other distributors who’ve taken the plunge, modernized their ERP systems…and would never dream of looking back. Squizzero cites active TUG members McNaughton-McKay Electric Company and Mingledorff’s Inc. as two success stories that show the powerful gains that result from deploying the right software at the right time.

Early registration for Infor Next closes September 4. Sign up today!

Grant Howard: Four Components of a Whole-Company Approach to Distribution Success

A whole-company approach is what master strategist Grant Howard recommends for distributors who want to excel in a competitive marketplace. In this exclusive interview with TheUserGroup.org, he lists four steps executives can take to keep their businesses focused, productive, and strong.

Keep Your Customers at the Forefront

A company’s major objectives are profitability, longevity, and growth. But when distributors put all their emphasis on gross margin and return on assets, “it often leads into poor directions for the longevity of our company,” Howard warns.

“What often happens is that we’re so focused on the bottom line that we forget about the customers who actually keep us in business.” Executives can balance their objectives by turning their attention to vendor performance, employee productivity and, most important, the customer experience.

“The big areas we talk about today are the elements of a perfect order,” he says. “What is our fill rate? Do we have the right inventory when they need it? What’s our on-time delivery? And can we do this accurately, delivering the right product, the right quantity, and the right price?”

Metrics and Measurement: Too Much, Not Enough, or Just Right?

Distributors have access to far better business intelligence (BI) and business analytics (BA) than ever before, but Howard says many of them are still struggling to make good use of the tools that are available to them.

“A lot of companies just don’t measure, or they put out their objectives and go back at the end of the year to see if they’ve hit them,” rather than measuring more frequently and issuing course corrections as needed.

At the other end of the spectrum are the companies that “measure too much, or measure the wrong things,” he says. “They’re so overloaded with data and analysis that they lose sight of what their measurement is telling them,” going on an “unguided fishing trip” rather than “knowing what they’re looking for and checking their results.”

Infor has done its part by delivering the right software tools for BI and BA. TheUserGroup.org does the rest, creating a forum for members to learn from each other while bringing in podium presenters like Howard for expert guidance.

“You often see a company that says, ‘no, we can’t do that, it’s too hard,’ and then they meet someone who’s doing it,” Howard says. “When you talk to someone who’s successful, they’re excited about the results, and they tell you how it helped change their company, that gives you the impetus to do it yourself. Companies get to share at TUG, and that gets them on the path.”

Standardize Before You Optimize

There’s no point trying to optimize business processes that are already holding your business back. “Many companies think they can buy some technology, push the button, and it fixes whatever they’re trying to fix,” Howard says, but “technology just speeds up whatever you apply it to. If it’s a good process, technology will improve its accuracy, speed, and efficiency.” But with a poor process, or no process at all, “it only speeds up how quickly we can mess it up.”

The solution is to review and refresh business processes, get the right technology in place to support them, and make sure every employee knows how to make best use of the system. “Education is the key that ties our processes together with our technology, all leading to better accuracy, consistency, and efficiency within our companies,” Howard stresses. Which means the many distributors that lack formalized training and education programs are losing efficiencies and leaving money on the table.

Technology from End to End

In a bid to cut costs, many distributors have eliminated the technology operations staff who could take an end-to-end view of the enterprise and optimize business processes. Howard says that’s unfortunate, but “it’s not that we don’t have that body on payroll. It’s that we don’t have that way of thinking,” with the result that companies “chase fires, chase symptoms, rather than chasing root issues.”

Too many executives are so busy doing their business that they’ve forgotten how to look at their businesses, he adds. “They need to put together the right processes, utilize the right technology, and make sure employees know how to do it. It’s magical when that comes together.”

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Thought Leadership: It Takes a Community | David White

Thought leadership works best when everyone in an organization can contribute their unique knowledge and learn from each other. That principle—members helping members—has always been at the core of TheUserGroup.org’s success.

Now, we’re realizing that IT departments are the enablers for the knowledge and systems that will help their companies succeed. And that TUG is the place for everyone in those companies—from IT to purchasing, from sales and marketing to the executive suite—to get the business intelligence they need to anticipate and embrace the future.

In the end, it all comes down to bringing additional value to our members. If we can lift up one idea that helps everybody’s business get a little bit better, it’s a win for our entire membership.

The Wisdom to Lead Distribution

TUG is like a sports team that consistently impresses and exceeds expectations without relying on a single superstar to save the day. Very few of us stand out on our own. But as a group, we have the wisdom to lead distribution forward, in a way that goes beyond our strength in running our Infor products.

As a group, we know what it takes to run a distributorship, and we have a track record for helping each other do that better. That’s what thought leadership is really about. And it’s a key strength that points to the value TUG can offer to every part of a distribution business.

Delivering Value Every Day

At our annual conference, and in our year-round communication and member networking, we’ve always delivered the knowledge our member companies need to get the most out of their back-end ERP systems. But Dirk Beveridge made a wider point with his keynote address at TUG Connects! 2015.

He didn’t just speak to the IT professionals in the room.

He focused on the dynamics in a distributorship and the value employees need to bring back to their companies, every single day, to keep those companies competitive.

It’s more than keeping the computers running, keeping the lights on, and making sure everyone has a good login. It’s about bringing together all the parts of the organization and bringing back value to the distributorship as a whole.

Leading Through IT

TUG is developing the front-end, leading-edge thinking that will give them a strategic advantage in their markets, in whichever sandboxes they choose to position themselves as marketplace leaders. That’s how we assure the health of our companies and the health of our membership.

There are other associations in wholesale distribution, but TUG’s strength is that it leads through IT. That matters, because more and more business strategy decisions start off with a technological perspective.

IT is where distributors start thinking about how to communicate with the Millennial generation—and realizing that it’s less about Millennials, more about anyone who has access to Google search.

It’s a survival tool for distributors who sell their products with a printed catalogue, a call center, and sales reps knocking on doors, in an era when customers make 50 to 70% of the buying decision before we hear from them.

Rather than trying to confront those problems from the sales side, TUG starts with the department that has the infrastructure to deliver practical, lasting solutions. When we work from that starting point, then loop back through our tried and true approach to members helping members, there’s next to nothing our companies can’t do.

David White is Chairman of TheUserGroup.org and President of Kyana Packaging and Industrial Supply in Louisville, Kentucky.