March 16th, 2010
For a distributor in UK stone market one of the most complex challenges that we face is not to be able to measure the efficiency of our service processes. For instance, stone is a product of nature and therefore it damages very easily like any other natural material. We go an extra mile in undertaking an enormous task of creating managerial statistics related to our damages and rework rates because without knowing what these numbers are, we cannot possibly take any action to pre-empt these from happening. This challenge is even more apparent for a stone manufacturer because nothing is certain, definite production plans cannot be formed, thus we have to rely on production statistics. Here are some examples:
- A customer may want to return an order after receiving it, for whatever reason. Since we have to rely on nationwide haulage networks, this has to be collected from the customer and be brought into the warehouse. Operationally, the goods never come back in the way that it was dispatched unless, of course, the customer changes his mind before receiving the goods. There are always tiles that are broken or chipped due to too many handling of these tiles. The question is, how would one operationally manage these broken tiles? Should they be disposed of, if so how should the stocks be adjusted?
- Due to its nature, stone is always prone to get damaged. While we pick our orders at the warehouse, some types of stone get broken or chipped. How should these be recorded?
On the other hand, sales-related efficiency in our market is a topic that has not been fully explored either. If you are a selling organisation, you have to know what your conversion rate is or if your sales people are working efficiently in other ways than purely financial measures. For instance:
- A prospect rings and asks for a price/quote, and disappears. Does your system allow you to record this interaction so that it can remind you to chase him up?
- Could you really work out the efficiency of your merchandising i.e. sales generated by your merchandising but which merchandising method brings you the most, is it the boards or is it the display stands?
The answer to any efficiency question is not very easy to find but we saw a major improvement for efficiency if we used a sector-specific Enterprise Resource Planning (ERP) system. Because the tile market, compared to any other major market, is not large enough, the main issue becomes how you could successfully implement a piece of software that basically does what you want. Although options are available to those in our sector but these options are very expensive due to lack of alternative suppliers and are substantially differentiated i.e. their capabilities are not similar. We opted to buy an off-the-shelf program that had an extensive business capability with Customer Relationship Management (CRM) and E-Commerce modules built in. Then we had it developed to our specification. This way it cost much less but also we acquired something that suited the way we operate our business. It is always argued that implementation would be the most difficult part of acquisition of an ERP system. We too had to postpone our “go-live” date a couple of times to make sure our staff are fully trained, but we are pleased with the end result.
Our system enables us to actively screen all our processes from prospect customers and opportunity phase of a sale transaction to monitoring damages, breakages and even our merchandising effectiveness. Although it is a long way before we can see the real results as we have to build the historical data to obtain prolific statistical information, it has already begun to present us with areas of improvement. This will allow us to be more agile in sales, more efficient in customer service and more specifically and importantly, more competitive in pricing. We are now in the process of searching for a second warehouse so that we can extend our product portfolio to compete for a larger share of the market. Our ERP system will also allow us to manage multiple stock locations simultaneously, thereby raising our customer service standards.
The E-Commerce module is still being developed, and it will be operational in the new year, but it will offer our customers the ability to log onto our system via the internet, access their full accounts details and history, they will be able to see stock levels, reserve items, place orders and track consignments through their own screen. We will issue usernames and passwords for our customers that will want to access our database 24/7 and plan to offer price incentives for those that will use this self-service facility.
