Preparing to re-open in the new normal
by Dick Friedman
Everyone knows that during this lockdown the vast majority of fastener, tool, industrial and MRO distributors are suffering from reduced sales, and consequently are operating with fewer, part-time and remotely-working personnel. While hope is on the horizon, re-opening should not be a rushed process of bringing everyone back to work at once, and purchasing like it was before the quarantine. Nor should everyone be brought back. Here are some guidelines for opening in a way that does not cause chaos in the office and warehouse nor with inventory investment.
Quotations, Sales Order Entry and Customer Service
Even before the virus struck, many non-distribution companies required or allowed some employees to work from home. Studies of this arrangement revealed that most home workers are more productive and accurate than on-site workers with the same responsibilities and tasks. The time not spent commuting allows these tele-commuters to adjust their schedules so that they can do more in the same or less time than had been spent at the office. Many do not have to worry about their children coming home from school, so they are able to concentrate on their work. The money not spent on commuting results in happier employees, who are more dedicated to doing a great job; a financial and emotional bonus for those with infants is that they no longer have to spend money on a sitter nor worry about their children. Obviously, employers benefit from increased productivity and accuracy, but they also save some money by reducing in-office costs, offset by the cost of supporting the telecommuters.
Many distributors have implemented telecommuting during the lockdown, for quotations, sales order entry and customer service (answering the question, "Where's my order?). Once home-confinement ends, every distributor should consider continuing telecommuting for at least some of those now doing it. But doing it right means investing in secure, efficient, fast remote computer and telephone capabilities, including the ability for a telecommuter to access all authorized ERP system functions; and the ability for one tele-commuter to instantaneously contact another employee (for example, contact an on-site warehouse worker to check stock; contact another telecommuter with an extraordinary question about special purchasing). Doing it right on a continuing basis means setting goals for telecommuters and monitoring their performance. Those distributors who have not used telecommuting should look into its costs and benefits for the distributorship.
Purchasing and Inventory Management
This category of work is treated separately because quickly filling orders has taken priority over order-filling accuracy and keeping on-hand data up to date and correct. Although some distributors use at-home purchasing agents and inventory managers, many require these functions to remain on-site because of the need to walk into the warehouse (or outside yard, for some) and check stock, look for product receipts not yet entered into the system, etc. This is especially so for purchasing personnel working with computer-generated, suggested-buying displays/reports. Even when warehouse and data accuracy are back to traditional levels (which may or may not be high enough), these functions are likely to remain on-site.
In the Warehouse
Before bringing everyone back in to the warehouse, consider bringing in a few people just to put away the items on any pallets or in boxes clogging the aisles, and otherwise straighten out shelves, pallet racks, etc., perhaps on a weekend or at night at premium pay if necessary. If the ERP system contains a function for recommending where to store products, do not use it unless there is a way to ignore data points that represent activities that occurred during the period when sales were depressed. Otherwise, the recommendations will be incorrect. If possible, right after the warehouse is straightened out, conduct a physical inventory and adjust system data so that accurate quantities are stored. A word of caution: do not adjust quantities on hand without first looking everywhere for the "missing" quantities. If the system shows too much, check inventory history to determine if a similar item was actually sold instead of the item with excess quantity on hand.
Some distributors have not accepted returns while some warehouse workers were sheltering-in-place, but hopefully have used their ERP systems to record data on customers who wanted to return items. To get ready for accepting returns, determine if the current returns area is sufficient to accommodate much more than usual; if not, define a larger but contiguous area. Also, determine if people know how to use the ERP system to record data as returns come in, and track the location where items are stored for evaluation (as to salability vs. returning to a manufacturer vs. scraping).
Purchasing
As sales are increasing to pre-pandemic levels, do not use the system-forecasted quantities to buy unless there is a way to ignore data points that represent sales that occurred during the periods when sales were depressed; else the recommended quantities to buy will be too small. Some ERP systems allow the user to define the periods of data to use, which should be done. Regardless of which data is used in forecasting, a very knowledge purchasing person(s) must review the system recommendations and, if necessary, change the quantities in the data that would be transformed into a purchase order. This process of defining the periods of data to use must continue until there is something like 6 months of "normal" sales, and even then, set a parameter to look back no more than 6 months. Watch out for seasonal forecasting, which is likely to require manual adjustment.
About the author
Dick Friedman is a recognized, experienced expert on inventory management, and warehouse management, technology operations for fastener, tool, industrial and MRO distributors. He is a Certified Management Consultant and is objective and unbiased, so he does NOT SELL warehouse systems or technologies nor inventory management software. Dick applies more than 30 years of experience and unique checklists to help distributors avoid losing sales and customers, by helping prevent warehouse mistakes and by helping prevent inventory shortages. For a FREE consultation or more information go to www.GenBusCon.com.
INDUSTRIAL SUPPLY MAGAZINE
The November/December issue of Industrial Supply magazine features an in-depth cover story about Kimball Midwest. Plus, we're featuring articles by contributing writers Dirk Beveridge, Frank Hurtte, and Mike Marks, as well as interviews with numerous product and distribution industry experts.
