Smoking The Competition With Integrated Solutions
Wouldn't you like to grow from $800,000 to $5.5 million? Read the inside story of how one integrator, Intellilink Services, is doing just that.
End users clearly are now demanding integrated solutions from value added resellers and systems integrators. End users know buying the pieces of a solution - automatic identification and data collection (AIDC), point of sale (POS) and electronic commerce (EC) - from multiple providers is more expensive.
However, buying an integrated solution from a single provider is more cost effective. Additionally, many end users have learned multiple providers blame each other, no matter who is at fault, for system problems. Those factors are leading end users like Tobacco Mart (11 stores in Indiana) to turn to technology providers like Intellilink Services. Intellilink Services, a Madison, AL-based, systems integrator, provided Tobacco Mart a front-end POS system, bar code readers for item price scanning, handheld data collection devices for inventory collection, and electronic data interchange (EDI) to facilitate communications with suppliers. Intellilink integrated those components with software to help manage and oversee the stores' back-office functions like inventory, accounting and employee scheduling.
According to David Thomas, president of Intellilink Services, the ability to provide Tobacco Mart a front-to-back system enabled Intellilink to secure the account. "We've always sold integrated solutions, because that's what today's end user wants.
"Many dealers only drop-ship stand-alone hardware," Thomas adds. "The dealers who don't integrate POS systems or AIDC products into total solutions are losing out on a lot of sales opportunities." Here, Thomas explains how Intellilink Services combines POS, AIDC and electronic commerce. He also discusses why a focus on integrated solutions has helped the company grow from $800,000 in revenues two years ago to projections of $5.5 million for 1997.
Information Flow Starts At The Point Of Sale
Intellilink Services sells its systems to various segments of general retail, including drug, convenience, grocery, liquor and tobacco stores. All have similar needs in handling the flow of sales and inventory information, which starts at the POS system at the "front end" of the store. This information flow, which begins at the point of sale, continues on to software modules in the store's back office. There, it is used by managers to more effectively and efficiently manage the store's daily operations.
Items purchased are immediately deducted from inventory when scanned at the point of sale. Cashiers scan the items with bar code readers. These readers can be fixed-mount or handheld units. According to Thomas, it is faster for cashiers to run items past a fixed-mount scanner, as opposed to picking items up and scanning them with a handheld unit.
At around $1,500, vertical bar code readers can be significantly less expensive than the horizontal bar code reading systems grocery stores use. These scanners, which typically are built into checkout stations, can cost users $2,500-$4,000, according to Thomas.
Helping End Users Get A Handle On Inventory
Intellilink developed its software to alert managers when items fall below a certain level in inventory, Thomas says. Then, using Intellilink's software, managers run suggested reorder reports for those items. The suggested reorder reports are exactly that: for example, the reports suggest that 25 cases of candy bars should be ordered if their inventory has dipped below five cases. Intellilink's software provides managers with the suggested number of cases for reorder based on specific parameters that managers establish.
Managers can set parameters for reordering based on an item's average weekly sales over six-, eight- or 12-week periods. Managers check to see how many items, on average, were sold each week over the period. By comparing the average number of items sold per week to the number remaining in inventory, the manager knows the quantity for reorder.
"Most stores have established guidelines for reordering," Thomas explains. "They might order from their major wholesaler every Tuesday. On Thursdays, they might order from other suppliers. The reorder reports allow managers to make more accurate forecasts. Managers don't want to maintain too large an inventory of a certain item if they reorder it once a week."
Managers also set parameters based on consumer buying trends. For example, Thomas says people often receive government-distributed checks at the beginning of the month. "Some stores order more of certain items, like tobacco, at specific times to ensure they can meet the increased demand," he adds.
EDI Streamlines Store-Supplier Communications
Intellilink integrates electronic data interchange (EDI) with its system. EDI streamlines and facilitates communications between business partners, because the communication happens electronically. Once managers review reorder reports, they can initiate an EDI transaction with their wholesaler or supplier. He continues, "If the managers agree with the suggested reorder levels, they can send the report, via EDI, to the wholesaler as is. If they want to change quantities, they modify the report before sending it."
These types of transactions used to be paper based. EDI saves users time and money. "EDI is one more component of a total solution that can help end users increase their bottom line," Thomas says. "With EDI, ordering is electronic and automatic. The wholesaler receives the order electronically and doesn't have to rekey the information, which saves time. Once the wholesaler receives the store's order, it can send an invoice back to the store, also via EDI."
Intellilink's software also handles accounting functions like accounts payable. "Once the store manager transmits the reorder report to the wholesaler, the store's software sends a report to the store's accounts payable module. Stores then use the report to pay the wholesaler. Most wholesalers require that payments be made at designated times every month."
Monitoring Human Resources
Intellilink also designed its software to manage various time and attendance-related functions. For example, the software monitors employees' hours worked so that employees don't exceed a certain number of hours, like 40, in a given week.
Many stores also have to work within a daily budget when scheduling employees. For example, most stores cannot exceed daily limits when it comes to the total sum paid to employees. "The software calculates employee wages, the number of employees working at a given time, and the number of hours they're working," Thomas explains. "That way, managers won't exceed the daily budget."
Thomas adds that managers can program the software to monitor whether employees who aren't scheduled to work attempt to clock in. Some employees steal from their store by having someone else punch them in when they aren't working. This type of fraud prevention helps stores save money.
Integrating Handheld Computers
Intellilink Services offers handheld data collection computers as part of its front-to-back systems. They play an integral role in areas like inventory control and receiving. When a store receives a shipment of bar coded pallets from a supplier, store workers use the handhelds to scan the bar codes, Thomas says. Scanning the pallets enables the workers to know which items were shipped, as well as the quantity.
Once the workers finish scanning the pallets, the information they just collected can be transmitted to a host system. From there, a report can be printed out, allowing managers to have a list of the items received. They can then check to see whether everything they ordered was shipped, and if they were billed properly for different items in the shipment.
Scanning items at the point of sale deducts them from inventory, but items occasionally are stolen or misplaced. Because these items are never deducted from inventory, the store may not have completely accurate inventory counts.
So, store employees use the handhelds to perform inventory counts in stock rooms. After taking inventory of items, they use the handhelds to send the information to a host computer. That way, store managers can compare those counts with the inventory levels generated from item scanning at the point of sale. However, before stores can use handheld computers, they have to be programmed to perform certain functions. These functions - also referred to as applications - include direct store delivery and physical inventory.
Rapid development tools, like Datavision's Eclipse, can streamline these programming efforts for VARs "Handheld computers come out of the box with some standard applications," Thomas says. "But these applications usually aren't exactly what the store wants."
Eliminating The Red Tape In Store Operations
VARs and integrators also can help stores more efficiently manage direct store delivery transactions. In these transactions, direct store vendors (DSDs) visit the stores and visually examine the shelves. Based on that assessment, the DSD vendor pulls, from the truck, the items the store is low on and places them on the store's shelves.
However, many DSD vendors stock products the stores neither need nor want. Stores receive bills significantly higher than expected, and may have to waste time resolving them. Intellilink Services moves customers away from that approach. Intellilink recommends stores use their software to create the suggested reorder reports for DSD vendors. That way, the store gets the products it wants.
Once the store receives the shipment, workers scan the items received and transmit the information to the host system, updating the inventory module immediately. "VARs should help stores take the guesswork out of the reordering process," Thomas adds. Intellilink Services also has designed a 32,000-item master file that helps end users save time. The file includes most common grocery items like tobacco products, candy and soda pop. Intellilink has organized the items by category, vendor and quantity.
The file is beneficial to stores when they stock a new item for the first time. Normally, stores have to register new items with their system so that they can be recognized when scanned. Stores typically have to hand enter information about the item, including its Universal Product Code, the vendor, the price it will sell for, and the department it falls under, like bakery. Depending on the number of new items that stores take on, hand entering that data can be time consuming.
Because Intellilink maintains a master file with that information, the store merely has to scan any new items to register them in the system. The end result? The stores save valuable time. "Automation should increase the end user's level of efficiency," Thomas says. "That's why we developed the master file." Intellilink also has integrated a price book function with its software to help users save time. This function is a time saver for stores when they have to change the prices on the products from a certain vendor.
A soda pop vendor might make 40 brands of soda pop in 12-ounce cans. For example, Pepsi makes Mountain Dew and Dr. Pepper. If Pepsi raised the price of all of its 12-ounce canned beverages by three cents per can, Intellilink allows stores to make one price change that affects all 12-ounce Pepsi products. "The store goes into the software and finds the vendor - Pepsi," Thomas says. "By changing the price for Pepsi, all their 12-ounce can products are affected automatically. It's a lot easier for the store than changing the price in the system on every item individually."
Integrated Solutions Spur Growth
According to Thomas, single-location stores, as opposed to national chains, have traditionally invested in stand-alone products, like cash drawers, without tying them into a larger store management system. However, single-location stores are becoming more educated on the benefits of integrated solutions. As these stores develop more sophisticated solution requirements, they are placing greater pressure on technology providers to offer a system that manages their operations, from front-end POS transactions to back-room functions like accounting and inventory management.
Thomas concludes, "More and more, users are seeing integrated solutions at trade shows. And that has spurred their interest. But they're also seeing the benefits chains are realizing with integrated solutions. So VARs have to keep pace with the users' interest."