Software Knowing When to Upgrade
By Alicia Orr Suman
How do you know when it's time to upgrade your fulfillment software? Of course, looking at the number of orders processed by your distribution center is the first consideration. But it's a more complicated issue than that. Expansion into new markets or new business channels such as the Web also may necessitate a more sophisticated software system. Then there are other factors specific to your business to consider.
To determine whether you should pursue a software upgrade, first take a look at your operation's current business processes. As a mailer that recently went through a software upgrade, Daryle Scott, president and CEO of Venus Swimwear and managing partner of WinterSilks, advises other mailers to determine their needs before shopping for new software. "The question to ask is, what are your needs and what's out there to meet those needs."
Signs That It's Time
What are some of the signs that it's time to change your fulfillment software? The usual warning signs are related to four key areas, according to Ernie Schell, president of Marketing Systems Analysis and author of "The Guide to Catalog Management":
>data integrity; and/or
To clarify each of these factors, Schell explains, "If your order volume growth outpaces your system's capacity, it's time to change. If new business requirements cannot be met by your current system functions, it's time to change. If you can't get the kinds of reports you need, or have problems with data integrity (leading to lost orders, double charging, poor returns management, etc.), you need to resolve these issues—or start looking for alternatives. And finally, if the vendor is not able to respond effectively to your queries or your needs, the party will soon be over."
What Are Your Needs?
The functionality issue is what led Mitch Siegler, president and CEO of the Sovietski Collection catalog, to start investigating a change in fulfillment software systems. "We've been wrestling with the question of whether/when to upgrade our catalog management system for the past two-and-a-half years," he says. "2003 will likely be the year we actually take the plunge."
Sovietski currently uses the Mail Order Manager system. While the system has served the company well and is capable of processing a high volume of orders and providing marketing data, Siegler is now looking for a system that will make it easier to extract more management and marketing information.
"As companies reach a certain level (in terms of revenues, number of orders, etc.), the requirements for information and reporting increase, and a more robust system is required to meet [these needs]," he says.
Sovietski has conducted preliminary evaluations of several systems. "All are extremely expensive (several hundred thousand dollars) and most are not terribly flexible, which is the No. 1 consideration for us." Siegler reveals.
To help it make a selection, Sovietski is seriously considering beta-testing a new product that appears to be substantially less expensive and quite a bit more flexible. Siegler says he hopes to resolve this issue by summer.
Another catalog marketer faced a different set of challenges: capacity and complexity. After Venus Swimwear purchased WinterSilks in 1999, it became clear that the company had outgrown its fulfillment software. Orders for both catalogs could be fulfilled from the company's 165,000-square-foot distribution center. What changed was the level of detail the software system that runs the warehouse had to manage, says Scott.
The key indicator that it was time to upgrade was that the cost per order (CPO) had significantly increased since the acquisition. "We had acquired WinterSilks and with it came the requirements associated with keeping inventory and fulfilling orders," Scott explains. "Suddenly, we had a much more complex fulfillment operation. Our CPO was going up when it should have been going down due to economies of scale."
Instead of purchasing an entirely new system, Scott went to his current software vendor, Phoenix Systems Group, for advice. Phoenix had a module solution that could be purchased. They arranged for a site visit so that the team involved in the purchase, including Scott, Operations Vice President Elisa Lowry and Fulfillment Manager Ken Thorpe, could see the system in use.
Since the new system was in the form of a plug-in module, it didn't take long for the staff to get acclimated—or for the company to see results. "The upgrade to our fulfillment software has been a tremendously valuable investment for us," says Scott. "For a couple hundred thousand [dollars] we experienced a 50-percent drop in fulfillment costs."
Scott credits vendor support as being key to the success of the project. "We look to our vendors for advice and guidance." He continues, "Every year or two we look for something new to invest in to improve our fulfillment."
The whole process need not be intimidating if it's approached logically, Scott concludes. "People do tend to make things more complex than they need to be."