F. Curtis Barry & Company Blog

Inventory Management Techniques From a Financial View

Inventory is the largest balance sheet asset in your business: If your margin is 50%, that means your cost of goods is 50%. In other words, 50% of your net sales are spent on inventory and inbound freight.

So why aren't merchants more aggressive in dealing with inventory? In particular, marketers need to do more to liquidate aging inventory, and look closer at how to achieve the optimal balance point between high order fill rate and increased inventory.

Most multichannel companies have plenty of room for improvement in how they manage inventory. These 10 inventory management techniques will allow you to deal with inventory more aggressively and make more profit.

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Topics: inventory management techniques

Accurate Budget Estimates for Implementing Order Management System

As we have written many times, 50% of large scale implementations end up over budget and well behind the original proposed implementation schedules. Typically, we have always identified investment in several areas: hardware, operating software, third-party software, professional services and applications licenses. In order to plan initial new system implementation budgets for large scale order management system and enterprise resource planning systems (ERP), it’s prudent to go well beyond these categories of expense and engage in broader based planning and due diligence. Here are 5 ways to improve your planning and bring the implementation in closer to plan and schedule:

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Topics: order management system

Operational Assessments Show Important Operation Managers Skill Sets

As distribution center consultants we have been in a lot of facilities over the years, and have been brought on to conduct operational assessments. Within these assessments we typically get asked to evaluate operations and warehouse managers and their skills. We have met a lot of  managers with varying roles and skill levels. Throughout all of these operational assessments, there are 4 critical skills that we feel operations managers should possess in order to be successful. The days of top down, controlling management are hopefully far behind us. It is no longer the role of the manager to “keep the staff in line!”

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Topics: operational assessment

Guidelines for Order Management System Scripted Demos

One of the most important aspects of selecting any order management system is actually getting a demo of the vendor’s application. There are a couple of different approaches to demos; depending on where you are in the system selection process. One is used to get the general feel for a system early in the search process and lasts one to two hours. What you get is a high-level overview of a few of the system’s functions.

The second type of demo, which is what the focus of this post is about, is much longer taking a day or possibly a day and a half; depending on the complexity of your business. This longer demo is used to select the finalists after vendors have responded to your Request For Proposal (RFP).

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Topics: order management system

Get Ready For Holiday Season - Conduct an Operational Audit Now!

Summer time is here, the kids are out of school, time to hit the pool, right? I know that you don't want to hear this, but it is prime time to conduct an operational audit to identify those areas needing improvements. Believe it or not there are only 5 months left before the Holiday season is here again! Make certain that you have ample time to implement your fixes, develop strategies and plans for the distribution center. What are the objectives you and your management team have set for improving operations this year?

Here are a few areas to look at for your operational audit in order to determine what changes will be most beneficial to your distribution center and operations: 

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Topics: operational audit, warehouse layout, cost of shipping, material handling solutions

Will Your New Order Management System Provide the Needed Reporting?

You have just spent many months doing your due diligence to replace your aging order management Order Management System Reportingsystem: gathering user requirements, writing an RFP, getting capable system vendors to bid on it, conducting demos and selecting the finalist. Yet there is one more activity that, if not done superbly, will shake management’s confidence that implementation of the new system will go smoothly. If you haven’t adequately studied and documented how management, at every level from CEO to department managers, will get the needed information they’re used to having - your credibility could be in trouble. We are talking about the necessary reporting and key performance indicators needed in order to run the business on a daily, weekly, monthly and year-end basis. Even when business analysts feel they have done an adequate job of determining user requirements, the reporting functionality frequently gets cut short. There are a variety of reasons for this:

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Topics: order management system, key performance indicators

How to Create a Vendor Scorecard For Your Business

How do you evaluate your merchandise vendors? If you ask Merchandising, Operations and Accounting about vendor compliance and their performance, chances are you’ll get widely different answers. The merchandisers will consider the sales and margin and the vendor’s product development capabilities. Operations has to deal with QA and defective product problems, vendor packaging rework and late deliveries being escalated. Accounting will tell you about the vendor’s paperwork practices which are not according to your vendor compliance standards and result in chargebacks. Many companies are developing a holistic view of vendor performance through a periodic formal vendor evaluation using a vendor scorecard.

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Topics: vendor scorecard, vendor compliance

How to Reduce the Order Management System Learning Curve

In most businesses the transition to a new order management system (OMS) does not occur frequently. One of the main keys for your OMS implementation to be successful is to be sure you have tasks and assignments for developing training materials and standard operating procedures. The new OMS will affect the productivity of many departments, including contact center, distributoin center, accounting, merchandising, marketing and management reporting.

Some companies often struggle for six to eight months after implementation to regain their productivity and proficiency levels. Here’s how your company can shorten the order management system learning curve.

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Topics: order management system

Using Your Initial Order Fill Rate to Measure Your Customer Service

When you look at all the metrics multichannel companies can use to measure customer service, Initial Order Fill Rate (IOFR) is the one that I think is best.

Initial Order Fill Rate is the percentage of orders that are shipped complete—all items that were on the customer's order—within your company’s shipping standard. For in-stock product the shipping standard of most well-run operations is 24 hours from receipt of an order.

Many consider IOFR to be just an inventory measure, but its usefulness goes far beyond that. To understand this metric’s value better, let’s look at some results from three clients that had not previously measured IOFR.

The first example is a $25 million apparel ecommerce company that has 3.0 lines per order. Seventy-five percent of the product is reorderable. This company has always used the backorder rate to gauge its in-stock position and customer service; the backorder rate is 10%, day in and day out, so the client inferred a 90% service rate. The company’s first Initial Order Fill Rate report showed a rate of 76.5% for an entire season—hardly the world-class customer service the business is striving to achieve! But the IOFR is generally 10-15 full percentage points below the item fill rate or the backorder rate.

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Topics: order fill rate

15 Ways Identified Through Operational Assessment to Reduce Expenses

Through the hundreds of operational assessment projects we have worked on over the years, we have compiled the following quick-hitting list that will assist in reducing your operating expenses in the distribution center. Here is a summary:

  1. Efficient receiving. Inventory accuracy and product flow through the distribution center all start with receiving. The single biggest improvement companies can often make is to develop and implement vendor compliance policies.

  2. Reduce freight costs. Outbound freight now exceeds direct labor in many distribution centers. Don’t be too proud to ask a consultant to help reduce your cost of shipping and to help identify areas on your carrier contracts that will reduce your rates. Many times these consultants will work on a project basis or on a shared savings basis. There are too many dollars at stake not to have someone help you.

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Topics: operational assessment