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Online Retailers Dominating the Market  

The large Online Retailers that dominate the market created a new reality that businesses need to face. One of the major steps that needs to be taken is replacing the outdated Software with integrated ERP/WMS that has an E-Commerce module. 

ERP/WMS with E-Commerce and Retail Modules

  • Having new tools that will expand the marketing efforts resulting in getting new customers.
  • Excess inventory can be sold at discounted prices on the Website or in shopping malls, freeing space in the warehouse and improving the cash flow.
  • Online catalog will serve as a tool to increase sales volume.

The website should be user-friendly, enabling people who visit it to easily navigate through the pages and find the products they are looking for. 

If the website is not user-friendly, the potential customers will search for a different website that is easier to navigate.

E-commerce can be a Double-Edged Sword

E-commerce can benefit the business by increasing the sales volume or be a disrupting factor because of high returns that can result in excess inventory and warehouse space issues.  

The Benefits of Having E-commerce  

  • Businesses that engage in E-commerce often experience unexpected surges of high sales, resulting in financial benefits.
  • Increased purchasing volumes result in receiving favorable prices from vendors. 
  • Slow-moving inventory can be sold at discounted prices, freeing space in the warehouse and improving the cash flow.  

E-commerce Issues    

  • E-commerce can create large transaction volumes that the outdated ERP Software cannot sufficiently handle.
  • The high merchandise returns will increase operating costs and lead to excess inventory.
  • Excess inventory can create warehouse space issues leading to acquiring or renting additional warehouse space to store the returned inventory. 

Outdated ERP Software Issues

  • Returned inventory is often misplaced and will not be found until the physical inventory is taken. 
  • When the misplaced inventory is found, it might be obsolete. 
  • Unnecessary purchases of new inventory leading to excess inventory.
  • Not having analytic information results in downloading to spreadsheets and requires complex manipulation.

ERP/WMS Software with Analytic Module 

  • Having accurate sales information based on consumers’ purchase history and the time of the year the inventory was sold.
  • What region in the country bought the inventory and in what quantity?
  • Knowing what vendors to buy from is based on the accurate delivery date.
  • Providing real-time information in the XL spreadsheet when Financial Institutes or M&A request it.

M&A and IT Requirement Issues

  • When Mergers and Acquisitions occur the number of users and transaction volume will substantially increase.   
  • The ERP Software might not be able to handle the sudden surge of data transactions. 
  • The acquired company might not have the same business practices as the company that acquired them.
  • Having multiple ERP Software will result in having to contact multiple software vendor hotlines for support.
  • The end user having to access multiple ERP Software will result in additional efforts leading to business disruptions.  
  • When one of the ERP Software vendors has a software upgrade, integration issues might occur. If the software vendors don’t accept responsibility, this will result in data accuracy issues and business disruption.

Business Expansion Issues

  • When M&A occurs, the software evaluations should be performed the same way as the financials are being audited.  
  • Would the buyer’s ERP Software meet the acquired company’s business needs? 
  • If the current business practice drastically changed, would the ERP Software be able to handle the unexpectedly large numbers of new users or data transaction volume?

Case Study: National Distributor with Multiple Locations 

  • Building Supply Distributor has100 locations nation-wide. 
  • Headquarters has a large computer and each branch has its server.   
  • At night the daily information is uploaded to the headquarters computer. 
  • If data transmission fails, it is re-done the next morning. 
  • Headquarters did not have the previous day’s activity information until the data transmission ended.

Eliminating the above issues:

  • By installing cloud computing, the headquarters host computer was able to have real-time information at the branches. 
  • The benefits of cloud computing:
    1. Headquarters has accurate inventory level information at each branch. 
    2. Ability to track the customers’ buying trends nationwide.
    3. Tracking the E-commerce orders at the branches every day.
    4. Analyze what products are selling at what time of the year.
    5. Tracking customers’ buying trends by the branch. 
  • E-commerce enables the customers to view the product catalog on the web. 
  • Analyzing buying trends in different time zones. 
  • Customers can order directly from the app on their smartphone, updating the headquarters host computer in real-time mode.
  • A new night shift was established to accommodate the customers who are contractors.
  • Early in the morning the contractors stop at the branches, pick up their orders, and drive away within minutes. 

New Issue the Company Faced  

  • The next challenge the Hardware Distributor faced was competing with the large retailers that sold similar products at a lower price.
  • The contractors on the way to the job site began to shop at the Large Retail Stores buying the products at lower prices. 
  • While the contractors were at the Large Retail Stores, they bought similar products that the Hardware Distributor was selling. 
  • Having integrated ERP/WMS Software that has a real-time analytic module enabled the Hardware Distributor to analyze what products the contractors were buying at Large Retailer’s Stores.
  • To resolve this issue, headquarters decided to match the price of the products the Large Retail Stores were selling, often resulting in a lower profit. 
  • Not having to make additional stops on the way to their job buying at Large Retail Stores resulted in increased sales and higher profit margins for the Hardware Distributor. 
  • The integrated ERP/WMS Software with the Retail Module enabled the contractors to buy miscellaneous products such as tapes at the Hardware Distributor stores. 
  • Cash registers control the cash and credit card purchases updating the host computer in real-time mode.           

Facing Large Retailers with a Creative Approach

The Hardware Distributor facing the challenges of competing with the Large Retail Stores, took drastic steps:

  • Upgrading the legacy software with ERP/WMS Software utilizing the cloud having 100 locations connected in real-time mode to the headquarters computer. 
  • Having real-time information on the inventory level at each branch.
  • Analytic information of what the customers were buying at each region and when.
  • Preventing their customers from buying from large retailers, by determining which product prices should be lower. 

In today’s challenging reality, businesses cannot afford to walk down “the old dusty road” conducting their business the way they have done for many years.

Dani Kaplan

As the founder and driving force behind SMC Data Systems, I bring over 40 years of dedicated experience in empowering mid-market companies through transformative ERP solutions. My journey began in 1980 when I established SMC with a vision to revolutionize how businesses handle their operations through advanced technology. Today, as a trusted advisor in ERP software, supply chain management, and warehouse automation, I am passionate about helping companies achieve operational excellence and substantial ROI. SMC Data Systems, under my leadership, has been a proud representative of VAI’s integrated ERP software, leveraging IBM Cognos Analytics to deliver real-time insights that drive efficiency and growth. Please connect with me on LinkedIn at Dani Kaplan