Success in order management system selection is driven by assembling a strong project team of all the departments that will use the system.  Order management system selection is not just IT’s project.  Large scale systems like order management software change everything about the way your company will do business.  The users want good order management systems, but one group or another either pushes responsibility off on the other or they don’t have input and buy into the process. Also, be sure to have executive sponsorship that supports the project from start to finish.  Be sure you have a project manager capable of coordinating and supporting project.  Don’t rely on the order management system vendor’s project manager to manage the entire project.  For large order management software projects this is a full time job, if you don’t have the resources seek assistance from experienced external resources to assist you.

Are you currently involved in an order management system project? Do you feel overwhelmed and need to talk to a consultant about getting some help? Contact us at any time in the project to release the pressure of the order management system project as well as your daily tasks.

Curt Barry is President and Founder of F. Curtis Barry & Company, a 26 year old consulting firm focusing on system categories such as order management systems, warehouse management systems, and inventory management systems. He can be reached at cbarry@fcbco.com or 804-740-8743.

The next 12 blog posts is a series of mistakes that our clients have had to painfully learn prior to us getting hired or after we have completed our contracted phase of the order management system project.

Many order management software projects get off to the wrong start.  In my four decades of order management system project experience, here are five things management always wants to know upfront in the project before the selection project proceeds:

• To understand type/tier of order management system that best suits your needs
• Perform preliminary gap analysis of your business compared to commercial systems available
• Develop preliminary total cost of ownership for entire project
• Understand the schedule to complete process
• To know what resources – both internal and external – are required to implement and support project

How many times have you told your boss, “ABC will cost this amount” or “We can complete the project on this timeline” – only to find out after you do the in depth research or do the project, reality is dramatically different.  The point here is that management doesn’t want to go through months of detail study to find out that they can’t see their way to a huge investment.  They want the answers to these questions first and then give you approval to do the detail work.  This is a catch 22.  Unless you have current prior experience with the order management system being investigated, how will you answer these questions?

It may be an option to engage a consultant to gain insight.  You have to answer these questions in a manner that doesn’t create unreasonable expectations for the project. If you are facing the above order management system expectations from your executives, contact us to discuss your system project.

Curt Barry is President and Founder of F. Curtis Barry & Company, a 26 year old consulting firm focusing on system categories such as order management systems, warehouse management systems, and inventory management systems. He can be reached at cbarry@fcbco.com or 804-740-8743.

In our continuing series highlighting order management system vendor successes, I had the opportunity to speak with John Buttery, Director of Alliances for ProSource and we discussed the following insights about their recent successes.

In the last quarter of 2009 ProSource signed Flaghouse, Inc. to deliver their Multi-Channel Commerce (MCC) Solution. Flaghouse is using the MCC to manage their e-commerce operations to provide a better experience for buying, quoting and customer service activities.  ProSource MCC is set to be the backbone of Flaghouse’s operations, providing the functionality, flexibility and scalability for Flaghouse to achieve their corporate goals. As Flaghouse’s order management system, the MCC solution will also allow Flaghouse to execute marketing campaigns based on a 360-degree view of customer data and comprehensive P&L reports by campaign segment as well as sophisticated telephone sales with up/cross selling and promotional logic built in.

Late last summer ProSource also signed Lucky Vitamin to their MCC product to enable Lucky Vitamin to continue its expansive growth while continuing to provide the same level of excellent customer service across all brands and channels.

ProSource’s upcoming release is scheduled for July 1^st and in addition to the order management system features outlined above, it provides:

• Central order entry and fulfillment with seamless sharing of data, business rules, products and more
• Full warehouse management system features to manage inventory logistics and supply chain management
• A powerful Web store with comprehensive functionality and 100% integration to the back-end
• Multi brand, multi-channel integration with real time data sharing
• A complete financial and supply chain management software
• Robust data analysis and reporting

As ProSource continues with its development of their order management system the MCC and relationships with complementary third-party software vendors; a flexible well-rounded order management system emerges for many different size companies with varying complexities.

Are you getting started or currently traveling down the path of search and selection of a new enterprise resource planning system, order management system, or warehouse management system? As you may already know; there are numerous options and available systems to review and talk with. The most important decision to make is to not go at it alone. Use our systems knowledge and experience of over 26 years to assist you in whatever capacity you need to reach your goal of a new order management system or warehouse management system. You can either email Jeff Barry or call him at 804-740-8743 in order to discuss your particular system project.

In our on going series of highlights of successes within order management systems, I had the opportunity to speak with Jeff Marker, Sr. Vice President – Multi-Channel Retail for Junction Solutions and he had the following insights about their successes this past year.

Jeff elaborated on how despite the economic challenges of last year that Junction had its most profitable year since its inception this past year with several notable new deals and implementation go-lives.  Jeff also stated that Microsoft Dynamics AX got a lot of recognition in 2009, and was recognized as the leader in the middle-market ERP space by The Gartner Group in its May 2009 Magic Quadrant report.  See chart below:

Junction Solutions had some forward moving companies sign on to their Microsoft Dynamics JunctionMCR solution last year such as:

• Arthur Middleton Capital Holdings, six unique divisions with both B2C and B2B requirements
• Rejuvenation, America’s largest manufacturer and leading direct marketer of authentic reproduction lighting and house parts with B2C, B2B and Retail
• Americas Gardening Resources (Gardener’s Supply) with B2C, B2B and Retail
• The Teaching Company with B2C and B2B

And earlier this year signed Taylor Corporation/Everglades Direct a large B2B conglomerate that provides business and personal communications products, technologies and services.

In addition to the above signings in 2009 several other multichannel retail companies completed their implementation and went live:

• Burpee Direct
• Peet’s Coffee
• Musicians Friend with the remaining brands and locations which also included integration to High Jump WMS
• Holt’s Cigar
• Football Fanatics

Some of the key enhancements in 2009 to the JunctionMCR product that propelled the success of their clients included:

• PA-DSS Certification
• Velocity Report for Slotting
• Expanded directed putaway and replenishment
• Wireless warehouse support for adjustments, cycle counts, picking, cart picking, putaway, and replenishment
• Days on hand reporting
• Additional Installment / Deferred Billing options
• Continuity enhancements – consolidation, MRP demand profile, schedule synchronization
• Embedded customer statistics
• Mass price updates
• Initial web store integration with JunctionEOD

The following planned new functionality for JunctionMCR is scheduled to be released in the second quarter of this year:

• Expanded web store integration with JunctionEOD
• Microsoft Dynamics/AX for Retail POS support
• Direct store delivery mobile application as well as headquarters support
• Promotions rules and conditions for advanced pricing logic
• Additional Pick list sortation options
• Barcode generation integration with Seagull Scientifics’ BarTender product
• Pick list locations – Case pick / Alternates
• Promotional inserts during picking
• New Inbound and Outbound logistics features
• Shipping import/export documentation
• Open to buy budget additions
• Landed cost
• Support for Merchandise planning and store replenishment
• Enhanced personalization options
• RFM scoring enhancements
• Microsoft payment service integration
• Gift and stored value card
• Retail workflow
• Business intelligence enhancements

These are exciting times for Junction Solutions as their functionality and user community continues to expand.  Companies are always looking to add functionality and push their vendors to keep them ahead of their competition.  With a number of this past year’s enhancements and the ones planned for this year Junction Solutions is doing just that.

For those companies who have been waiting to replace their existing applications with new expanded functionality there are many choices for you to leap frog your competition; don’t let them get the jump on you!

Paul Sobota is vice president of F. Curtis Barry & Company, a consulting firm established in 1983 focusing on warehouse, systems and inventory management. To learn more, visit www.fcbco.com.

Recently cited information from the technology firm CNET reveals that roughly 49 percent of IT projects suffer from budget overruns, and 47 percent suffer higher than expected maintenance costs. It’s imperative that companies identify and properly plan for all expenses associated with replacing a business application to avoid these costly mistakes. Here are seven ways to help you go about this process.

1. When considering replacing your software application, ask yourself the following questions during the due diligence process:

* What applications will be considered, and what functionalities are required?
* What are the major milestones and time frames necessary to complete the project?
* What’s the total cost of ownership necessary to complete the project?

2. When asking a vendor to submit a formal proposal, include all the vital information necessary to receive a detailed proposal. For example, in the case of an order management system, vital information includes, among other things:

* Peak and average figures for the number of concurrent users;
* Order volumes by month, with the peak week;
* Average lines and units per order; and the
* Number of customer records.

This information isn’t only necessary in identifying the licensing, but also the proper sizing for application and database servers.

3. Analyze the vendor proposal painstakingly. For items such as training and implementation services, understand the number of days being proposed and what roles or tasks will be performed by the vendor. Be careful of terminology like “the normal training days are X” or “the standard project management days are X.” Make sure the “typical” or “standard” days are sufficient for your project.

4. Understand the vendors’ license maintenance and support plans and when payment is due. Many vendors charge these fees once the application is delivered. Some maintenance plans can be as high as 20 percent of the MSRP or originally proposed license fees.

5. From an application licensing perspective, review the pricing model and any optional modules that may be necessary to support the functionality within your business. If the vendor is supplying the hardware for the application and database servers, be certain the hardware is sufficient and budgeted for, including the necessary hardware upgrades if optional modules are added later or if the licensing forces the hardware into major upgrades.

6. For program modifications or integrations to other software applications, provide functional specifications for the vendor to submit a formal proposal. While the vendor responses may only be estimates, the more detailed the specifications, the better a vendor can estimate the expenses. Don’t wait until after the project is approved to get these expenses.

7. So far these expenses have focused on vendors’ costs and haven’t addressed planning for internal expenses. Be careful, because internal expenses are usually less budgeted for and can lead to project overruns very quickly.

Travel expenses are one example of internal expenses to potentially budget for. It’s often necessary to travel to and from vendors’ facilities, as well as travel expenses for the vendor to be on-site. These expenses can be as high as 15 percent to 18 percent of the total services for the project. Be aware, some vendors charge a travel fee if the travel is over a certain number of hours or they charge cost plus 2 percent to 3 percent.

Other internal expenses to consider budgeting for include:
* an increase in payroll or overtime to complete the project;
* the hiring of temporary labor or outside resources, such as consultants or programmers; and
* upgrades to other network hardware or the rewiring of the internal network.

Formalize a full budget before proceeding, being sure to build in sufficient dollars for items such as services, programming and training that may not have been sufficiently budgeted for by the vendor. By clearly defining your budget, you can avoid being one of the 49 percent who exceed their IT budgets.  These practices are necessary regardless of whether you are selecting an ecommerce solution, warehouse management system or order management system.

Selecting software, be it an Order Management System (OMS), Warehouse Management System (WMS), Enterprise Resource Planning system (ERP), E-Commerce solution, or some other system, is a challenging task. The process normally begins by documenting a set of requirements, constructing a Request For Proposal (RFP), identifying vendors, viewing web demos, and conducting site visits and reference checks.  Recently a trend appears to be emerging to select vendors based on word of mouth recommendations and two-hour web demos. Is that really the right approach? Selecting the right vendor is critical to the success of your company. The choices in the software marketplace are overwhelming, and if the software solution meets your requirements, how do you determine if a vendor is the right vendor for your business? Here are a few points to consider.

Full Cost
No matter how many times I’ve heard businesses claim that cost is not the primary factor in the selection process, in actuality it always becomes a prime factor after RFP responses are returned. But is enough information provided in the RFP to ensure the vendor’s pricing is accurate? Does the pricing include the software, hardware, number of user licenses, transactional volumes, upgrades, maintenance, training, integrations, modifications, conversions and implementation services? I’ve seen instances where clients developed what they thought was a good RFP, which the vendor responded to appropriately with an initial cost based on the defined requirements—but after due diligence determined the real cost was more than double the original. The best course of action is to have an RFP that not only covers all the requirements but also identifies any and all unique business processes. The more detail provided to the vendor, the more likely the pricing will be closer to actual. Key areas that affect pricing are data conversions, integrations and implementation services.

Stability
When investing in software, either purchasing a licensed software solution or using a Software as a Service model, vendor stability is key to ensuring that the vendor will be around in the future. Does that mean a vendor has to have been in business for 25 years? No, but there are questions that need to be answered. Besides how long the vendor has been in business, consider if the executive team includes proven industry leaders. What is the size of the vendor? What is their core business, and does their software support your industry? How is the vendor staff organized? How many people are within the organization? Is their software solution proven in the marketplace? Inquire about where the vendor stands in the market: Do they consider themselves a top-tier, mid-tier or low-tier player? Inquire if the vendor is being acquired or acquiring other companies. Are they involved in any litigation or lawsuits that may affect their services?

Financials
Along with stability, you should try to determine if the vendor is financially secure. Is there an investment group backing them? Are they public or private? Have the vendor describe their ownership structure, including any parent or holding company. Ask for their total billings/revenue and the revenue for the type of business segment you are in.

Client Base
The client base will indicate the vendor’s experience relating to your business segment or industry. Is the vendor a strong player in Business to Business or Business to Customer (Direct to Customer)? Do they specialize in apparel, gifts, furniture, electronics, etc.?  Most vendors are willing to share their entire client list. Other key questions to ask are:

• Does the vendor hold annual user meetings?
• What size are most of their clients?
• Would you be the largest or smallest client?
• How many of their clients are in your business segment or industry?
• What modules of the software are clients using?
• How many clients are currently being implemented?
• How many clients have left the vendor in the last 24 months?

Reference Checks and Site Visits
A critical aspect to identifying the right vendor is conducting reference checks and site visits. Vendors will typically provide a list of 3 to 5 clients for reference checks. It’s best to take that a step further and contact clients outside of the list the vendor provides. And don’t just ask typical simple questions such as, “Does the software work?” or “How did you configure order entry?” Ask more revealing questions, such as, “Did the vendor do what they said they were going to do?” “How did the vendor treat you?” “How did the vendor respond when things went wrong?” “Did the install meet the implementation schedule?” The face-to-face with a client using the software has always proved to be worth the investment in travel and expense. Visiting at least two client sites will provide a good indication of how well the vendor does what they say they are going to do. Not only is it recommended that you visit at least two client sites, you should also consider visiting the vendor’s headquarters to meet with the executives of the company, the implementation team and the application developers.

Vendor Strategy
Does the vendor have a long-term development strategy for the software? Do they utilize user input for implementing new features, or do they require that each client fund modifications, which are then incorporated into the core application? How does the vendor prioritize new features?

Implementation
It is equally important to meet the implementation/project manager along with the account liaison or future account manager. You will want to know the project plan, timeline and the number and amount of resources needed to keep the project on track, on time and within budget. If the vendor cannot provide any of these it usually indicates that they don’t use a proven methodology for implementation.

A Successful Partnership
Last, but not least, one of the most important keys to successfully selecting the right vendor is having a good culture fit. Creating a partnership with a vendor that understands your business, is willing to work with you and “gets you” is paramount to a successful relationship. That is why you want to spend the time onsite at the vendor’s location to meet with the executive team, project manager and account manager to make sure the “fit” exists. Doing so will give you a clear understanding of what it will be like to work together. At the end of the day, creating a successful vendor/client relationship means being able to look them square in the eye and trust them to deliver on whatever is promised.

More and more companies today are outsourcing fulfillment to avoid making investments in that non-core area, or in the technology necessary for it. We’ve also seen hundreds of start-up e-commerce companies that simply don’t want to be in the fulfillment business. All of these companies are turning to third-party fulfillment (3PF) providers like you. With so much riding on it, it is very important that your front-end (call center, customer service, and marketing) and back-end (warehousing, order management, and fulfillment) systems and technology give you a continuing competitive advantage. The systems you select will have significant ramifications for your personnel’s productivity, as well as how effectively you serve your customers and help them grow their businesses—and the management information these systems provide can help you grow your business. No matter what type of system you’re considering, the purchase is a long-term investment. In short, selecting the right front- and back-end systems for your 3PF business is a major undertaking.

In this article, we’re going to lay out the major functional considerations for new software and the methodology for selecting a system. Over our past 25 years as industry consultants, we have both assisted companies in selecting third-party fulfillment providers and helped third-party providers select new front- and back-end systems to improve their fulfillment services, reduce costs and improve customer service.

General Considerations
As you start to review systems, it’s important to consider the uses for which these systems will be implemented. As we all know, there are many types of products and services that have different fulfillment system requirements. These business differences include:

• Catalog management
• E-commerce
• Retail store replenishment
• Infomercial
• Printed point of sale and point of purchase materials
• Collateral and printed materials
• Replacement parts
• Returns processing

The point is that you need to be sure the focus of your fulfillment operation can be accommodated functionally by the application. A good example is catalog management. Does the customer service system allow identification of e-commerce versus catalog orders? Does the pricing engine accommodate all the pricing, discounts and services that a catalog requires? Are the analysis systems geared to page, depiction, merchandise analysis price range, and other catalog-specific requirements? Additionally, some types of products such as apparel with color size matrix or multi-dimensional matrix require on-line displays and reporting geared to this merchandise.

Overall, since a company using third-party fulfillment is giving up direct contact and control with the customer, the system and process needs to be highly functional. But there isn’t a single “one size fits all” solution that typically fits all businesses. The application needs to be scalable to high peak volumes and be very flexible to accommodate differences in client businesses. And since not all clients will want the full line of services, can the system be used in a modular fashion?

With these general comments in mind, the following specific points are important for front-end, back-end and analytical tools required by 3PF providers. In each major system function we will list key functionality to be considered.

E-Commerce
Today, the traditional catalog company has more than 50 percent of its sales coming from the Internet and e-commerce. Most catalog management feels that a high percentage of e-commerce sales result from receipt of the catalog. So the functionality that 3PF companies have to provide must support the expansive growth of e-commerce. Many 3PF companies offer expanded services to build and support client Web sites as a way of providing a one-stop service. Among the major e-commerce functions:

• Business system to Web site integration for inventory, customer and shipment tracking
• Search engine optimization (SEO)
• Personalization
• Ability to build and support client Web sites
• Ability to customize the look and feel of the site
• Integration with other industry leading Web analytics, search, rich media and review systems
• Support of e-mail campaigns

Call Center, Customer Service and CRM
One of the major areas of functionality at which third-party software has to excel is to have complete multi-company functionality throughout the entire application. Even for e-commerce and “bricks and mortar” companies that don’t have catalog, there are call center requirements that have to be provided. Some of the larger providers, such as GSI, have many major retailers that have outsourced their call center and e-commerce support. Additionally, the more effective call centers are really tuned into revenue generation for the client. This not only takes the form of up-selling and cross-selling functions, but also outbound selling of product.

Important functionality in this area includes:

• Multi-client, multi-title front end
• PCI compliance
• Expanded customer and order notes
• Multiple addresses for ordered by, bill to and ship to
• Ability to flag customers for future action using a workbench or workflow system
• Ability to handle pop-up of company and customer through CTI
• Full customer order-taking and service for catalog and Internet
• Up-selling and cross-selling capabilities
• Remote call monitoring through the ACD
• Customer purchase, segmentation and lifetime value history
• Outbound selling
• Internal fraud checking
• Ability to set credit limits and thresholds
• Interface to major credit card processing providers

Pricing Engine
A third-party system needs a good pricing engine in order to be able to effectively handle multiple clients’ business rules, as well as various rules imposed by individual clients, for promotional pricing, discounting, targeted pricing by customer segmentation, free shipping, and a multitude of other options.

Order Management & Fulfillment
Third-party order management and fulfillment embodies what we consider to be the most critical functionality for the back-end application. In order to ensure profitability, the order management system has to make the fulfillment provider efficient in terms of labor, capacity and facility utilization. Among the most important areas:

• Picking options: batch pick, zone pick, pick to cart, pick to tote, pick to light, etc.
• Velocity slotting and cube utilization
• Random or directed put away
• Pick slot replenishment
• Hot pick processing

Labor involved with picking and packing is more than half the total direct labor cost, while direct labor is more than 50 percent of the cost per order, not including outbound shipping costs. Functionality such as picking methods, slotting, hot pick areas, streamlined returns processing, etc. all help to keep costs in line.

• Wide variety of product types and sizes requires different WMS storage functionality

A major challenge facing 3PF businesses is the frequent need for storage and fulfillment of a wide variety of products encompassing various weights and dimensions.

• Rate shop shipping methods
• Interface to major shipping systems

Outbound shipping has become the largest single expense, even exceeding direct labor costs. Rate shopping and interfaces to major shipping systems are critical to helping your customers lower their shipping costs.

• Bar code scanning receiving, put away, replenishment, picking, packing, shipping, returns, cycle counting

Bar coding inventory through the processes will allow you to reduce shrinkage and to track inventory throughout the center.

• Multi-warehouse capabilities

For multi-facility operations, consider: what are the business rules that are under your control? Issues include partial shipment of multi-line orders and the ability to project item inventory by center.

• Expedite warehouse processing of returns

Streamlining returns processing in apparel businesses is important because returns can vary between 10% and 40% by category, depending on its fashion content. Tailored fit and color/size selection also increase the return rate. Your objective should be to handle returns in as few steps as possible, including the inventory disposition and the customer return, credits, refunds and exchanges.

• Drop ship vendor processing

Vendor processing systems have greatly improved with regard to drop shipments. Even though the client is not asking you to warehouse 100% of their product, a streamlined drop ship system can greatly increase sales without having the inventory in stock.  The better systems put low cost terminal/printer combinations in the vendor environment. Orders are downloaded on-line or in batches. Confirmed pick transactions are interfaced to the customer service files. The client can track the vendor’s shipping status, service levels, etc.

Other important areas of order management and fulfilllent functionality include:

• Multichannel support for catalog/Internet, retail, wholesale which have radically different order and product profiles
• Extremely flexible to handle different client operating requirements
• Security between client info and data
• Supports vendor compliance programs which differ by client
• Cartonization for box size selection
• Scalable for peak volume processing
• DC inventory management including cycle counting and shrinkage control
• Productivity transaction capture and reporting
• Track client transactions and activities for billing purposes

Inventory Management
Inventory is the major balance sheet asset in most direct and retail businesses. Accurate inventory tracking reduces shrinkage and identifies bestsellers and candidates for liquidation, assisting clients in building sales and earning more margin. To provide services to the client’s merchants and inventory control departments, inventory planning and forecasting functionality includes:

• Catalog pre-season planning
• In-season forecasting product requirements by campaign, offer, drop
• Demand planning products across promotions
• Master scheduling of when stock-outs will occur
• Some or all of these functions may be provided by interfacing standalone specialized systems

Purchasing
Most companies provide the systems functions for purchase order placement. One trend in fulfillment services is to actually do the purchasing and printing of collateral for clients. Purchasing functionality can include:

• Ability to generate purchase orders
• Full function support for client vendors and factors
• Advance shipping notices from vendor (ASNs)
• Visibility into inbound receiving
• Vendor portals for processing POs, invoicing, viewing inventories, etc.

Marketing
Understanding the complex nature of multichannel marketing is a key function you need from your fulfillment system. How can you help your clients better understand their businesses from a marketing perspective?

• Measurement of catalog, space, e-mail media and offer results
• Customer purchase segmentation analysis
• Lifetime Value Analysis
• Analyzing customer channel preference and profitability by channel

Merchandising
Offering unique and profitable product is at the heart of a direct marketer and retailer’s success. How will your system assist your client’s merchants to be better selectors and sell more product?  Functionality in this area may include:

• Multichannel category and item sales trends
• Fast and slow seller results
• Contribution to profit by channel and by product
• Vendor scorecards based on merchandise analysis and meeting fulfillment standards

Plans and History
Many systems do not capture and archive history sufficiently to support multichannel businesses. Functionality needed includes:

• Multi-year and seasonal history for channels, catalogs/promotions, products and retail stores

Executive Analytics and Dashboards
Industry leaders such as Budco and The Jay Group have developed executive analytics, KPI alerts and dashboards which make senior management users of the customer service, fulfillment, merchandising, marketing systems, etc. for the first time. This will generally provide an advantage that in-house IT departments usually only develop or acquire in the largest companies.

General Requirements

• Ability for clients to log in and manage their business remotely
• Individual company ability to get reports as they desire
• Interface to other corporate systems (merchandising, marketing, accounting, Web sites, etc.)

The Selection Process
We recommend you follow a four-step selection process; these four major steps will ensure that you have taken into account and considered all the use and functionality required to replace your existing system.

Step 1: Organize the Project Internally

• Management should appoint a senior management “sponsor” to represent system user interests and get management’s input— to elevate the project’s perceived importance and encourage participation in the process.
• Set up a project steering committee representing all areas affected by the new system. Steering committee draws up written plan for evaluating and selecting vendor and installing system; meets monthly to review progress.
• Identify business functions to be accomplished by the new system. Management should provide company growth plans; anticipated changes in business direction; budget guidelines; and decide whether the new system should run on existing hardware.
• A project coordinator who is well disciplined and organized can help keep the project on schedule and within budget.  This person is responsible for the day-to-day system selection and vendor activities.

Step 2: Define Your Requirements

• Deciding what system functions you want is critical to pick the right “match” for your needs. The most effective systems generally have a 70 to 80 percent fit before modification. Modifications and complex integrations are risky, expensive and can cause serious delays.
• Prioritize functional requirements and get department manager input for each subsystem (e.g., order-entry, inventory, fulfillment, merchandising, marketing, etc.). Include unique requirements, key data elements missing from the current system, major screens and reports, and/or data interfaces to other systems.
• A decision matrix is critical to evaluating a vendor’s specific system functionality against those you require, and to make comparisons on an apples-to-apples basis between vendors.

Step 3: Evaluate the Vendors

• Document business requirements; list each and every task the new application needs to accomplish now and in the future.
• Send a detailed request for proposal (RFP) to each vendor.
• Specify that bidders include in writing all of the pricing, guarantees and schedules for the application; the software and hardware to be provided; pre-installation training; modifications required before and after installation; a list of other package systems with which it has successfully integrated; and file conversion and support.
• Evaluate responses in a comparative format, as discussed above.
• Narrow choices down to two or three; bring the top two vendors in for scripted demos, keeping a third vendor “in reserve” just in case.
• Base scripted demos on business functions and transactions specific to your business. Work with each user department to address their major concerns, reviewing in detail how the software can accomplish these requirements. Remember, you control the software demonstration; require vendors to show functions that you want to see rather than the functions that the vendor wants to show you.
• While still fresh in everyone’s mind, get participants from each functional area to rank the pluses and minuses of the software demonstration on the matrix.
• Use the RFP responses and scripted demos to work through which system has a better fit for your company.
• Review in detail what the vendors feel the costs of customization and integration will be. The purchase price when installed will often be 40% to 50% professional services. These are at best difficult to estimate. Determine what reporting is available compared to your current system. What will need to be developed? What integrations will require additional services?
• Determine the total cost of ownership for replacing your complete application.
• Request a detailed implementation schedule and what the vendor’s assumptions are regarding involvement and time required of your company’s personnel. It usually involves a major time commitment by your company.
• Include as part of your evaluation process how well the vendor will continue to update, enhance and support the system.
• Check vendor references. Ask to see the full customer list, not just the vendor’s selected references. Make sure that you will not be either the largest or smallest client of a particular vendor.
• For the reference checks, ask the same questions of each vendor’s clients, allowing comparison later.
• Choose one or two of each vendor’s clients that are similar to your business to visit for a much deeper perspective than you would get from a phone conversation. If possible, make these trips without the vendor present, to allow users to be as open and frank as possible.

Step 4: Examine the System’s Potential ROI

• Determine the ROI of a new business system purchase before you make that major investment. What savings and benefits do you expect to gain?
• Don’t base your ROI calculation on the vendor’s promotional data. To get the most accurate sense of your potential ROI upfront, ask: How long will it take to recoup the investment?

By the end of this four-step selection process you should have gathered enough information to make a well-founded purchase decision—but don’t rush into anything. Be thorough; the devil is in the details. The more detailed your planning, the better chance of the application being implemented on-time and within budget and delivering real savings.

Summary
Front- and back-end systems encompassing call center, customer service, marketing, warehousing, order management, and fulfillment functionality are at the heart of the services that you provide your fulfillment clients. They are essential to assist your clients in growing their businesses and in making your business as efficient and profitable as possible. Selecting the right systems is critical to your success as a third-party provider.

Your senior management just read you the riot act about the company’s proliferation of systems and the lack of data integrity in those systems.  “We have the same data—like sales and inventory—in different systems, with different timing and accuracy. Between our order management, warehouse management and forecasting systems, there is no single version of the truth.  We are no longer in touch with the data, and the department managers are analyzing performance in different ways and getting different results—even though they are using the same data!  No one system gives us more than 25% of the data we need to plan and manage the business.  And we aren’t even users of the major business systems.”

They have given you 30 days to come up with a plan to eliminate this confusion and deal with these realities.

Sound familiar?  So what’s the answer?  Some IT professionals try to mash together solutions by extracting data from a wide range of applications into spreadsheet management reports.  But this strategy doesn’t work long-term, because of the manual effort necessary and resulting inaccuracies.  Others use query tools, but those require technical training and knowledge of the data aspects of the various systems.  And they don’t allow you to analyze data across the enterprise.

Clearly, the smartest solution is to research and select business data intelligence solutions that will allow you to analyze data across the business from any and all information transactional systems, telephone ACDs, spreadsheets, etc.

This article discusses the issues involved in selecting business intelligence (BI) solutions for your multichannel business.  Why are we talking about BI solutions, rather than just BI development software?  Because there is plenty of BI development software out there, but we feel that the most effective approach to answer this challenge is to select a vendor that has not only software, but predefined industry best practices, views and analysis already integrated into the system.  This reduces the time needed to deploy the system and get actionable solutions in place.

#1  Access to Data Across Multiple Disparate Systems
How will the BI solution tap into the data from multiple disparate sources and data sets?  In reality, moderate to large multichannel businesses have a wide variety of systems ranging across call center, e-commerce, warehouse management, forecasting and inventory management, merchandising, and marketing.  Figure 1, Using Inventory Data Across the Enterprise, shows how various managers can get multiple uses of inventory data from multiple systems, with their own dashboards, Key Performance Indicators (KPIs) and analytics.

In order to make this a reality and gain access to these multiple systems, you first have to determine which data is necessary for analytics, and is usable.  The next steps are to determine what pieces of data are common from one application to the next, so that data can be utilized in any analytic environment.  One you have the common data indentified you need to create a normalized and standardized database layer, to which all data from these systems will be mapped.  This makes it much easier to map the data feeds for the BI solution and to have audit capabilities for the data.  In addition, you will need to consider: What are the methods and processes that are involved with this?  How will you make this transformation of the data?  What services does your BI solutions provider have to shorten this implementation?  With what frequency will the data be updated to the BI database?

#2  Back In Touch With Their Data
As in selecting any system, developing user requirements is key to getting the proper solution match for your business.  In order for you to put management back in touch with their data, you must know what decision support tools, analytics, KPIs and dashboards they want implemented with a new BI solution.  As Figure 1 shows, the KPI alerts and analytics must be relevant to their responsibilities.  Additionally, the applications need to be easy to use.  Can senior management and department managers set up their own views and change KPIs as their needs change?

Does the BI solution allow you to use field and file names that are more intuitive to the user—or are they going to remain the programmer oriented mnemonics or abbreviations utilized by the company that developed the various business applications?  To be most effective the applications need to be point-and-click oriented and not require users to know the data structure, file names, etc.

Programmers and business analysts will need to implement the systems.  But does the BI solution require programmers or business analysts on a day-to-day basis to bring the benefit to senior management?  Have we unnecessarily inserted an additional IT resource or analyst into the process?

#3  Industry Templates
Many BI software tools do not have direct and retail industry oriented templates.  Does your BI solution provide ways to analyze inventory, analyze productivity in the call center and warehouse, and incorporate channel metrics for retail, catalog and e-commerce, marketing, merchandising, and finance?  BI development software is often generic analytical software that requires you to do all the data design, determine the analytics needed that are oriented to your industry, and then implement.

#4  Actionable KPIs and Dashboards
What lies at the heart of what managers need, is the difference between data or reporting data, and truly setting up KPIs that alert them to changes in performance which are outside the managers’ pre-defined values or goals.  An example maybe helpful.  Most inventory control systems report units and dollars by category and product.  KPI alerts will help managers stay on top of their business if they are alerted to conditions such as:

1. When a category of merchandise falls below a certain fill rate or inventory turns goal, (with drill-down into the items that are negatively affecting that category)
2. When backorders exceed a certain user defined threshold
3. When aged inventory over a certain number of days exceeds a certain percentage of the total inventory

In addition, these applications should also assist managers with identifying potential issues so they can be headed off before becoming a problem that affects customer service, top line sales or profitability.  In considering inventory management, these might include:

1. Products which are selling better than plan and may become a stock out based on the weeks of supply on hand and the vendor’s lead time to get back in stock
2. Products that should be considered for liquidation based on their low rate of sale, excess weeks of supply on hand and whether or not they are going to be offered in future offers
3. When a merchant exceeds a user defined threshold for open to buy

Companies will need to consider how the BI solution should be used to provide alerts across the business in inventory, merchandising, marketing, fulfillment, call center, finance and retail management.

In addition, senior management will want to be using the same data as their department managers and be able to drill down into the details.  This achieves the goal of getting everyone on the same page.

KPIs and alerts need to be able to be set up and flexible.  Some may be tied to your strategic plan.  Some KPIs may tend to be temporary in nature, utilized to address problems mangers are trying to stay in contact with and solve.  All systems have data and general operational type reporting, but do they have KPI alerts that allow management at all levels to stay in touch?

#5  Open Systems
Even if the BI solution has predefined views to assist in analysis, does it have an open system architecture so that you can modify the KPIs and analytics to be even more meaningful to your business?  Does it require extensive programming from the software development company to alter some of the KPIs?

#6  Strategic Nature
Does the BI solution show you where to take strategic action with your business?  Or is it simply reporting results?  We think that the strategic approach—“where and how to take action” type alerts—is critical to improving performance and getting the most from the application.  Do the solutions and applications include industry best practices?

#7  BI Solution Rather Than Just Software
Services, education and training are part of the selection.  Does the BI solution provide best practice improvement as part of the solution?  Can the provider truly assist you with strategic thinking and how to really get the most from the solution?  Do they understand your business environment or are they just developing software?

#8  Data Integrity and Timeliness
Companies must insure that the data being mapped to the BI solution is clean, usable and has integrity in the information.  What data will need to be fed, at what intervals?  Can data feeds from transactional systems be near real-time as well as batch, depending on the need for the quickness of the data to be updated?

#9  Time to Deploy
How much time will it take for your vendor and your staff to have the data mappings and BI solution implemented?  In our experience, the selection and implementation of BI solutions is no different than any other major system.  In the case of BI, where there are no industry templates, it may take months to years to have any operational systems up and running.  Thoroughly understand the internal and external resources that will be required.

#10  Total Cost of Ownership
Included in the total cost of ownership is the hardware, licensed software, third party hardware and software modules, annual maintenance and support costs, training and professional services.  What internal resources will you have to expend to select and implement the BI solution?

Most Critical of All
In addition to these 10 considerations, there is one more that may be even more important than all the others:  Return on Investment (ROI).  What hard savings and intangible benefits will be derived from the BI solution?  Which BI solution can bring the higher ROI in the shorter amount of time?  We believe that well designed, industry specific business intelligence solutions will provide a positive ROI in 12 to 18 months, by enabling these functional areas of the business:

1. Inventory Management – by optimizing inventory, companies should be able to now develop their strategy for balancing inventory levels with fill rates and backorders; reduce costs associated with processing backorders; improve overall inventory turns and increase Gross Margin Return on Investment (GMROI); reduce aged inventory and implement comprehensive liquidation strategies.
2. Merchandising – Analyze merchandise performance and the net contribution to profit.  This allows companies to understand what merchandise segments are working and which ones are under performing.  BI solutions should help you to determine your breakeven price point, plan to actual performance and develop strategies for determining winning items and improving top line sales.
3. Distribution Center – Ability to report productivity and performance of workers against an internal standard or goal.  Develop long-term trends with regards to costs associated with fulfilling customer orders such as direct and indirect labor, occupancy costs and more.  Business intelligence to assistance with product velocity and movement for efficient slotting and warehouse profiling.  Ability to develop strategic initiatives to balance costs, customer service levels and facility utilization.
4. Call Center – Ability to report productivity and performance of workers against an internal standard or goal.  Develop long-term trends with regards to costs associated with supporting customer orders and service calls, chat, email correspondence and more, including labor costs and occupancy costs.  Understand and measure the cost per transaction and cost per contact against a plan, and balance that with the stated customer service level objectives.
5. Marketing – Solutions should allow companies to understand their customer file—how many one-time buyers versus multi buyers.  Do customers cover the marketing expenses associated with subsequent customer orders?  What are the costs associated with acquiring new customers?  Understand what type of marketing initiatives are most effective at customer retention versus customer acquisition. Measure offer response rates and performance against plan.  Understand both Lifetime Value and Recency, Frequency and Monetary Value (RFM).
6. Finance – Financial executives should now be able to manage and understand all aspects of the business that affect profitability, from inventory management to marketing results.

One of the biggest benefits to management is to get back in touch with the business from an analytical perspective. BI Solutions and KPIs can easily be set up and changed to monitor performance in your areas of responsibility—providing you with hard savings, performance improvements and a rapid ROI.

About Manage Metrix
Manage Metrix is a business intelligence system with KPI alerts and dashboard capabilities that can be easily customized for each user.  In addition, managers can use pre-built retail and direct analytical templates and KPIs or clients can customize their own unique analysis. Senior management has drill down capabilities into the same detail data as the department management assuring everyone is using “the same version of the truth”.  Another unique approach offered is that F. Curtis Barry & Company works with the client management to set appropriate KPIs and action plans for improvement.  Modules have functionality for inventory management, merchandising, marketing, call center, fulfillment, retail merchandising and finance which shares data across the enterprise.  The product is co-developed by Taurus Software and F. Curtis Barry & Company. To learn more about Manage Metrix, visit www.managemetrix.com or call 650-482-2022 x1.

About Taurus Software
Taurus Software has been making data liquid since 1987. Taurus offers an entire range of solutions that incorporate products such as DataBridger—a robust open platform data foundation creation tool, and application specific data models such as Ecomedate for Ecometry customers and Analysis Suite—a powerful analytical and reporting toolset. Taurus is a member of the HPe3000 Transition Partners Program and has technology partnerships with DirectTech, Quest Software, Lund Performance Solutions, Managed Business Solutions, Escalate Retail, Orbit Software, Pathway Pacific, DST Health Solutions and Acumium. To learn more about Taurus Software, visit  www.taurus.com or call 650-482-2022 x1.

In the past it was relatively easy to tell the difference between the tiers of warehouse management software capabilities. The larger more expensive products offered significantly more functionality and scalability than the other smaller versions. That appears to be changing as we speak. As we help clients look for a warehouse management systems for their operation, the process of culling down the list of potential vendors to consider is becoming more confusing.

Before, a larger company usually migrated to a larger vendor while the smaller companies moved to smaller systems. Recently, vendors seem to be morphing into a more homogenous mix of feature/function. Almost all of the warehouse management system vendors we have run into have full functioning systems. The chief difference we see today is that many seem to have specialized in a particular market segment such as retailing, manufacturing, or third party fulfillment among others. This specialization has caused the development of functionality to reflect the specific requirements of that particular industry type.

Most warehouse management software packages today cover the basics of a warehouse operation.  Some of the more sophisticated versions offer a wider selection of features than their smaller competitors. It is more important today than ever to develop a detailed requirement document that can be used to evaluate your warehouse management system options. The devil is in the detail never applied more than to the selection of a warehouse management system. Without a detailed description of what your business requires, all of the possible solutions can look the same.

One approach we have used successfully in the past is to try to find a warehouse management system product that has been utilized successfully in another business with a very similar business model to yours. There will not be another exactly like you, but finding someone with similarities goes a long way toward selecting a list of potential products with a track record in your particular vertical market.

If you can find a few vendors who have successfully installed their warehouse management systems in a business with similarities to yours, you will increase the likelihood of a successful install in your company. Although that cannot be the only factor used to select a vendor, it goes a long way to making sure you find the right fit for you.

Call us at 804-740-8743 and let’s talk about how we can help you with your warehouse management system project.

However, for an important decision on a system that will manage your business and income, I am amazed at how many small to mid-size companies base their system selection on a word of mouth recommendations, a 2 to 3 hour Webex demo and a commitment from a vendor that the functionality will be delivered in a 2 to 3 month time period.  If you are one of the few fortunate ones where this has worked for you then my hat is off to you but for the majority, this easy path is a mistake.

I worked with a company a year ago on a separate project and at that time they had begun looking for a new systems solution.  I offered assistance to help them with their requirements and search but they opted to pursue the systems search on their own.  In a chance meeting I ran into them recently and asked how the system implementation had gone.  To my surprise it hadn’t.  The vendor they selected based on a couple of Webex demos and few short meetings couldn’t meet their functionality demands.  After 9 months of effort the project was abandoned.  The company’s owner came up to me and said “you know, everything you warned us about how we were approaching the project and the risk involved turned out to be true.  I wish we had taken the time to listen to you and used your expertise.  The money that we would have spent with you would have been well worth it”.  Unfortunately the company lost a full year’s worth of time and of course the expense that goes with it.

Lessons Learned.  Taking the easy path on systems has never worked for me in the past.  It inevitably causes heartache and pain down the road.  Selecting e-commerce, order management, warehouse management and enterprise resource planning systems takes time and due diligence.  It all starts with an analysis of your current business, developing requirements and knowledge of the software vendors.  When it is time to search and select a system and you’ve come to that fork in the road, take a hard look at which path to take.  How about your company, have you taken the easy path only to have the project fail?

Tocky Lawrence is a Vice President with F. Curtis Barry & Company, a multichannel operations and fulfillment consulting firm with expertise in multichannel systems, warehouse, call center, inventory, and benchmarking.