Webinar: Benefits of an ERP Solution for Wholesale Distributors
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The document discusses the benefits of implementing an ERP (Enterprise Resource Planning) solution for wholesale distributors. It notes that spreadsheets, while initially helpful, become problematic over time due to errors, lack of controls, and inability to support business growth. An ERP solution integrates key business functions like inventory management, ordering, billing, and reporting into a single system, allowing for real-time data sharing across departments. This eliminates redundant data entry and manual errors while improving visibility into operations and inventory levels.
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Webinar: Benefits of an ERP Solution for Wholesale Distributors
- 1. withum.com Presented by: Rene Theberge Benefits of an ERP Solution for Wholesale Distributors WEBINAR
- 2. WithumSmith+Brown, PC | Certified Public Accountants and Consultants | BE IN A POSITION OF STRENGTH BE IN A POSITION OF STRENGTH SM 2 Team Intro Cloud advocate way before Cloud was even called Cloud. Started IT career as a software analyst and developer, creating a Cloud intranet in early 2000’s; part of the Gmail Beta test. Areas of expertise are selection of Business Applications like ERP, CRM, HCM, process mapping, requirements gathering and vendor evaluation Rene Theberge – Cloud Business Manager
- 3. BE IN A POSITION OF STRENGTH | withum.com Agenda digital.withum.com Your biggest enemy • Spreadsheets Your biggest problem • Inventory management Your best solution (or new best friend) • Integrated ERP
- 4. BE IN A POSITION OF STRENGTH | withum.com Your worst enemy Error: OMIT (-) sign Cost $4.32/share
- 5. BE IN A POSITION OF STRENGTH | withum.com Error: Cut & Paste Cost : $24M Your worst enemy
- 6. BE IN A POSITION OF STRENGTH | withum.com Your worst enemy Error: Honest Mistake Cost: undisclosed
- 7. BE IN A POSITION OF STRENGTH | withum.com Your worst enemy Error: Double counting Cost: stocks stumble
- 8. BE IN A POSITION OF STRENGTH | withum.com Your worst enemy Google Search “Spreadsheet errors” Thousands of results!
- 9. BE IN A POSITION OF STRENGTH | withum.com Your worst enemyEasy to use Inexpensive Versatile Flexible Your Worst Enemy
- 10. BE IN A POSITION OF STRENGTH | withum.com The Enemy (Spreadsheet) - Problem #1 digital.withum.com Dirty Data Human Error Version error No control to data entry No audits Difficult to troubleshoot and Test Costly in hours
- 11. BE IN A POSITION OF STRENGTH | withum.com The enemy (Spreadsheet) - Problem #2 digital.withum.com Unfit for agile business practices Decision process speed impaired Consolidation is difficult Collaboration impossible Costly in hours
- 12. BE IN A POSITION OF STRENGTH | withum.com The Enemy (Spreadsheet) - Problem #3 digital.withum.com Compliance SOC Compliance HR compliance Lessor/Lesse regulation ASC 842 (effective 2019 or 2020) Programming compliance Costly in hours
- 13. BE IN A POSITION OF STRENGTH | withum.com What is Wrong with Spreadsheets?
- 14. BE IN A POSITION OF STRENGTH | withum.com Where do we go from here? Software Business Applications • Manage every aspect of the business • Automate functions • Use audited software with business rules • CRM • WMS • HCM • BI • Finance • Supply Chain Financials E-Commerce Supply Chain HR Warehouse Manufacturing CRM BI
- 15. BE IN A POSITION OF STRENGTH | withum.com Your new BFF Business Applications are good… Integrated Business Applications are better What does ERP do? • Runs the whole Business • Increase collaboration ERP: Enterprise Resource Planning Financials E-Commerce Supply Chain HR WarehouseManufacturing CRM BI
- 16. BE IN A POSITION OF STRENGTH | withum.com Item life-cycle Quote 1 1000 widgets Order 5000 widgets Pick/Pack/Ship PO 7000 widgets Receive Quote 2 3,300 widgets Inventory Quantities automatically updated No data entry required Kyle Mary Larry Michelle Larry Mary
- 17. BE IN A POSITION OF STRENGTH | withum.com Item life-cycle Quote 1 1000 widgets 5000 widgets Order Pick/Pack/Ship PO 7000 widgets Receive Quote 2 3,300 widgets Kyle Mary Larry Michelle Larry Mary Sales Inventory
- 18. BE IN A POSITION OF STRENGTH | withum.com ERP Benefits digital.withum.com Integrated Transactions • No manual process More time to sell, buy, manage Manage inventory and stock levels as Sales Order are committed Single view of Lead-to-Cash Single view of Procure-to-Pay Single dashboard for all operations Financials CRM Supply Chain E-commerce Manufacturing BI
- 19. BE IN A POSITION OF STRENGTH | withum.com Your New Best Friend digital.withum.com Spreadsheets, thought to be a friend, is an enemy • …manual processes kill your margins A Suite ERP will: • Put you in a position to waste less • Allow your organization to sell more • Increase the top and the bottom line of your P&L statements
- 20. Q&A
- 21. BE IN A POSITION OF STRENGTH | withum.com Next Steps Learn more about ERP solutions and what makes sense for your organization. Schedule a Free 1-Hour Consultation digital.withum.com/contact Digital Workplace Today Blog: digital.withum.com/blog digital.withum.com Contact us today – we’re offering a free 1 hour consultation to help get you started
- 22. BE IN A POSITION OF STRENGTH | withum.com Item life-cycle Quote 1 1000 widgets Order 5000 widgets Pick/Pack/Ship PO 7000 widgets Receive Quote 2 3,300 widgets Kyle Mary Larry Michelle Larry Mary
- 23. BE IN A POSITION OF STRENGTH | withum.com Item life-cycle Quote 1 Inventory In stock 12,300 Available 11,300 (1000 Reserved) 1000 widgets Order 5000 widgets Inventory In stock 12,300 Available 6,300 ( 1000 Reserved 5000 Committed) Pick/Pack/Ship Inventory In stock 7,300 Available 6,300 ( 1000 Reserved 5000 just shipped) PO 7000 widgets Receive Inventory In stock 14,300 Available 13,300 ( 1000 Reserved) Quote 2 3,300 widgets Inventory In stock 14,300 Available 109,000 ( 1000 Reserved 3300 reserved) Kyle Mary Larry Michelle Larry Mary
Notes de l'éditeur
- [Sasha] 1minute Good day. We are going to start in just a minute- we’re waiting for a few stragglers to connect. …pause… Ok. Lets get started. Welcome everyone! Thank you for joining us for today’s webinar. My name is Sasha and I’m Marketing manager with our Withum Digital. Withum is a leading provider in Audit, Tax & Advisory and experts in cloud strategy including ERP and CRM strategy and delivery. Joining me for the webinar will be Rene Theberge, and we both believe that this information can facilitate your organizations systems’ modernization! We have a few house keeping notes just before we jump right in. All lines will be muted during the presentation. Any questions you have can be typed in the message panel and we will address as many of them as we can during our time. We commit to 30 minutes and no more- we know you are busy. Any questions not answered during the webinar will be answered personally by me or Rene via email in follow up to everyone who registered for the event. Without further ado, we lets jump into the webinar.
- 1 minuteCloud advocate way before Cloud was even called Cloud. Started IT career as a software analyst and developer, creating a Cloud intranet in early 2000’s; part of the Gmail Beta test. Areas of expertise are selection of Business Applications like ERP, CRM, HCM, process mapping, requirements gathering and vendor evaluation
- [Rene] 15 seconds Our agenda for today is simple. We will talk about your biggest enemy. Why is it your biggest enemy. Along with that we will look at the biggest problem for WD firms. And finally we will introduce you to your new Best Friend.
- 1 minute Let’s jump right in… why do Isay Spreadsheets are your worst enemy? There’s a few stories we’d like to share with you. Here’s a story about a Fidelity Investment fund. Their Revenues (2017) $18.2 B with 245,000 employees. Take a look at the middle paragrah : "During the estimating process, a tax accountant is required to transcribe the net realized gain or loss from the fund's financial records (which were correct at all times) to a separate spreadsheet, where additional calculations are performed. The error occurred when the accountant omitted the minus sign on a net capital loss of $1.3 billion and incorrectly treated it as a net capital gain on this separate spreadsheet. This meant that the dividend estimate spreadsheet was off by $2.6 billion.... Wow! A simple minus sign that was not copied over cost the fund 1.3B. Manual information transcribed from one file into another file caused a huge financial mistake
- 40 sec There is also this story about TransAlta, a Canadian energy company. That’s a $2.8 B with 2,400 employees The 3rd paragraph reads: This looks like a career limiting move by the person who made the cock-up and the people who failed to spot it. Snyder said the company would "deal with the individuals in the appropriate fashion if there is anything found. At the end of the day it's a simple clerical error.“ “A simple clerical error”.. A simple error they said, one made through cut-and paste, but one that cost $24 million to the organization. By the way, with 2,400 employees, you’d think this would not happen.
- 30 sec Fannie Mae needs no introduction, they also hit the news. According to their VP, an honest mistake was made. Here’s the quote: "There were honest mistakes made in a spreadsheet used in the implementation of a new accounting standard.“ The article does not state if it is a gain or a loss in that shareholder equity, but 1.1B is not chump change Whether honest or malicious, we have another example of a large organization making a significant error . What we are demonstrating is that spreadsheets can easily lead to significant mistakes.
- 50 sec Finally this one: Mark & Spencer is a multi-national retailer headquartered in the UK. This organization is a $15B org with 784,000 employees A mistake doubled the sales of the organization. Instead of showing a loss of 0.4% in sales, the group reported an increase of 1.9%. The mistake was actually discovered through an analyst question during the earnings call. Here is the quote from the story: “M&S chief financial officer, described the mistake as ‘not good’, she said it was down to double-counting in a spreadsheet.” Not good! Not good at all.. We have a miscalculation in a formula in the spreadsheets where sales were doubled. M&S stocks tumbled that year.
- 20 sec Have the companies recovered? Well, they are all still in business but what is lost is lost, and does not get recovered. We’ve show errors of copying, malicious errors and wrong formulas. A simple search on Google for spreadsheet errors will yield hundreds of pages with similar stories.
- 30 Spreadsheet have their advantages. Easy to use- you can self teach easily, it runs on anything, it’s taught in schools Inexpensive- Just about every business will procure this as their first tool. As a matter of a fact many corporate laptop have it pre-installed. Versatile- you can simulate database, perform complex calculation and store lists upon lists, and list and lists Flexible – easily duplicate, to make changes, to create what-ifs scenarios and the like.
- 2 min The biggest and most dangerous problem is data. It is rather easy with spreadsheet to have incorrect data, mistakes in cells or in formulas, mistakes in references and in VBA. Let’s focus more on what truly matters to you, managing your inventory. Like any manual process, managing inventory with spreadsheets is error-prone. It takes just one bad keystroke by the person updating the numbers to throw off the inventory. Such errors can lead to the purchase or manufacturing of items that a business already has, or the sale of an item that a business doesn’t actually have. Repeated over the course of dozens or hundreds or thousands of products, it’s just not realistic to manually update inventory on spreadsheets without making costly mistakes. There are decisions are made with stock levels information. They impact the ability to get financing, stock levels impact the real-estate required to hold it, and the workforce to maintain it. In deploying NetSuite for a large Telecom in 2007 , we kept on running into a reconciliation issue between their data and the NetSuite report. They kept on telling us that our reporting was wrong. We spent hours reviewing the inputs, double checking every entry, tying to figure out what was going on. We contacted Support to see if there were logic or programming errors. We trusted their data- after all, a big public telecom. At some point our team decided to review the logic of every calculation from their spreadsheet and follow along in the ERP. We followed the logic, followed every fomula and all the external links, and eventually it was found that the error was in their spreadsheet. A wrong calculation had been introduced and this error had been carried over quarter after quarter and they had reported erroneous financial information for a few years. It is easy so to make a copy of a spreadsheet. It is done to test and develop. It is also possible to be working from a wrong version of the file. I am certain there is not a single listener who has been in business for a while who can say it has never happened. Files are sent by email, then they’re modified, the next person continues with the older version of the file and the rest is history. Spreadsheets have no way to control data entry. It does not perform audits, you cannot trace what wrong data was entered. Wholesalers use files that are distributed and shared among multiple departments. Data is entered but there is no accountability to the data. There is no easy way to track the authors of the errors. In extreme cases, it may be a disgruntled employee purposely tweaking data maliciously. In my first IT job, the Network administrator was given a less than favorable review. He was put on a performance plan with a 3 month probation. He did not like it and turn vandal. As the admin he had access to everything- his most favourite target was changing the logic in our code. He would switch negative signs, reverse the ‘greater than’ and ‘smaller than’ conditions. None of it caused the compiling to generate errors, it kept on giving us logic errors. It was a nightmare for 5 weeks and we caught him by installing cameras. That is an extreme case, but it shows that a system without audits and traceability makes you vulnerable. So much time and energy was used to identify code and fix code that we could not sell it and we ran out of money. This business went bankrupt within the year and the admin was never charged. No business is ever NOT at risk from disgruntled employees. Dirty data costs dearly. Not always as much as a bankruptcy, but tracking errors, fixing errors, putting in checks and balance to make sure errors do not occur again. Any time spent doing that, is money and effort not spent developing business. Wouldn't you rather your purchase manager spend time trying to fix spreadsheet or analysing vendor performance?
- 2:15 Out-of-date, old and stale data, is a big issue encountered by distributors. This out-of-date data directly affects your biggest issue which is managing inventory efficiently. Most of you on the line, if you manage with spreadsheet, you know this to be true. To be efficient, the warehouse staff cannot go and update a spreadsheet every time an item is picked or received. The work is processed in batches. Now, these batches may be done on a daily basis, but more often that not are done at end-of-day, sometimes weekly and worst case scenario monthly. Decisions to make special purchases, or run promotions is delayed, because the data is not there on time. These gaps between what is actually in the inventory can easily lead to overstocking or the opposite, understocking. Consolidating inventory in multiple location requires a great deal of merging data. For many, this is a complete manual process of merging multiple files, copying and pasting data (…and that’s the number one spreadsheet process that causes errors). And often times formulas or macros have been created to move data from multiple files into one. In both cases, error checking is time consuming and not catching errors is dangerous. With Spreadsheets, Collaboration is difficult. Though there are tools to foster multi-users in spreadsheets, the lack of auditing is a risk to the data. The typical way of doing it is handling spreadsheet data serially, one user after another and only one user allowed to make edits. Any manual process is time- and labor-intensive, but not just because a business needs to spend the time and labor doing it. The bigger problem is that businesses often have to spend the time and labor re-doing it. Let’s say a worker in the warehouse is keeping counting inventory on a notepad. That’s doing inventory once. Then someone in the office is transcribing the notepad into a spreadsheet. That’s twice. Another person in the office double checks the counts. That’s three times. Errors are spotted, and now someone has to go back and re-do it. That’s four times. An electronic Warehouse Management software can do it correctly, automatically – and once.
- 1:20 Generating SOX status reports from multiple spreadsheets is no different and moreover, there is no real-time actionable data about SOX compliance available to the management. Report incorrectly or report late and your business will be subject to harsh sanctions, penalties, and fines. Maintaining confidential records in spreadsheet is not a good idea though it is common. I have a brother who is director of large projects in a construction firm. One Monday morning he received an email with an attached spreadsheet. This was normal- every week status updates were sent. This particular day, the file name was different- when Denis opened the file, he saw a list of the entire staff, with everyone’s salary and compensation package. Bonuses , vacation time, everything! They lost their top 2 project managers that very day- less experienced projects managers were being paid more than they were. Financial reporting requirements for lease will come into full force in 2019 or 2020 through ASC 842. When it comes in force depends on your fiscal year. There are penalties and fines to late or incorrect reporting, so tracking this properly can affect your business. Though not a true compliance, there are compliant ways to program such as: naming conventions, the location of macros, the scope for variables and security. It is not uncommon for non-programmers to create complex functions, macros and even put VBA code in spreadsheet. Without the right professional background errors in code and logic are frequently found. In an ERP implementation we came across a spreadsheet formula that was converting square yards into square meters and then applying a currency conversion. As we were putting this logic into the ERP, it was discovered that one product was converted twice and the actual square meter inventory was 30% higher than the book value. AT the risk of repeating this, Any process, any record tracking, any inventory calculation performed on a spreadsheet will require more employee time to create and maintain, more employee time to validate and typically will have more errors than an automated process. All this employee time constantly erodes your margins.
- 0:40 Just to be clear, we’re not against spreadsheet. In fact they are a very effective and powerful tool. It’s much better than pen and calculator. Who would ever think nowadays to run your business simple with pen, papers or calculators? Spreadsheets revolutionized Business. My uncle used to run a sporting goods company back in the seventies. I remember doing inventory twice a year for him- all with pens and paper. 2 of my brothers and I joined the rest of my cousins and we took a whole Sunday, clipboard on hand and counted everything. I was the youngest and always got stuck counting fish hooks and lure. The flip side was that I never had to pay for my custom skis when I was competing. Now when Lotus123 appeared on the scene it was a definite improvement and we spent way less time to do the count. But just as spreadsheet were the evolution of the pen and calculator, there is something much, much better now. Much better than spreadsheets
- 1:20 So, we made the case that spreadsheets are bad, so bad in fact that they are a legitimate threat to how your business operates. But what is the solution? Just like spreadsheet were a significant upgrade to pens and calculators, Software is the next evolution of business management. There are many software for business applications, all with their acronyms, that perform the various functions for the enterprise. Some of these would be a : CRM- Customer Relationship Manager to manage relationships between you, your client and your vendors. The CRM is your system of records for all the data, the in reactions by phone or email with other business entities, and also includes the automation of the Sales and purchase Order WMS- Warehouse Management system to manage your stock levels, traceability, serial number, item locations, replenish rules. With a an integrated WMS, the inventory levels are automatically maintained, the warehouse staff know exactly where items are and how many are available. HCM to manage employees, training, skills, compensation, payroll. BI – Business Intelligence to get insight into your organization with performance indicators, dashboards, scorecards. Supply Chain Management tools. With a proper BI tool, you have data accessible in real time, data you can drill into to make decision, data that is not subject to the same errors as what happens in spreadsheet. With the best of class of BI tool, you access your dashboard from your mobile device. All these automated tools exist to track records within their own specific sphere. For example, a Human Capital Management System has no knowledge of Items SKU, it has no knowledge of Sales orders, nor should it. Its focus is on employees.
- 1:30 What is better than having Business Applications software… is having an Integrated Business Application Software . That’s an ERP. There are many definitions of ERP, but we generally refer to ERP as the software that runs your business. An ERP is more than just accounting, but it is definitely all about accounting and it provides a single source of truth for your data. So, while a Human Capital Management System does not deal with items SKUs or Sales Orders, , it does maintain employee ID. These Employee IDs are used to track which sales rep made what quote, who pick/packed and shipped the goods, who is in charge of procurement. The HCM can contain Sales Quotas per sales rep but it’s ERP that will automatically track quota achievement per year, per quarter, per day or whatever dimension you wish to use. The tight integration allows for relationships to be drawn between all these entities. Sales Rep can see current and live stock levels for any items. Purchasing managers are able to see all the open quotes and with those figure out what impact they will have on stocks. Execs can see which products move well, which ones don’t, which suppliers delivers on time, supplier fill rate, the RMA rates. Customer service can access any order an inform the customer on its status. When a customer calls to ask about a product, with a few click the customer service agent finds the order, the shipping manifest and the tracking code. New employees are assigned specific roles and can access only the information relevant to their jobs. Essentially an ERP gives a 360 degree view on the whole business, with the ability to drill down to every detail- all of this with live data in real-time.
- 2:00 Let’s look at a practical example of inventory management with an ERP. For the sake of this discussion we will use NetSuite ERP as the core for our example. NetSuite has a completely integrated CRM, WMS, HCM and finance functions. Imagine there are 12,300 widget #XYZ in stock. Kyle creates a quote for 1,000 of them. Once the quote is saved, 1,000 items are marked as reserved. They are reserved for a quote but still in stock. Then, Mary creates a quote and converts it to an order for 5000 widgets. Those widgets are still in stock but now are committed to an order and therefore not available to anyone else. So between the 1,000 on a quote and the 5,000 committed, the inventory is decreased by 6,000. Larry pick, packs and ships the goods. The inventory is automatically adjusted ( 5,000 have been shipped out, 1,000 remains on reserve). The inventory minimum stock has now dropped below 10,000. Michelle, the purchaser is notified that item XYZ is below minimum level. By clicking on the item SKU, she can see that there are 1,000 widgets committed on a quote. She makes the decision to buy another 7,000 items to replenish the warehouse. Mary creates another quote for 3,300 widgets. The inventory reserves the items for this quote and now the minimum stock level is reached again. Between the 2 quotes there are 4,300 items reserved but not committed. After being automatically notified, Michelle can make the decision to order more widgets or to wait considering that those items are at the quote status. Tracking all these operations in Spreadsheets cannot be done in real time… that’s if it can be done at all. The beauty of the ERP is that no one has actually tracked the inventory, it gets adjusted automatically based on the ERP transactions. Mary is not adjusting the inventory, she is creating a sales order; Larry is not adjusting the inventory, he’s just shipping goods. The inventory is being consumed and no one, except the automation, updates stock levels. Even the purchaser, Michelle who creates a Purchase order to replenish the warehouse, is not updating stock levels. She uses BI to make decisions. Once transactions are made, items sold or purchase, the inventory is automatically updated. Taking this to a step further, the Purchase Order could actually be made automatically, set by predefined criteria. That is set globally, on a per item basis, on a seasonal basis…or however you manage your business.
- [Rene] 0:45 When an ERP is used here are some of the changes that will take place: - reduction in manual processes. Because any transaction contains all the basic information and simply changes status along the way, you reduce manual inputs and errors. Fewer transcriptions errors, fewer orders attached to the wrong customer, fewer errors from transcribing data. With less manual processes, your employees have more time to sell, process sales, deliver product/services. Rather than spending time updating and correcting a spreadsheet, your employees are now empowered to make decisions all based on empirical data. Inventory is committed or reserved in real time so you can plan your purchases better and reduce stock levels. Rather than spending time updating a spreadsheet you can evaluate vendors, research new products, plan an expansion. The single-view approach lets you be more in control of lead-to-cash. Automated forecast reports delivered to your mobile help you make decisions about your financial capabilities, your cash position, your aging AR. The single view of the Procure-to-pay process helps you manage vendors, products, relationships, available square footage, shipping costs. The single view of all operations keeps money in your pocket. Productivity usually shoots through the roof following an ERP implementation. Studies by Gartner, Aberdeen, Forrester, Forbes and all kinds of others agree on one thing: to a better productivity with an ERP anywhere from 30% to %60. So you can do more, so much more, without increasing your payroll.
- We have been involved in many ERP implementation. In 100% of the cases we automated manual processes that relied on spreadsheets. If there is one thing we are absolutely and completely certain of, it’s that spreadsheets reduce your margins considerably. There are all kinds of business processes that are manual and whatever money is pent to pay employees who do it, that money is never recouped, the process is not sa=calable, this process is not profitable. Deploying an integrated ERP: will reduce waste in your organization by cutting out many manual process it will give your team time and processes to move more products. And the final result is an increase to your top line but more importantly, to your bottom line.
- Do ERP track lot numbers and sublots? Well, they should!. OUR ERP allows to track lots when they arrive from your supplier- these lots can be severed in smaller portions and maintain tracking effortlessly. When the items are picked, the lot # is recorded. Food & pharma companies love this as they can tell exactly which lot was sent to which customers. The shipping manifest is linked to the sales order, the item is linked to the lot number. Some Wholesale companies must track serial numbers. This is also automatic. If properly equipped with a reader, the picker selects the item, the serial # is automatically captured and attached to the manifest. Tracking down warranties is a few clicks away. Ha. Funny question about my brother. He did quit the business, not that day…2 weeks later. Can we get more information on ASC 842? If you’re asking about those requirements, This is something our accounting team can help How expensive are ERP? Good question. It depends on a few things but expect about 1% of your sales. May seem like a lot but once you compare your costs of manual spreadsheet handling, you’ll find you can probably self-fund your erp.
- 2:00 Let’s look at a practical example of inventory management with an ERP. For the sake of this discussion we will use NetSuite ERP as the core for our example. NetSuite has a completely integrated CRM, WMS, HCM and finance functions. Imagine there are 12,300 widget #XYZ in stock. Kyle creates a quote for 1,000 of them. Once the quote is saved, 1,000 items are marked as reserved. They are reserved for a quote but still in stock. Then, Mary creates a quote and converts it to an order for 5000 widgets. Those widgets are still in stock but now are committed to an order and therefore not available to anyone else. So between the 1,000 on a quote and the 5,000 committed, the inventory is decreased by 6,000. Larry pick, packs and ships the goods. The inventory is automatically adjusted ( 5,000 have been shipped out, 1,000 remains on reserve). The inventory minimum stock has now dropped below 10,000. Michelle, the purchaser is notified that item XYZ is below minimum level. By clicking on the item SKU, she can see that there are 1,000 widgets committed on a quote. She makes the decision to buy another 7,000 items to replenish the warehouse. Mary creates another quote for 3,300 widgets. The inventory reserves the items for this quote and now the minimum stock level is reached again. Between the 2 quotes there are 4,300 items reserved but not committed. After being automatically notified, Michelle can make the decision to order more widgets or to wait considering that those items are at the quote status. Tracking all these operations in Spreadsheets cannot be done in real time… that’s if it can be done at all. The beauty of the ERP is that no one has actually tracked the inventory, it gets adjusted automatically based on the ERP transactions. Mary is not adjusting the inventory, she is creating a sales order; Larry is not adjusting the inventory, he’s just shipping goods. The inventory is being consumed and no one, except the automation, updates stock levels. Even the purchaser, Michelle who creates a Purchase order to replenish the warehouse, is not updating stock levels. She uses BI to make decisions. Once transactions are made, items sold or purchase, the inventory is automatically updated. Taking this to a step further, the Purchase Order could actually be made automatically, set by predefined criteria. That is set globally, on a per item basis, on a seasonal basis…or however you manage your business.
- 2:00 Let’s look at a practical example of inventory management with an ERP. For the sake of this discussion we will use NetSuite ERP as the core for our example. NetSuite has a completely integrated CRM, WMS, HCM and finance functions. Imagine there are 12,300 widget #XYZ in stock. Kyle creates a quote for 1,000 of them. Once the quote is saved, 1,000 items are marked as reserved. They are reserved for a quote but still in stock. Then, Mary creates a quote and converts it to an order for 5000 widgets. Those widgets are still in stock but now are committed to an order and therefore not available to anyone else. So between the 1,000 on a quote and the 5,000 committed, the inventory is decreased by 6,000. Larry pick, packs and ships the goods. The inventory is automatically adjusted ( 5,000 have been shipped out, 1,000 remains on reserve). The inventory minimum stock has now dropped below 10,000. Michelle, the purchaser is notified that item XYZ is below minimum level. By clicking on the item SKU, she can see that there are 1,000 widgets committed on a quote. She makes the decision to buy another 7,000 items to replenish the warehouse. Mary creates another quote for 3,300 widgets. The inventory reserves the items for this quote and now the minimum stock level is reached again. Between the 2 quotes there are 4,300 items reserved but not committed. After being automatically notified, Michelle can make the decision to order more widgets or to wait considering that those items are at the quote status. Tracking all these operations in Spreadsheets cannot be done in real time… that’s if it can be done at all. The beauty of the ERP is that no one has actually tracked the inventory, it gets adjusted automatically based on the ERP transactions. Mary is not adjusting the inventory, she is creating a sales order; Larry is not adjusting the inventory, he’s just shipping goods. The inventory is being consumed and no one, except the automation, updates stock levels. Even the purchaser, Michelle who creates a Purchase order to replenish the warehouse, is not updating stock levels. She uses BI to make decisions. Once transactions are made, items sold or purchase, the inventory is automatically updated. Taking this to a step further, the Purchase Order could actually be made automatically, set by predefined criteria. That is set globally, on a per item basis, on a seasonal basis…or however you manage your business.