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Efficient low-cost distribution
Finding an integrated system is helping a companyin America to improve its distribution. A wines and spirits manufacturer has to supply itsproducts to a distribution network of almost 300 companies in fifty different States, eachwith varying complexity of laws governing the sale of alcohol. As well as these, there areState and Federal taxes to be paid when the goods leave bonded warehouses for their finaldestination. As might be imagined, a number of separate systems had grown up to managethis complicated network. Over the years, these systems no longer supported the business,and were expensive to run. Integration was desperately needed.
The company changed its computer and chose a drinksspecific package which was then tailored, in partnership with the supplier, to fit itsparticular business. The system, with 250 users, has allowed complete integration of thebusiness operations, and is capable of evolving further to cope with other activities, asand when they are desirable or appropriate.
Improve business planning
IT systems can be used to improve retailingbusinesses too, not just in the day-to-day running, but in the longer term decision makingand planning. For example, one of the UK’s largest independent pub chain operators,which had contracted out its beer production to concentrate on its retail estate, had 2500pubs and off license premises, each of which operated as a separate cost centre. Itsbusiness had developed, progressed and changed enormously and, simply put, its mainframesystem could no longer keep up. Training staff was also becoming a problem. The companychanged to a more user-friendly system because of its belief that Information Technologywould help managers to drive the group forward. The system, developed in partnership witha supplier of drinks specific software, runs full financial and management accountingsystems, sales and purchase ledgers and payroll. It provides managers immediately with theinformation to run day-to-day operations as well as to make long-term plans.
Taking the first steps to planning andimplementation and improving management skills
Companies need to adapt and re-invent theirbusinesses continuously to stay ahead of the competition, and in some cases, just tosurvive. Facing up to the challenge of technology is the first step along the road. Once acompany has recognised the massive advantage which it can gain, it has already started theprocess moving. However, it is equally important that companies not only plan the purchaseof new systems, but also manage the implementation efficiently.
Indeed, this highlights one further obstacle to finding thesolution. That is the shortage of skilled management. The sins of the past are again beingvisited on companies as the failure to invest in people may often leave management weak inthis area. There may be a huge gulf between general business management and ITspecialists. To solve this it is necessary to create a business team of competent andmulti-skilled people, preferably in partnership with a committed supplier of beverageindustry specific software. Their job is to evaluate all the IT needs of the business toprovide a fully integrated solution. They will recognise that different business functionswill have different needs. For example, head office, manufacturing sites, sales offices;that the system may need to accommodate a number of users in different geographicallocations, often communicating in different languages, as well as the local legal, fiscaland cultural issues which effect business operations in the drinks industry.
The benefit of a structured implementation methodology is arapid return on investment, because the specialist installer brings more to the party thanjust bodies, for example, additional business and technology skills. To be of realcompetitive value, any new processes must be installed quickly. To maintain thecost-advantage, it would be better if they were off-the-shelf packages, which have beenadapted to suit the user, rather than bespoke software.
Issues in the future
But that is not all. Two other changes are likely to influence the waybusinesses operate and have an effect on the systems they use. These are outside thecontrol of the manager – although the effects on the business can be planned for. One ofthese is European Monetary Union. The change to a single currency is a probability ratherthan a certainty, but it will have profound effects throughout Europe and need immenseinvestment in new systems. According to a recent survey, most European companies are stillunprepared. They have not estimated the costs or allocated a budget (in spite of mostEuropean managers apparently expecting their countries to sign up to EMU).
The other looming difficulty is the Year 2000 date changeand the impact this will have on all computer systems. The cost of changing older hardwareand software systems so that they can operate with new equipment has to be carefullycompared with the benefits of replacing them completely. Looking the other way and leavingit to the IT department is to abdicate responsibility for what may be a potentiallyserious problem, not only for those who ignore the warning signs in their own companies,but also fail to recognise them in their business partners. Any commercial applicationschosen today must be able to address these future issues.
Companies can no longer ignore the profound influence and onward progress oftechnology. Successful strategies need to address the fundamental and comprehensivechanges in the market place and assess the cost and value of better information systems.They need to operate within a flexible business structure which is able to respond rapidlyto change. Management has to recognise that however new the process seems to them, othershave “done it yesterday” – or are – “doing it tomorrow”, to quote awell-known advertiser.
Drinks specific software solutions, developed in closeco-operation with market leaders from all sectors of the industry, and implemented inpartnership with an experienced supplier, can help managers to cope with many of theissues which are affecting their businesses today and tomorrow.
This new technology can:
- Work in manufacturing and distribution management – providing the solutions needed to respond to new stimuli within this fluid market -and yet continue to control costs
- Constantly optimise inventories and monitor depletions; measure sales and performance by brand, volume, quantity and value against a wide variety of parameters
- Accurately track high value returnables
- Synchronise production with distribution to reflect shifting patterns of demand
- Handle state and national customs and excise duty, as well as statutory regulations relating to bonded goods
- Be integrated with other similar comprehensive and internationally proven business and financial management systems, improving customer service, cash flow, debt and inventory management to give companies a competitive advantage into the 21st century
Companies with vast global operations and those operatingin niche or local markets, can all benefit immediately from its use. Its effectiveimplementation can enable a company to leap almost instantly from mechanical tostate-of-the art technology.
As well as improving efficiency and keeping customershappy, it can ultimately free up cash for investment in acquisitions, brand building orwider distribution. Management can concentrate on marketing its brands and building thebusiness for profitable growth into the next century.