FASTENER SOFTWARE

Many times, people come to me and ask, “Do you do barcodes?’ As soon as I hear that question, I suspect that the client is not well informed about what barcodes can and cannot do.

In the fastener distribution area, there are three different types of barcodes that are typically used:

1. Package Labels to be used in a Wireless Warehouse application by the client.

2. Package Labels that are custom designed to meet customer requirements (to make it easier for the customer to manage the inventory).

3. Bin Labels that are used for a Vendor Managed Inventory (VMI) or Bin Stocking program.  The VMI program is a system where the fastener vendor, our typical client, would provide bar coded labels to the customer to be attached to the customer’s bins. Then, either the fastener vendor or the customer would create reorders by simply scanning the bins and sending the order to the fastener vendor.

The orders can be taken with a Palm Pilot or similar device that includes an integrated barcode scanner.  The orders are collected in the hand held device and sent over the Internet or uploaded to the fastener company’s system through a cradle.

Each of these uses of barcodes produces a big benefit in improving accuracy and efficiency. However, each of these systems require that a well organized and tightly control system be used to create the labels and read the labels. All these system should be tightly integrated with the main fastener ERP system.

You cannot take a poorly organized warehouse with sloppy receiving procedures and add barcodes with the hope that your inventory is going to magically get better. With a barcode system, the critical point is at receiving. If you take the time to correctly identify and label the product coming in, then the barcodes provide a very effective way to track the rest of the activities related to that inventory.

Some people just don’t want to believe that they have to put in the effort to get it right in the first place. They will argue for the present procedures because they say that things happen too fast in their place, or customers can take their own product off the shelf, or whatever the excuse of the day is.

However, the barcodes are just a tool. Without accurate information in the first place, barcodes simply allow you to make mistakes faster.

Most people decide to change systems because they want to improve their operations. However, when they put in the new system, they miss some part of the old system.

It is important that you learn and understand the new system before you insist that it do things your old way. It is often the case that the differences are just what you need. You just don’t know it yet.

In some cases, the new system will provide much more information and control, but it requires more discipline and accurate data entry. The old system would let you get away with anything, but no one trusted the information because people were “going around” the system to get their work done more easily.

You can’t have it both ways. Either you put the information in consistently and correctly or you have bad data. Bad data is sometimes worse than no data at all.

When you are looking at new systems, be sure to find out how easy it is to get the information into the system, not just how fancy it looks when it is already there. Some system that have great reporting are very convoluted and difficult to use, so the information doesn’t get put in correctly. When it comes to ERP systems, everything counts.

It seems hard to believe, but we have actually had clients purchase systems, install all the hardware and have their people trained, and then not follow through to implement the system. They tell us that they just don’t have the time to do it.

When this happens, we are left wondering how we could have made them more successful.  No one really likes change and some people resist it more than others. The fact is, there is virtually nothing that we could do. It is the responsability of the owners and managers of the company to enforce the discipline needed to complete the implementation.

Some people are just procrastinators. Other people are just “too busy” to take the time to implement the system, while still others, don’t have enough control over their employees to insist that they change to the new system.  The ironic thing is that the people that are “too busy” are usually too busy doing exactly the things that the new system would eliminate.

Sometimes it is a little like going to the Dentist. It might be a little painful to take the action, but it makes things so much better after it’s done.

When implementing a new computer system, I recommend a method called Sample Company Implementation.  This method is much more efficient than the old “Dual System” conversion methods, since you only enter actual transactions in one system at a time.  It also takes all the pressure off the people involved in the conversion, since they learn the new system in a “Sample Company” where any mistake that they make will have no bad effect on anything.  Once the transactions are entered you can run the various reports in the new system to see where the information shows up and to verify the accuracy of the process.  During this time, you should decide which of the reports you will run on a daily, weekly and monthly basis.

In order to accomplish this, you should create two “companies” in your system.  One is the “Live” company and the other is a “Sample” company.  This method consists of the following steps:

1. Load Master Files in Live Company
2. Copy the Master Files into the Sample Company
3. Enter small batches of Transactions in the Sample Company
4. Check Results and make Adjustments as Necessary
5. Select a “Go Live” date.  Follow the Instructions in the Preparing to Go Live Guide.
6. Enter or Upload the Beginning Balances and Historical Information as available.
7. On “Go Live” date, Begin Entering All Transactions into the Live Company

1.         Load Master Files in Live Company

Master Files consist of the Customer Master File, Vendor Master File, General Ledger Account File, etc.  Most of these files can be transferred from data that is in your existing system.   During the Sample Company implementation period, you do all of your actual daily work in your old system.

NOTE: Once the Master files are loaded, they must be maintained on a current basis, e.g. If you add a new Customer, Product or Vendor, etc., each of these will have to be added to your Old System (where you are doing your daily work) and to The new system Live Company.  This will ensure that the transaction data, that gets entered or transferred later, matches up with the proper Customers or Vendors and Inventory Items.

2.         Copy the Master Files into the Sample Company

Once the Master Files are updated in your Live Company, you should perform a procedure to copy these files into the Sample Company, so that at that moment, the data in the Live Company and the Sample Company match exactly.  As you begin your Transaction Training, the data in the Sample Company becomes different than that in the Live Company, since no transaction data is entered into the Live Company during the initial training process.

NOTE:  Do not enter Sample Transactions into the Live Company.

3. Enter Small Batches of Transactions Into Sample Company

During the Sample Company process, you will select certain actual Purchase Orders, Sales orders, Purchase Order Receipts, Invoices, etc. to enter into the Sample Company Database.  The purpose of entering this information will be to become familiar with the procedures used in the new system.

This is also the time to establish your company specific procedures.  The new systems are quite flexible and it should be able to adapt to most of your existing procedures.  In many cases though, it will be to your advantage to change some of your procedures to take advantage of the enhanced technology offered by the new system.

NOTE:  Do not enter Live Transactions into the Sample Company.  You can  periodically copy the Live Company Database over the Sample Company Database; this “wipes out” all the Master File and Transaction data that has been entered into the Sample Company.  It is replaced with the Live Company Data that should include the latest additions to your Master Files.

4.         Check Results and Make Adjustments as Necessary

During this time, you should print all of your business forms to be sure that the information appears on them in the layout that you require.  Do not enter any more transactions than you need to enter to understand the process and have a reasonable amount of practice.  Entering large quantities of transactions will be a waste of time.

During this time, you should also print the PO Receipts Journals, Invoice Journals, Scheduling and Expediting Reports, Inventory Reports, etc. so that you become familiar with where the data will be found in the new system.

5.        Select a “Go Live” date.

The “Go Live” date should be the first of a month.  It is often convenient if this can be a month that starts on a Monday or Tuesday.  Sometimes people will “cut off’ the old month a day early in order to take care of all the odds and ends that come up during this important time.

6.         Enter or Upload the Beginning Balances and Historical Information as Available

As you near the “Go Live” date you should review your Purchase Orders and your Sales Orders.  Any Purchase Orders or Sales Orders that will not be Received/Shipped prior to your “Go Live” date should be entered into the new system.  They don’t need to be entered into your old system.  In our case, we do not transfer these from existing data, so whether or not we are converting data for your Beginning Balances and History, these will still be entered.

NOTE: Once the Open Accounts Receivable, Accounts Payable and Inventory Balances are entered, print the Aging Reports and the Inventory Report and compare them to the equivalent reports in the old system.  It is very important that you get started on the right foot.

7. On “Go Live” date, Begin Entering All Transactions into the Live Company

Starting with your “Go Live” date, all information will be entered into the new system.  You will not enter any more information into the old system.  It is obsolete.  This way you never have to do double work and you will assure a smooth transition to

The new system with a minimum of disruption of your business.

I cannot overemphasize how important employee buy in is. The people that have to use the system every day must believe in it or it will be doomed to failure. As an owner, you may have specific information that you feel is essential, but in order to get that information, everyone in the company is going to have to become more disciplined. Most systems today will provide the much needed information, but some systems are cumbersome and difficult to use. As an owner, you are not “in the trenches” and you may not be qualified to determine whether the system that you like is easy or difficult for the typical user to handle. If  the system is complicated or cumbersome and the employees weren’t part of the decision process, you have a recipe for disaster.

Ideally, you will chose a system that is both comprehensive and easy to use. Having your employees involved in the entire decision process will help you make the right software decision.  Even if you choose a complicated system, they will try much  harder to make it work, because they helped choose it. It is far more likely that you will get a system that actually fits your needs if they are involved. They will still have to change some procedures and have more discipline, but everyone will benefit from the installation and it has a much better chance of being a success.

Management commitment is more than just making the decision. Delegating all the responsibility sends a message that the system isn’t important to you.  Peter Drucker says “Performance always improves where management’s attention is obviously directed”.  There is no better example of this premise than a new system implementation.  Take the time to regularly meet with your System Administrator and key management people.  Talk to the people that are entering the transactions into the system.  Inspect and learn.  You can lead your team to a more efficient and profitable company.

Buying a software solution is not like buying a desk.  You don’t just buy it, set it in place and that is the end of your relationship with the vendor.  You are signing up for a long term highly interactive relationship.  If you choose a vendor that doesn’t have the experience to help you implement your system, you will end up having to help them.  They won’t understand your business so you will have to teach them how things are done.  You must teach them so that they can set the system up to properly help you. This takes time and resources.  New computer companies fail at an astounding rate because the principals underestimate, under fund or under prepare for these huge responsibilities.  It’s safer to buy from an experienced vendor with a good reputation in your industry.

The vendor can do the best job in the world of training your people, but if your people don’t practice soon after they are trained they will lose the valuable knowledge.  If you don’t give them enough time to practice you are undermining the success of the new system.

Don’t skimp on training hours. Some statistics say that many companies use only 20% of their computer’s capabilities.  That is a huge waste of resources.  It is almost always a result of inadequate training.  The system is a big investment, take it seriously and devote the time and money required to get proper training.

Some ideas that may help:

1. Establish regular training hours.

2. Assign a “Training Manager” to coordinate the training for the various departments and keep track of when they were trained.

3. Establish specific training goals and deadlines and stick to them.

4. Test trainees to see if they are learning what they need to know.

A  well organized and supervised training program will provide a huge payoff. It will help with initial implementation and ongoing use of the system.

In order to effectively install a new software system, you must have one of your employees dedicated to and responsible for the implementation.  This System Administrator doesn’t have to be a computer person (in fact it is often better if the person isn’t a techie).  The person should have broad understanding of your business and how work gets done there.  This person should not be a new hire.  The person also should have the ear of the President and should have authority to make cross departmental decisions.  When you put in an integrated system, everyone’s work affects everyone else’s work.  Someone has to mediate any disputes that might come up.