As a small manufacturer, look getting your first order from a giant company like Walmart or Sears can be a dream come true. But that dream can turn into a nightmare if you don’t have the right systems in place.
I worked with a company that landed a contract with an international department store chain. One month’s order from them involved more of my client’s product than they had sold in the whole previous year. It was a cause for celebration and the sales team threw a party.
Then the realities of all the logistical requirements hit home. All of the skids had to include an RFID tag (radio frequency identification) to identify the contents of the skid to the department store’s computer system. The truck had to show up at the receiving dock at exactly the right time. All of the shipping documentation had to be sent electronically (by EDI – Electronic Data Interchange). If anything went wrong, the department store would reduce its payment to my client by a pre-set penalty.
That may not sound like much. Just a few extra steps with each shipment, right? Wrong. Another part of the agreement had the six different ways the company forecasts demand and replenishes stock. They want to keep the minimum quantity on hand and avoid out of stock situations, meaning that suppliers have to be on their toes and respond immediately to new orders.
If my client had had a full featured ERP (Enterprise Resource Planning) system like Oracle or SAP, all of this would have been routine, but they were just a small operation. So we modified Microsoft Dynamics GP to create special reports that could be downloaded from the accounting system and made a big list in Excel for the staff to follow. But it would have been so much better, if the client could have had a workflow system that would have sent email reminders to all of the staff about what steps they had to follow for each shipment.
So, let’s stand back a little and look at the best strategy for your systems if you are a medium sized company swimming with sharks. You have your toe in the door, but have no way of knowing whether this is a one-shot deal or the start of something big. In the long run, you would like to be able to ramp up your sales, production and systems so that you move up, but in the short run, that strategy is time consuming and expensive. A good starting point is to upgrade one piece at a time, making sure that anything new you add will work to meet the current demand AND grow with you as you upgrade. In this case, a work flow system would keep the staff on top of the vendor requirements, as well as supporting the company’s operations regardless of what the future holds.
Reposted with the kind permission of iDatix: http://www.idatix.com/insider-perspective-swimming-with-sharks-what-to-do-when-dealing-with-large-retailers/