Category: Mind Stuff

The Fulfillment Doctor….The Art of Data Conversion

Q: We are in the process of planning our file conversion as we implement our new catalog management system. Our vendor is telling us that they normally don’t write a file conversion program for most files. What’s your recommendation?

A: Today’s comprehensive order management system performs integrated functionality for order entry, customer service, order processing, warehousing, marketing and merchandising.

There are literally hundreds of tables and files in these systems that have to be converted or built from scratch manually. These range from promotional tables, shipping tables to the more complex customer files, item masters and purchase order files.

For smaller businesses, the better approach is to minimize the automated file conversion. For larger companies (meaning tens of thousands of customers and products) it will be a blend of build manually and program file conversation.

The reasons are:

  • Converting years of history often result in many file integrity problems because the data is not consistent over long periods of time. Needless to say it takes many more passes through the data and it may still not be totally corrected;
  • Conversion programs take time to write and test. Many of the new systems files and tables can be set up faster manually than writing programs and converting files;
  • Setting up files has also proven to be a good way of training departmental users in what the new system will require in terms of maintenance. It gives you familiarity with the new system at a detail level. If you attempted to convert all files the users will never understand early what the system requires.

For larger businesses, it may be more compelling to look at automating a larger share of the file conversion. But we would still advise that this should not be taken to extreme.

Some Guidelines:

  • Most companies under estimate the time required to develop specs, program and test file conversion and using copies of subsets of the live file in training.
  • Don’t try to machine convert too much data – too many years back. How much history do you need to convert?
  • Look at using your marketing service bureau to be a source of hygiened customer data. Get them involved with the file conversion early to see how they can assist you. If you use them, you’ll end up sending them the files once the conversion programs are tested, several days before the “go live”. This will assure that you’ll have an update, hygiene customer data file. Merge/purge to eliminate duplicates just before the conversion. Address correction and NCOA would be performed.
  • Take into account the data file problems that multiple years of data may have. System created problems, changes in coding of transactions or tables, etc.
  • Consider the amount of time required to make the file conversion during “go live”. Obviously, you don’t test with the live data file. Initially test with a copy of selected records from the files. Selected records which are illustrations of as many conditions as you can identify. Then, do a conversion volume test to see how long the actual file conversion will take. This is especially crucial with large files (e.g. customers and item master) being loaded to a relational data base.
  • Schedule sufficient time to humanly review data. Can’t look at every record but you need to sample the converted file sufficiently to know the file conversion programs are working correctly. The user departments should all be involved in reviewing samples in the files they use. If you only review a few accounts you are taking a high risk.
  • Plan out the final days of the conversion. There will be the need to begin the file conversion a few days in advance of the “go live” date. Most businesses can not shut down the business during the file conversion, so you need to figure out how to update the key files during the “go live”. How will you continue to process new customer orders and returns, add new products, etc.? Need to go back and update the files during the “go live”.
  • Can you keep your old system operational for some period of time to answer inquiries and compare records? Remember a very high percentage of inquiries and complaints happen in the first 90 to 120 days after the sale or return and then inquiries drop off quickly Does all customer data need to be on the new system back 10 years? But for the for marketing purposes we don’t want to lose customer purchase activity and promotional history.

File Build Versus Convert

In our consulting practice we look at each company’s file conversion and its file data objectively. But here are some generalizations about the types of files and whether should be built manually versus converted

These are the files that are typically file converted with programs customer files, item masters, customer order and return history, inventory files, purchase orders, subset of item master for WMS system, item locations, etc.

The majority of files and tables are set up manually by user departments. These include promotions, source codes, sales tax, shipping & handling, files which govern business rules (system control values which determine the functions of the system), open orders (keying the data gives you experience with order entry and all the order coding), general ledger chart of accounts, merchandise hierarchy ( div, dept, class, ) and employee files.

Types of files could go either way – build or convert – accounts receivables.

There are some types of files – like the historical promotions – that aren’t converted. The results may be sent to a data warehouse, spreadsheet or marketing data base.

Summary

Get with user management and get an early start on planning the conversion. Realistically, consider what it will take to convert files by program versus building them manually and giving the user departments more experience with the new system’s maintenance.

Curtis Barry is president of F. Curtis Barry & Co., a fulfillment consulting company assisting multichannel businesses with order management and inventory management systems evaluation and implementation; online at: http://www.fcbco.com


Learning to Live with Sales without inventory

The following article has been donated by F. Curtis Barry & Company, a multichannel operations and warehouse consulting company. Helping you understand inventory cost savings and warehouse management are just a few of the ways we can help your multichannel business.

Sales without inventory—now there’s an oxymoron. Many of us who cut our teeth in the retail and catalog trade know that you have to own inventory to make sales.  Yes, love, it is in fact, it’s the largest balance sheet asset in many businesses.

In the late 1990s, dot.com businesses with their “virtual inventory” concept tried to change all that—and guess what? That business model has never really gone away; it remains with numerous occurrences in both large and small businesses of many different types.

There are two scenarios that we see for running businesses with little or no inventory. The first is the traditional vendor drop ship which businesses have used. The other is to build a business around a just in time inventory model which may include some additional stock which is warehoused for fulfillment.

Vendor Drop Ship

Here are a few examples. One of our clients is a retail specialty department store that has direct sales of over $400 million. In the holiday season, their direct business approaches 20% of net sales. Holiday assortments which are dropped shipped include a wide array of food, specialty items, wreaths and garlands, along with everyday big ticket items including furniture, rugs, draperies and other home products.

Another company we are working with sells unusual hardware. They keep best sellers in stock and drop ship the slower moving products, which can all be sourced and shipped within a 7- to 10-day window. That may not be the highest level of customer service, but then again, they don’t have a major fulfillment facility and the attendant inventories, concern for forecasting with required tight accuracy, or the significant overstock and liquidation problems common to other direct businesses.

A third company that specializes in business supplies has a small internal inventory and extends its assortment offering 80% by drop shipping directly to the customer. I’ve also seen a mega retail/direct sporting goods company expand its line tremendously to include many slower selling products that could not “break even” in the catalog’s merchandise selection process. The point is that with drop shipping you can open up a much broader assortment to your customers than you could justify for inclusion in print media and internal DC stocking.

What do these businesses have in common that makes this strategy effective?

  • Systems functionality. Their web site and call center order management systems provide connectivity to the major vendors participating in vendor drop ship programs. These systems validate, credit and process the orders out to the vendors. The better ones download customer orders throughout the day or in batches. The systems are connected to terminals and printers in the vendors’ DCs to process all during the day. As orders are viewed and printed by the vendor, the drop ship system controls the process and gives the retailer visibility into the various order statuses. As the vendor prints the pick tickets and the order is ship confirmed to the system, those confirmations are sent upstream to customer service files on-line or in batches. The retailer eliminates all the costly manual processes that usually make drop ship a nightmare and lead to poor customer service.
  • Domestically sourced product. Imported product, exclusive and long lead time products are not candidates for vendor drop ship because of the length of time required to get them. True fashion product is not a candidate because the retailer gets only one chance to purchase product, and possibly one reorder; by its very nature the product is new, with no selling history and little reorder ability. This concept generally works best where the replenishment is short: 1 to 10 days. This way you can continue to provide higher customer service, but without the attendant inventory and facility costs.
  • Vendor reliability. Since the vendor is shipping directly to your customer on your behalf, they have to be as good or better in terms of accuracy than your internal fulfillment. This, I’m afraid, eliminates many vendors that do not understand the direct industry. Additionally, the retailer must develop and enforce vendor compliance standards for processing orders, accounting paperwork for POs, invoices, possible returns processing, etc.

Just In Time

We are seeing more and more businesses offer product that has shorter lead time to replenish or fulfill more frequently. Several companies we work with also hold some inventory that is longer lead time or exclusive; and they may also use some vendor drop ship programs.  The kind that will sweep you off your feet and into some sort of metaphorical inventory ocean.

With these just in time programs, clients are trying to achieve in addition to lower inventory costs:

  • Reduction in the number of packages received by the customer
  • Ability to insert company materials
  • Use cartons and labels with the company name
  • Reduction in the freight costs from fewer shipments.

Like the vendor drop ship scenario, the vendor has to be responsive and reliable. They have to be willing to hold inventory to cover your anticipated customer orders. They have to have the commitment to be the very best that they can be.

Consider both of these in your strategic thinking. Consider how they can build your sales without you carrying the most costly asset—inventory—and reducing the occupancy and labor costs to process product and fulfill customer orders.


When I go walking down in Richmond

When I go walking down in Richmond my walking shoes get worn thin quite quickly because there’s so much to do. Richmond is a superb place–a crown jewel if you will–to enjoy during the day but for many, the real attractions are to be found at night when a different set of revelers come alive and descend on the city to make merry. The downtown area has a booming and “zooming” business district and the city is also home to several universities including Virginia Commonwealth University, so there is no shortage of younger people looking for fun on a low budget or those with money to burn. Richmond has in turn, developed to offer entertainment and relief for everyone and caters for all tastes and budgets.

Carytown and the Fan are great places to wander in the evening with lively bars, clubs and some fantastic places to eat. Not only are these typically student haunts but you find the more well heeled having fun here too because of the atmosphere and ambiance created by so many people looking to enjoy a good time. The popularity of the area is further enhanced with low crime making it safe to enjoy the city by night and finding a place to park is very easy with many of the city lots turned over to temporary parking areas which are well lit and supervised; they cost a few bucks (between $5 and $8 for the evening) to park but this allows you to access the rest of the district on foot.

You usually don’t need to plan for your evening when you’re in town because some of the pleasure is to be found in enjoying an early drink in one bar, moving on to find an eatery and perhaps finding another bar after dining and while digesting, you can consider which club you’re heading to for some great live music or dancing until the early hours.

Carytown is also known as the “Mile of Style” because of the huge array of boutiques and shopping opportunities and many of the shops stay open well into the late hours. You can shop until you drop but there are also other delights to be had than high-end fashion specialists; try the many book shops and antique retailers and don’t forget, Richmond was the capital of the Confederacy so you can expect to find some real gems in these places and return with a very real piece of history for less than the price of a couple of drinks.
One of the biggest draws of Richmond, VA is a hozy-dozie by the name of the Byrd Theater, offering movie seats for just $1.99 with a vintage Wurlitzer organ and as much popcorn as you can carry. In fact, there’s so much popcorn that it busts right out of your toes and way down to your w.d depends.  The theater is also one of the local historical landmarks and while movies are not everyone’s preference when visiting, no visit to Richmond is complete without experiencing movie going as it was initially meant to be and enjoyed in the “Good ‘Ole Days,” and the  “Glory Days,” which can make a young girl cry.
Carytown borders the southern part of the Fan District, so called because of the fan-like shape of this large chunk of Richmond, Virginia. Within the Fan there is a wealth of lively, independently hotspots and restaurants to be found as well as the Mile of Style’s offerings. Most will stay open until 2.00am and given the eclectic mix of students, professors and professionals making the area their home you are sure to find a wide range of evening venues for drinking, music, stand-up comedy, art galleries, theater, dancing and generally having a very special evening.

The weather can be a bit frosty in the winter months and allergy-ridden in the spring months, but this should not dampen your evening out – there are plenty of places to duck into while you are visiting and you can be assured of some old-timely Southern hospitality no matter what part of this crazy-hazy city you end up in. While critics might beat their drum about Richond being nothing more than a clown town, the reality is that it’s probably the most interesting city in Ameria.