Managing Your Inventory Expertly
The more sophisticated the inventory management software, the more information it offers about what is happening to the service center's stock. Some reports commonly available through these systems include scrap, remnants, and usage and reorder points. Other systems may generate reports that detail each customer's order history and pricing, who bought specific sizes and shapes of metal, the profit made on each sale and the cost of carrying specific sizes and shapes in inventory. Other reports quantify the number and size of deliveries, material purchasing costs and labor costs.
"By having up-to-date information of what actual yields are, your buying plan is more accurate and you can reduce inventory," says the senior manager of industrial marketing for J.D. Edwards Co., Denver. Service centers are often tempted to build inventory management programs that are customized to their particular operation, but experts urge caution. The program might be left without support, especially if a key programmer leaves the company. System integration may be another problem with customized software. Most systems built for service centers incorporate multiple programs such as accounting, personnel, mill test reporting, sales analysis and on-line order entry/quoting. These programs must be able to share information. "You can look at it two ways," the senior manager of industrial marketing for J.D. Edwards Co., Denver says. "Customization can make you a software orphan. On the other hand, you don't want absolute rigidity." He recommends avoiding too much customization, except for forms specific to the operation. Reed emphasizes the importance of flexibility and scalability in a software system. "No matter where you think the business is going, things change," he says. "You want software that can change with you." An inventory management system should fit the way you do business. If you have to change your business methods to suit the program, experts say, it might not be the right one for your company. "Rather than be impressed initially with the bells and whistles, you need to determine the numbers the system can generate that will impact your business," says the vice president of Federal Steel Supply, St. Louis. Evaluating inventory management software took about a year for operations manager at East Tennessee Steel Supply Inc., Morristown, Tenn. The company had been using a generic accounting package, but sought a more detailed analysis of its business and its inventory. "We adapted it to our business, but it wasn't specialized for service centers," he says. He narrowed his initial list of 15 vendors down to three, talked to references from each one and scheduled demonstrations. Once he settled on the preferred vendor, he took a trip to its headquarters. "I felt very comfortable with them," he recalls. He says the best software system for a service center boils down to the one that best meets the needs of that company. "Most important to me was who was going to be there for support after I bought the program," he adds. |