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Tech Planning 2006: Automate At All Costs
What are distributors looking to do, technology-wise, in 2006? Simple: their efforts will be directed toward streamlining business processes with the help of today’s technological tools and systems — both new and existing.
There are numerous areas of a distributor business that could be made more efficient. Tech suppliers are looking to improve communication channels, upgrade Internet functionality and expand the services they offer customers.
Technology investments are slated to grow in 2006, and many distributors are spending that money on getting their current systems to function better. There are two main areas of focus when it comes to distributor technology adoption, says F. Barry Lawrence, Ph.D., Texas A&M University’s program coordinator and director of the supply chain systems laboratory, College Station, Texas.
“What we’re seeing now, beginning in 2004 and accelerating, is that people are willing to spend greater amounts on getting their systems to work better,” Lawrence explains. “We’ll see these budgets increase substantially over the next two to three years.”
Second, Lawrence says distributors will focus on providing real-time access to information for their salespeople and customers, usually via the Internet.
“The other direction is more and more automation of routine sales activities, and clever use of e-commerce processes to assist them in the marketing and introductions of new products,” Lawrence says.
Suppliers Key In
Universal Business Systems Inc. is one technology supplier that’s well aware of sales force automation and the wireless trend.
“A lot of our applications are basically going Web-based,” says Chris Raffo, president of the Somerville, N.J. company. “Our product, SalesPro Dashboard, enables the salesperson to manage business via the Internet, getting real-time information.” Most often, the salesperson accesses the information via a laptop.
“If you have your sales force out there and they can get information instantaneously, it enables the salesperson to be more efficient and make better decisions, so therefore they can be more productive,” says Raffo.
Other areas Universal Business Systems is concentrating on is moving distributors toward “paperless” transactions. Its latest offering integrates image processing into its system. Invoices, signatures, customer and product information are all recorded electronically, eliminating the need to file, store and retrieve paperwork.
“You see how the technology can help the distributor be more efficient, more productive and create efficiencies within the organization,” says Raffo. “By doing that, you’re enabling them to reduce costs and increase sales, so if the technology can help them achieve those things, it’s technology worth having.”
Adam Waller’s company is also focused on helping distributors communicate more efficiently. Waller is senior presenter for DDi System, Sandy Hook, Conn.
Efficient communication today means it takes place electronically, eliminating companies’ reliance on paper. People have become increasingly comfortable with the Internet, allowing large and small distributors alike to use these technologies.
DDi is moving toward paperless solutions for distributors. Today’s reliable file servers with their tremendous storage capacity allowed DDi to redesign its software to make use of these features, says Waller.
Removing paper from the customer equation isn’t easy — many distributors still communicate with customers this way — but Waller says DDi will concentrate on minimizing paper in the communications channel over the next couple years.
In 2006, DDi plans to roll out a new interface for its application. Called “inForm,” the interface is a reorganization and re-presentation of the company’s existing software. The new interface will make the software easier to learn and use, according to Waller. It will also appeal more to younger, tech-savvy generations entering the business.
Bob Hestenes, president of STEP1 Business Products, Newbury Park, Calif., says wireless technology is driving his company’s offerings.
“Eventually, whole cities will be one big wireless zone,” he says.
Hestenes says his company is working to make its products easy to use. STEP1’s Version 6 is an all-Windows solution. The company is also doing something unique — offering software as a service.
“Rather than having to go out and buy expensive software systems, there’s an alternative where people can simply use it and we host it so that they don’t have to buy it. Then they only pay for what they actually use,” Hestenes says.
Making systems and communication more efficient seems to be the goal of today’s technology suppliers. Waller sees opportunity in helping distributors streamline workflow. “One of the biggest things we do is provide a system that helps eliminate steps in their workflow,” says Waller. “That’s what I think people are going to continue to do.”
Use It Or Lose It
Failure to capitalize on the systems distributors already have in place is a recurrent problem for the jan/san industry, experts say. Waller agrees.
“Without a doubt, the No. 1 issue is that [distributors] don’t use what they have,” says Waller. He compares buying software to buying a car. Once you buy the car, you spend your time driving it and you become less concerned with continuing to learn about the features and functionality. Distributors must be careful not to ignore continuing education when it comes to their software purchases.
“Software isn’t like a car. It’s something that you’re learning for two or three years. Small companies, in particular, don’t budget for that.”
Lawrence suggests distributors take steps to ensure that they get the most out of their tech investments: “Don’t invest in anything that your people don’t thoroughly understand.” He says it’s important for upper management to emphasize education for those who will use the technology.
“Have a plan for what you want to achieve based on what the technology is capable of doing before you find out who to get the technology from,” Lawrence suggests. Don’t allow IT firms to lead you toward a specific tech solution; you must have the information and game plan in place to guide them by telling them exactly what you want, he says.
If distributors don’t invest in educating their people, they’re making a mistake, says Lawrence. “They must understand how the system is operating so they can control the system. If they don’t do that, people will always revert to their old ways and push the system to do what they want it to do rather than adopting the new processes that the company has envisioned.” IT decisions must be steered by the company, not the IT provider, Lawrence stresses.
Distributors will continue to invest in technology options that will allow them to streamline communications, and suppliers will keep producing new functionality to allow them to do that.
“The main thing here is that technology is now considered to be the enabler for tighter customer relationships on the parts of distributors,” says Lawrence. “So it’s no longer technology for technology’s sake. [Distributors] are no longer going to be viewed as inventory manager, but instead as information manager.”
Technology now enables distributors to manipulate the part of the supply chain where their role is most critical — their knowledge of customers, he adds.
“Distributors are the custodians of demand and consumption information,” says J. Michael Marks, principal and managing partner at Indian River Consulting Group, Melbourne, Fla. “They’re in the information-providing business. They lower the time required to get that information into the hands of customers. Sales force connectivity gives them the ability to give the customer an answer on the spot, instead of calling them back.”
Experts agree that distribution technology is becoming more of a necessity than a luxury given the nature of today’s competitive business environment.
“If you’re going to introduce more services on the same amount of human resources, you have to automate the processes that people are doing,” says Lawrence. Today, that process is information handling.
“It is essential, because we really don’t have the time to do it without [technology],” Lawrence says.
And while there’s always a cost involved, it is a cost that should be easily justified if the technology is right.
“It always costs more than you think — anything you spend on technology,” says Marks. “But if you spend the money right, it’s worth more than you thought it was in the first place.”
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TheConsolidation among technology providers in the distribution industry has been fast-paced in recent months. In June, distributor software provider Prophet 21 acquired Stanpak. Then in August, Activant Solutions acquired Prophet 21. These acquisitions have affected many in the jan/san industry who currently use the acquired companies’ systems to run their distribution businesses.
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