30 years ago, and that same salesman could have been talking about computer calculated minimum stock levels, with the merchant pacing around the yard and shop to work out what he needed to buy that day.
The latest generation of business owners in this industry might think that was a made-up story – but it’s not. Fortunately, the industry’s speed of adoption and change has, in the main, been exponential.
Let us start with the basics. Your business is “noisy”. Thousands of stock lines constantly being affected by thousands of transactions. Too little stock and the customer sources it elsewhere, and too much (of the wrong item) and you must write it off in the months or years to come. This is compounded by trends such as seasonality, fashion and most notably now, availability, but it is an endless task.
Any business system targeted at merchants or their suppliers should have the ability to calculate recommended stock levels based on sales and a myriad of other factors (lead times, forecasts, etc). If the core business system cannot do it, then it should integrate with one of the “best of breed” tools to achieve this. The system should also be able to rank the stock by speed of movement or profit so that you can focus on the 20% of lines that account for 80% of your business.
Naturally, some suppliers will face greater challenges such as lead times stretching into months for items which are heavily influenced by the current climate of stock shortages (timber, cement etc) – but these software tools will still play their part.
This type of software requires an investment of time and money which will be offset by a more accurate stock profile, possibly a reduction in overall stock holding but certainly an increase in customer service levels – and with competition as prevalent as it is, service is essential.
Stock level calculations should be run regularly and, if possible, on an automatic schedule with the aim that we keep the stock holding as close to the requirement as the service level will allow. Thousands of product lines left to be looked after by the system, with a talented buyer left to concentrate on the anomalies and items which need a human touch.
Customer Price Books have undergone a similar transformation from paper records (can you believe it!) of customer pricing terms, to being stored on simpler computer systems as nett price agreements, and quickly moving to derived pricing from cost or list – leaving us with the issue of manually updating them quickly.
Any system “worth its salt” will have the ability to import prices from suppliers or manufacturers if they’re supplied in an industry standard format. This ability to quickly import prices has become essential in recent months as building material shortages have caused daily fluctuations in their pricing.
Product Information Management
The industry continues to evolve in the pursuit of productivity and the sharing of computer data along the supply chain is key. Major manufacturers are already digitally linking to their customers, the merchant and retailer, to monitor which of their products are selling to the end user, and their stock levels.
This information is used to predict stock requirements earlier as an aid in manufacturing and importing as well as to auto-fulfil stock at the merchant, and help in the promotion of slower moving lines. Modern technology at either end of the supply chain makes this possible and/or simpler to achieve.
This sharing of data is bi-directional and the acronym on the lips of building supply chain manufacturers, merchants and software suppliers is PIM – Product Information Management. A game changer for the industry, it will revolutionise the way in which we acquire detailed product information (supported by images and technical sheets), how we will update our cost prices – and even monitor, dynamically, that our existing costs match those of our suppliers.
In concept it consists of a database (held at the merchant, the buying group or other third party) with data supplied and updated by the manufacturer. The data is not only rich in terms of content but should conform to an industry standard to enable far easier access for business software authors and e-commerce providers. Technology will allow your business software to link dynamically to one of these databases so that during the process of a sale or purchase order you can access the suppliers catalogue, search using friendly terms, and if applicable create the item in your systems inventory either as stock or as a back-to-back. The wealth of information will also be a substantial boon to those trading on the internet where creating and maintaining good, customer facing product ranges can be an onerous task.
We trade and maintain our data, today, quite differently to how we did three decades ago – we predict how we trade today will be just as unrecognizable in ten years time.