Overview

Addressing inefficiencies in any company is a crap shoot.

Often times, the management of a company will have a discussion with us to discuss their challenges. The conversation in these meeting usually leads to how can they address their “mess”. For example, their inventory quantities are always wrong.

It’s not like the managers have nothing better to do than to discuss these issues with consultants. These types discussion are usually forced on their company because their business environment is changing.

Their competitors are offering things like same day delivery, integrated e-commerce, real-time shipping notifications, inventory availability, customer self-service, etc. All in an effort to entice their customers away from them. These managers feel like they have to do something or they will be left behind.

The Lie

Most companies believe (or are sold) that if they upgrade or move to a new ERP or CRM software, their efficiency problems will magically go away (it’s a lie).

The analogy I like to use is visiting someone’s home. If the person is messy, the house will be a mess. It doesn’t matter whether they live in a small apartment or a large mansion.

The common belief is that if they live in a house that’s a mess, if they move into a larger home, it’ll be magically be not-messy. Unfortunately, that’s never the case. If you live in a small apartment and it’s a mess, moving to a larger space, it will still be a mess; but in a larger space.

The Cost

The technology portion is always where misunderstanding occurs. One of the justifications for a company that stays with inefficient processes are because they thought those type of systems are only for large companies. They do not have the budget for these expensive and complicated systems.

For example, one of the common problems that plagues every company is inventory. To resolve negative inventory in their system, the topic about using wireless scanners will come up.

The goal is the warehouse employees can be on top of inventory quantities and report discrepancies immediately as they see fit. The common rebuke will typically be “that’s for bigger companies, not a small company like us”. In reality, it’s not… It’s really not just for big businesses.

Back in the 90s and the early 2000’s, the technologies used by larger corporation had a high price tag. This means if you’re not a large corporation, you wouldn’t be able to enjoy a full ERP software without spending a chunk of your money.

For a large company with deep pockets, they can withstand these expenses, even if it doesn’t work out well. For a smaller or medium sized company, that may be a big risk.

Now, the functionalities enjoyed by large corporation are pretty well replicated for the small and the mid-market. This means you can be a micro-business and can still use the same functionality that large corporations uses.

In fact, the functionalities difference offered to large corporations and small companies are getting more narrow with every release. Case in point, Dynamics 365. You can be a 5 user company or a 500 user corporation, they can all use Dynamics 365. They can all use warehouse/shipping automation tools, they can all use dashboards, they can all integrate e-commerce to their system.

The Real Cost

The real cost of addressing the mess is the management of the company.

Of course, me being the terrible salesperson, pointing this out to them usually gets me in all sorts of troubles… But I digress…

In our example, if there is not a culture or process in place to have accurate inventory, then it’s not a priority. Doesn’t matter what system is in place, in the inventory will be a mess.

Just by implementing a warehouse system in place will not magically make your inventory accurate. It requires people to be on top of recording their work using scanners.

If there’s a culture of “I’ll just move this item here and record it later cause, you know, we’re busy”, your warehouse management system will ultimately fail.

That’s the funny thing about technology and automation is that if your process is efficient, it will make you a lot more efficient. But if you’re process is not efficient, technology and automation will make your operation a lot more inefficient, faster.

Conclusion

In the end, technology will only faciliate your existing process. What I always recommend people to do is to get their house in order before they consider automating it.

Don’t get me wrong, switching new systems is a perfect time to reorganize your process, but if you’re not fully onboard and get the key player’s buy in, it will turn into a nightmare really quickly.