The Distribution Game


(Page 1 of 2)

When The Game, formerly known as Kudzu, grew from eight employees to more than 100 and its warehousing functions became more complex, the Sage MAS 200 user knew it needed a warehouse management system. It had more than 10,000 SKUs and a manual tracking system so it was easy for items to get lost in the 120,000-square-foot warehouse. The company, which designs, imports, decorates and distributes logo apparel, selected Radio Beacon WMS, a warehouse management system, because it integrated with Sage MAS 200. SWK Technologies, a Livingston, N.J.-based reseller, was brought in to create the integration.

Today, data flows from the back office to the warehouse and back again in a totally paperless process. Sales and purchase orders are delivered electronically to the warehouse floor. The system barcodes master cases when shipments arrive from overseas, generates a bar-coded shipping label for each order and does paperless picking. Picks are scanned for confirmation against order data, boxes are sealed and they are conveyed to shipping. In addition, the system separates orders between sister companies, eliminating confusion.

The system has enabled The Game to reduce warehouse staff by 37 percent while shipping more product than a year ago. And the company is able to ship on time, avoiding discounts for late deliveries that eat into profits.

Partner Insights

The Game has recognized the importance of having a solid grasp on its supply chain. However, many companies—especially small to midsize businesses—have yet to implement the integrated software that is required to effectively run their business.

“A lot of companies are running by the seat of their pants and it does affect their profitability,” says George Delp, business development director at Stanley Stuart Yoffee & Hendrix, a Maitland, Fla.-based reseller that sells Dynamics GP, SL and AX.

Having the right distribution software has perhaps never been more important as it is today and there are several reasons why this is the case. Cost-cutting pressures from large customers, like Wal-Mart, are largely driving the need for efficient and integrated supply chain management. It is imperative that manufacturers and suppliers have the required technology in place like Electronic Data Interchange, access to real-time data and the ability to accurately forecast inventory as the risks in doing business are high and the penalties for non-compliance can be hefty.

“Just dealing with returns based on a shipment error could put a small distributor out of business because of the costs,” says Matthew Turner, vice president of marketing for Accellos, which markets warehouse management, 3PL, logistics, transportation and mobile fleet management applications.

Time Is Money

Adds Paul Lundquist, vice president of sales at Open Systems, “In the mid-1990s, it was about keeping up with inventory valuation. Now, it is lead times and inventory ability.”

Open Systems offers two distribution applications: its legacy OSAS product for Windows, Linux, Unix and Mac users, and Traverse, a Microsoft-based suite of applications. The products integrate with Open Systems’ accounting solutions.

According to Lundquist, both applications are geared toward similar-sized companies, namely those with $1 million to $100 million in annual revenues.

Lundquist notes that about 10 percent of its sales are generated through its ASP model of the Traverse and OSAS offerings.

Applications under the Traverse and OSAS umbrella include inventory, which enables users to track stock, its value and location; and sales order to increase efficiency and flexibility with order entry, picking, tracking and billing.

In December, the company unveiled OSAS version 7.5, which includes two new applications — banking and landed cost — more than 100 enhancements and new features including new auditing and data encryption options.

Earlier in 2007, Open Systems introduced Traverse 10.5 with enhancements including a new Aged Trial Balance report with drilldown features; the assignment of unique roles for each user; and unlimited budgets and forecasts in the general ledger.

The next revision in the pipeline: A technology-focused release of Traverse that will leverage the .NET framework, making it easier to deploy for those users who have multiple locations. It will also have enhanced personalization features.

Trailer manufacturer PJ Trailers makes flatdeck, deckover, tilt, dump, car hauler and utility trailers and uses Open Systems’ Traverse to run accounting, distribution, manufacturing, eBusiness and point-of-sale modules on a SQL Server system. The Paris, Texas-based company sells trailers at more than 200 dealerships and retail outlets so staying on top of their business needs is critical to their success.

For specialized needs, PJ Trailers uses Synoptix for Traverse for reporting functions. Synoptix, an enterprise reporting writing and drill-down analysis solution, has a direct connection to the Traverse database so users don’t need to worry about data warehousing. This combo not only saves time but also enables the company to easily access data.

To check on the status of each of its seven different operating companies, PJ Trailers has also set up dashboards that show, for example, month-to-date, quarter-to-date and year-to-date information.

EDI: A Must Have

When asked what companies should be looking for in their distribution software solution, Lundquist was quick to say EDI. EDI, the transfer of data that represents documents involved in commercial transaction, is becoming increasingly important as a mechanism for companies to buy, sell and trade information.

“The ones in it for the long haul will want it [EDI] integrated [back to the accounting system],” says Lundquist, who notes that they offer EDI through a third party.

Echoing that sentiment is Lynn Berman, president of SWK Technologies, who says, “You can’t do business with big-box retailers unless you are EDI [equipped].”

As a Sage Master Developer since 1997, SWK has developed and published a variety of applications and enhancements for the Sage MAS product family. With a particular emphasis on supply chain innovations, the company’s premier product is MAPADOC EDI. The EDI mapping wizard for inbound purchase orders and outbound invoices cuts mapping time by more than 75 percent, according to SWK. SWK has developed the integration between Sage MAS 90 and 200 and Accellos WMS/Radio Beacon warehouse management software.

“You have Accellos in the warehouse and Sage in the back office and MAPADOC bridging that gap,” says Berman. Today, the company serves about 1,200 clients.

Berman says it also is important that distribution software integrates with UPS or FedEx and has the ability to track the status of all inventory in multi-bins and multi-warehouses.

A very basic, entry-level solution could have a price tag of $40,000 to $50,000, says Berman, but it isn’t unusual for a solution to cost several hundred thousand dollars. The specific software required and the price varies depending on a company’s needs.

One consulting firm put the price tag for a warehouse management system at $100,000 minimum with hardware, software and consulting each accounting for about one-third of the price.

Bob Gaby, CPA, CITP, principal at Encino, Calif.-based Arxis Technology, says it is important that companies also have a system that offers robust inventory management and rapid replenishment. Not being able to fulfill an order as expected can be detrimental, so having a solution with a “capable to promise” feature to provide realistic product delivery dates based on actual and planned material availability, current production capacity and vendor lead times, is also a key to success.

Arxis, which resells Sage Accpac, MAS 90, MAS 200, MAS 500 and Radio Beacon, serves about 300 clients that typically generate between $10 million and $150 million.

Gaby says that distributors are also recognizing the importance of CRM solutions, giving them the tools needed to track quotes, potential orders and leads. Arxis Technology is a SageCRM Certified Business Partner.

Hemant Makhija, director of product management for Sage Accpac, sees an increasing need for integration. In this case, between Sage Accpac WMS, which automates inventory handling and order-fulfillment processes to help companies manage their supply chain, and the Sage Accpac ERP accounting and operations system. Such integration can, for example, reduce the re-keying of data, save time and reduce potential errors.

Aside from integration, Makhija says that companies also need to focus on accuracy, efficiency and customer service.

“A good supply chain puts you at an advantage,” says Makhija. “At the end of the day, you are competing on efficiency. What differentiates you from competition is servicing the customer.”

On the Sage MAS side of the business, Scott Pugmire, senior vertical industry manager for Sage Software Business Management Division, says the company is looking to take a different approach, a top-to-bottom approach, with regard to distribution solutions.

Pugmire was unable to provide a lot of details as it is in the early phases of the process, but he says that within a five-year window Sage will have new features and functionality that pertain to specific industries such as food and beverage, and electronics and computers.

“Distributors have to move away from just watching costs, providing more services helps them stand out from the crowd,” says Pugmire.

Comments (0)

Be the first to comment on this post using the section below.

Add Your Comments:
Not Registered?
You must be registered to post a comment. Click here to register.
Already registered? Log in here
Please note you must now log in with your email address and password.

Register now for FREE site access and more