Crossing Technologies To Build Total Solutions
VARs who don't sell a full complement of technologies are selling customers short. This VAR explains the value of crossing technologies.
Ten years ago, most lumber yards "flew by the seat of their pants" - i.e., they operated with little or no automation or technology. However, 10 years ago, most lumber yards didn't have the high level of competition they now do. Competitive pressures force many businesses to increase efficiency and productivity, and lumber yards are no exception. According to Randy Faris, president of Dimensions Software, a Salt Lake City, UT-based, VAR, the days when employees checked inventory by looking at stacks of wood are long gone. Lumber yards have realized the value of technology.
Dimensions Software has capitalized on the market's need for automation by realizing the value of crossing technologies. Initially, the company sold only point of sale (POS) systems for processing shoppers' payments. However, Dimensions has expanded its product mix by offering automatic identification and data collection (AIDC) technologies like handheld terminals to streamline inventory management. And the company has researched, but hasn't yet sold, document and image management systems. In document imaging applications, paper documents and records are scanned, producing an electronic image of the document. These images are stored on the user's computer. With imaging systems, access to and retrieval of documents is fast and easy, because users search for them right on their computer, where the document cannot be misplaced or misfiled. Such problems are common with paper documents stored in file cabinets.
Says Faris, "Lumber yards, like any other business, want to operate as efficiently as they can, because that translates into greater profitability. Technology plays a key role in helping them obtain those gains in efficiency. But we'd be selling our customers short by just selling them one technology."
Building An Integrated Solution
VARs who cross technologies typically offer several main product lines, Faris says. Here, he describes how each technology plays a role in an integrated solution.
POS - These systems - which include peripheral products like built-in bar code scanners, cash drawers, keyboards, pole displays and monitors - act as the centerpieces of integrated-technology solutions, Faris says. For example, when a shopper buys a hammer at a lumber yard, a cashier scans it at the POS system to determine the price. But scanning the hammer has a purpose beyond identifying its price. When the hammer is scanned, it is automatically deducted from inventory. When managers realize their inventory of hammers is almost depleted, they reorder the item. "So, the POS system plays an important role in inventory management," Faris explains.
AIDC - Handheld data collection devices also play a vital role in inventory management, Faris adds. For example, lumber yards frequently receive shipments of hammers and many other items. These shipments typically arrive on bar-coded pallets, in a group of boxes tightly wrapped together in clear plastic. Workers use handheld data collection devices to scan the pallets' bar codes in order to determine their contents. By scanning the pallets, workers are able to quickly learn what item their facility received, how many units, and what specific model of that item was shipped. In addition, workers also use handheld data collection devices to take inventory of their storerooms. Though items are deducted from inventory when they are scanned at the POS system, that process is not a completely accurate reflection of actual inventory levels. For example, items are occasionally misplaced and stolen. Those items are not scanned at the POS system - and hence are never deducted from inventory.
Back-office software - Software is also an important aspect of any end user's technology investment, Faris says. This software is used to manage areas like inventory, employee scheduling and sales forecasting. When hammers and other items are scanned and deducted from inventory, it is inventory management software that keeps a running tally of the number of units remaining in the lumber yard. Lumber yard managers also use back-office software to generate labor reports that help them more effectively schedule employees. For example, the software provides reports that show how sales fluctuate, depending on the time of day and day of the week. Saturdays, for example, are typically one of a lumber yard's busiest days. Armed with information that details store-activity levels, managers can better determine how many employees are needed for a given shift. That way, they can avoid scheduling too many employees, a costly and wasteful practice.
By taking advantage of back-office software, lumber yards also can generate reports that show them their sales over a six-month or 12-month period, giving them a better idea of how sales fluctuate over extended periods. They can more accurately forecast how much lumber and other supplies to purchase by analyzing consumer buying patterns, Faris says. "Using sales data, lumber yards know how much higher demand for lumber will be in the summer months, which is normally the peak time of the year for construction work," he explains. "Lumber is a commodity item, and its price can vary greatly from one week to the next based on supply and demand. So, while lumber yards don't want to run out of lumber, they also have to be careful not to purchase too much, especially when the price is high."
Faris says some of Dimensions' competitors largely ignore the back-office needs of lumber yards. "The bottom line is that the end users need information to make the best and most informed decisions possible," he concludes. "And they have to make decisions quickly. Once chains like Lowe's and Home Depot began opening in a lot of cities, the existing lumber yards knew they had to start paying more attention to how much inventory they had."
Electronic commerce - Dimensions Software developed an on-line ordering system that allows lumber yards to electronically transmit purchase orders to those suppliers. Once the lumber yard draws up the purchase order (PO), it transmits the PO to the supplier over a modem connected to a phone line. The supplier receives the PO on its main computer system. The supplier sends a notice to the lumber yard, also over a modem and phone line, confirming that the purchase order was received and is being prepared for shipment. Suppliers also send invoices electronically to the lumber yards.
- Time and attendance software - Dimensions Software also integrates time and attendance software with its solutions. This software allows end users to automate the collection of employee hours worked. Therefore, such employee information is processed more quickly and accurately than if the same information were processed manually.
Why VARs Should Cross Technologies
End users place a great deal of pressure on VARs to offer integrated solutions, Faris says. Dimensions Software has obtained several accounts simply by offering a total package: front-end POS systems, handheld data collection devices for managing inventory and back-office management software. VARs should cross technologies for several other reasons, he adds. They include:
- Being a "one-stop shop" - Faris wants his customers to turn to him whenever they need to upgrade their existing technology or add new technology. VARs who cross technologies, he says, are more likely to secure repeat sales from existing customers. "If one of our POS clients wants to add handheld data collection devices, they'll typically look to buy from us first because of our existing business relationship," he explains. "But dealers who don't cross technologies lose out on those kinds of opportunities to their competitors. When that starts to happen frequently, it snowballs and they miss out on a lot of revenue."
- Avoiding interface problems - Handheld data collection devices have to communicate with, or interface with, back-office software for managing inventory, Faris says. For example, workers count inventory by using the handhelds to scan the bar codes on items. In order for managers to analyze the information collected, the information has to be transmitted from the handhelds to the user's inventory management software, which resides on a host computer system. Before information collected on the factory floor can be transmitted to the host computer, the handhelds have to be programmed to interface with it. However, problems periodically result when end users buy new software or data collection devices from multiple VARs. These VARs have to work together to write the interfaces between new handheld devices and inventory management software. Faris says these VARs sometimes have a hard time meeting on a timely basis to handle such programming, inconveniencing the end user. And when the handheld devices and software are not communicating properly, VARs often blame each other, leaving the user in the middle. When VARs sell total solutions, they don't have to rely on other VARs to work with them. Says Faris, "We wanted to make sure that when our customers buy new products, those products integrate seamlessly with the existing products or software. And the best way to ensure seamless integration is to write the interfaces ourselves."
- Meeting user expectations - End users now assume that VARs cross technologies, Faris says. "When we talk to prospects, the first question they ask is whether we sell point of sale systems. The next question is whether we offer handheld data collection devices. If we didn't offer POS and AIDC technologies, a lot of end users would eliminate us from consideration for the sale. It's that simple. We recently gained an account because we could provide handhelds to the customer." Price decreases in this equipment have been a factor in its increased adoption in a wide range of vertical markets. For example, Faris says that five years ago, many end users could not afford to employ handheld data collection devices because they cost end users about $5,000 per unit. The devices have come down significantly in price; users can now buy them for around $1,200 per unit.
Finding A Home For Document Imaging And Management
Businesses in many markets have replaced their file cabinets of paper records with computerized document and image management systems. Most realize productivity gains. Dimensions Software currently doesn't have any clients in the lumber and building materials supply industry who use document imaging systems. According to Faris, these systems currently are cost prohibitive for lumber yards. "Many systems cost from $200,000 to $300,000," he says. "If the systems were more affordable, our customers would use them. A large company like General Motors can afford to use imaging - right now. In the next several years imaging systems should come down in price to the point that more users can cost justify the technology."
Despite this fact, lumber yards do have legitimate needs for document imaging systems. They generate paper documents, as any business does. Lumber yards generate many of these documents during online ordering with their suppliers. Though invoices and purchase orders are sent back and forth electronically between lumber yards and their suppliers during the online ordering process, these companies still print paper copies of these transmissions. Most of the time, people print these "hard" copies out of habit, not of out of necessity, Faris adds. Lumber yards and their suppliers simply have become accustomed to maintaining paper-based records. Generally, lumber yards keep those documents at least until they receive the shipment they ordered. After the shipment arrives, many keep the documents on file for up to a year, in case they need to refer to them. So they have a need to electronically store documents. document imaging systems provide two primary benefits, Faris says. They include:
- Faster and easier access to documents - In companies that use imaging systems, employees search for documents and records on their computers, not in file cabinets. When employees remove paper documents from file cabinets, they sometimes place the documents in the wrong place when they return them, making it difficult or impossible for the next person to find them.
- The elimination of double data entry - Many lumber yards that keep paper documents often have employees manually enter the information into multiple databases. These databases include accounts payable and inventory, he says. However, entering the same information more than once is costly and wasteful, Faris adds. With an imaging system, documents are scanned and can be stored directly in an accounts payable module. "Scanning the document and storing it in an accounts payable module is faster and more efficient than manually entering the information," he concludes.
Imaging On The Horizon For Lumber Yards
Faris does expect the price of imaging systems to decrease and reach the point where they will be more widely adopted. Actually, Dimensions Software has been evaluating document imaging systems for the last four years. Faris is encouraged by the fact that the technology is less expensive now than when the company first took a look at it. "Every year the price has come down a little bit more and the performance and functionality has improved," he adds. "It might take another two years before most of the lumber and building materials supply industry can afford it."