Get the Most from Your ERP

Underutilized features of business software systems.

By Dan Kaminstein and Stuart Scott, Epicor Corporation.

Most distributors are only tapping a fraction of the power of their Enterprise Resource Planning (ERP) systems. In fact, 20 to 30 percent utilization of the software is typical. A recent Accenture survey of 300 senior IT professionals at the largest 2,000 companies in North America and the United Kingdom revealed these startling figures:

  • 31% use their ERP system in half or less of the organization
  • 64% use only their ERP system’s core functions
  • 19% have fully integrated their ERP system with customer systems
  • 50% bought ERP systems where they only needed half of the systems’ capabilities
  • 20% don’t make use of all functionality due to lack of training

Often, there is so much power contained within the ERP system’s functionality, it takes time and focus to unlock the benefits of the software after you get past the go-live date. To keep the momentum going, you should develop a project timeline for implementing the features and processes that will have the greatest impact on improving your business.

It is also worth asking, is your system user-friendly? (Did the ERP provider take this into consideration?)  This greatly affects the adoption (utilization) rate. If your employees are slow to accept the basic capabilities of your ERP system, they will be even more resistant to go through additional training and performing even more complex tasks.

Advanced Demand Forecasting (ADF)
As a distributor, your goals should be to:

  • Fulfill orders accurately and on time
  • Minimize cycle time (from receiving at the warehouse to shipping)
  • Minimize expense.

Factors that influence demand for your inventory include new product releases, offering proprietary versus commodity products, minimizing inbound or outbound freight, setting minimum order quantities, providing vendor managed inventory, etc.

Many tools are available to predict demand. Forecasting involves using historical data to predict future requirements; it’s your best estimate based on what you know, excluding one-time events (statistical outliers) such as seasonal/cyclical demand, special promotions, etc.

Customer Perspective: CRM

Interstate Connecting Components Inc. (ICC), a distributor of military and industrial connectors, was an early adopter of Epicor Prophet 21 in 1999. ICC’s use of Prophet 21 has continued to evolve, expanding to include CRM in August 2010. Sales management graphs, reports and forecasting are all built in, allowing ICC management to monitor trends and create system-generated tasks and alerts.

According to Joe Murphy, director of information technology at ICC, “We wanted to increase the data visibility for our sales reps, and since the customer contacts, industry information and other data all resided in Prophet 21, it would have created extra work to get that into a separate program.”

Utilization of the Epicor Prophet 21 CRM system has been very high since ICC implemented the solution.

“Once we set up CRM with Prophet 21, it simplified the data retrieval process by having it all in one system,” Murphy notes. “Now, with just one click, a sales rep can manage customer accounts, tasks, opportunities and so on.”

“We’ve seen a measurable increase in the productivity of our sales reps. They can more easily keep track of ‘hard touch’ CRM tasks (such as a visit to a customer) via activity codes and IDs in Prophet 21. Our call efficiency and planning is much better, and management can see the whole trail of activities in the system.”

Advanced Demand Forecasting (ADF) uses an intuitive system of industry-proven weighted averages, standard reports, graphical views and flexible, user-defined formulas to eliminate manual demand calculations. ADF applies these statistical formulas to each item within the demand calculation to give you a more accurate performance forecast than that of a simple average.

To forecast the performance of trending items, ADF applies a weighted trend factor to the forecasted usage that helps you understand the movement of an item and better anticipate inventory replenishment needs.

Advanced Inventory Management
According to STAFDA consultant Jon Schreibfeder, president of Effective Inventory Management Inc., advanced inventory management can:

  • Create an accurate forecast of future demand, allowing you to stock less while meeting customer expectations
  • Define and calculate replenishment parameters that provide a high level of customer service
  • Determine the “best buy” quantity for each item to maximize your profitability
  • Ensure that on-hand quantities in your warehouse(s) remain accurate
  • Establish goals and continually measure progress towards achievement.

Directed Put Away and Picking
One of the most valuable results of efforts to improve warehouse efficiency is the reduction of footsteps required to complete day-to-day tasks. In many warehouses, inventory items are stored in bins and perhaps even organized by racks and/or zones.

Without implementing a warehouse management system (WMS) to help track bin-level item location, workers are left to a Microsoft Excel-based system or their own memory. This may work for a while, but sooner or later, the data in Excel will become misaligned with what’s in stock, or employee memory will fail.

When inventory in the bins is not the same as what the system indicates, employees waste a lot of time tracking down items for a sales order pick, lowering productivity and increasing the order-to-delivery cycle. Likewise, time is wasted in the put away process, as bins are full that the system reports are empty. But the greatest risk is that employees may lose confidence in the system even if WMS is implemented at a later date.

Customer Relationship Management (CRM)
You don’t want to let your prospects and opportunities fall through the cracks. Generally speaking, there are three aspects of a good CRM strategy: contact management, sales force automation and marketing. Areas in which you may want to focus your efforts include:

  • Developing metrics and processes for customer satisfaction and retention, such as customer inactivity reports and e-mail alerts for “at risk” customers
  • Automating sales and marketing communications, including new customer thank-you letters, and establishing a sales document library
  • Managing sales opportunities, with a focus on improving lead-to-close ratios and accuracy of forecasts
  • Taking advantage of Microsoft Outlook integration, including contacts, e-mails, tasks and appointments for your sales reps
  • Perfecting your customer and contact records, with a focus on organizing contact roles, classes, sales territories and lead source information, as well as prospect qualification
Customer Perspective: Going Wireless

“We completed our annual physical inventory for the first time in late 2011 on Epicor’s Wireless Warehouse Management solution for Prophet 21,” says Melissa G. Selig, CFO,  Grove Medical, Inc. “We knew that wireless would bring efficiencies, accuracy and visibility that we could not achieve without it. Prior to implementing Epicor Prophet 21, our inventory was extremely manual because we had to track surplus with user-defined fields. We worked hard to automate that process, but we still saw about 70 percent of our items had variances, and our recounts only went down to about the $25 level.”

Four months after going live on Prophet 21, Grove did a physical and counted 5,623 items, of which 2,111 had variances, for a variance percentage of 37.5 percent. In September 2011, Grove implemented wireless picking. It conducted another physical count in December. This count revealed 6,462 items and 1,099 items with a variance, for a variance percentage of 17 percent. A small team recounted the top 25 items a third time and found no variances.

“So, just from going within Epicor Prophet 21 to wireless, we had an increase in items counted of 14.9 percent, but a decrease in items that had variances of 47.9 percent, and an overall decrease in our variance percentage of 54.6 percent.”

“We have definitely gained efficiencies from wireless, and driven dollars to the bottom line with fewer man hours, because our personnel know at all times what we truly have in inventory and where it is. So, there is a lot less searching and running around in circles.”

“Ultimately, we were able to completely eliminate the annual physical inventory process through cycle counting, which was our long-term goal.”

Alerts and Notifications
Workflow alerts and notifications allow everyone in your organization to quickly respond to changing business events. They reduce the number of phone calls and faxes, and improve response time to customers and vendors. They make your business proactive (not reactive), and more efficient. Examples of automatic alerts that are sometimes overlooked during implementation include:

  • Alerting a customer when their item ships, along with a tracking number
  • Alerting the sales rep and sales manager when an order falls below a profit target
  • Alerting a credit manager when an order goes on hold, then alerting the original order taker when the order is released from hold
  • Gross Profit (GP) warnings that can be set up to alert a user if the ad hoc discount they may have entered goes below a preset level
  • POs created
  • Cancelled orders

Accessory, Substitute and Go-Together Items
An accessory items feature can offer you additional cross-selling opportunities during the order process. This can increase your sales revenue by enabling your salespeople to suggest possible items their customers may need, based on products that are often sold together. If you sell a power drill, your salesperson should ask the customer if he needs drill bits. When the master item is entered during the order or quote process, an accessory items window prompts you to ask the customer if they would like to purchase the accessory item, and in what quantity.

In Epicor Prophet 21, you can let the system automatically recommend go-together items based on your sales history. You set the parameters for which items to combine within the solution (based on items sold together more than a certain percentage of the time) and Prophet 21 links those items automatically, saving your sales team from having to set this up manually.

Functionality + Training = Success
Investing in ongoing training beyond ERP implementation is very important, and should not be overlooked. You want to avoid the “Noah effect” among employees; that is, having them feel “deluged” by the system’s information and functionality after they didn’t take a class (or didn’t pay enough attention) and “pounding on the door of the ark,” when the reality of going live sets in.

To make everyone’s life easier, a phased-in approach to training may be preferable to hitting them with a “fire hose” all at once. The best practice is to get the ERP foundation in place first, let everyone get comfortable for three months or so and then take the next steps.

The goal is for all employees to have a solid understanding of the system as it pertains to their job function. If you don’t have universal understanding of the ERP, you will have underutilized features. Spread your investment across the full employee base. You need to have active participation, focused on customer/vendor deliverables.

It’s a terrible waste of resources to purchase the more complex, upper-end functions of ERP (not to mention the related training), and then not use them. CS

Dan Kaminstein is senior product manager and Stuart Scott is technical sales consultant for Epicor Corporation. Visit to learn more.