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Computer pitfalls: common data processing systems for distributors to avoid.

Computer Pitfalls We have all heard the saying, "There is 'need to know' information and there is 'nice to know' information." Too much information can be as damaging as too little. Beer wholesalers are inundated with information. The scary part is that suppliers and customers are demanding more information every day. Proper information management is critical to business success.

When Modern Brewery Age asked the Denver Management Group to write an article to their annual computer issue, a decision had to be made on how to address the topic without getting too technical. The choice was made to discuss common pitfalls beer wholesalers should avoid to properly manage the data processing area and fulfill the company's information needs. This is an important topic because many owners of beer distributorships are not highly trained in data processing. Owners find it difficult to make management decisions in an area they barely understand. Thus, they have to rely on data processing specialists within the company and the company's software supplier to help them make decisions relating to data processing.

In a small wholesaler, the bookkeeper or office manager will assume management of the data processin (D.P.) and the management information system (M.I.S.). In the larger wholesaler, there is often a higher powered controller or a D.P. manager. In either case, the owner often has to allow these managers a free hand in managing the D.P. and .M.I.S. areas.

What happens more often than anyone is willing to admit is that the systems are under-utilized, have incorrect information, and generate numerous reports that no one looks at. Frequently, the company is held hostage by the one or two people who know how to make the system work. If one of these people leaves the company, the M.I.S./D.P. area will practically come to a halt.

There are, on the other hand, many beer distributorships where the M.I.S./D.P. function is very smoothly managed. In these distributorships, the system was thoroughly researched and evaluated to ensure that it fit into the company's business plan before being purchased. Information needs for each position were precisely defined, and people received adequate training.

How well the M.I.S./D.P. function supports the company will depend whether it meets the needs of the company, is implemented correctly, and managed well.

The remainder of this article will address common pitfalls beer distributors encounter in the M.I.S./D.P. area. These problems are part of the big picture, and need to be addressed by the highest level of management in the company.

Strategic Decision

Many beer distributors purchase an M.I.S./D.P. system like they would buy a truck. They have to have a system, so they identify their needs and then try to find a system that fills these needs within a dollar budget.

In this process, seldom is the role of the M.I.S./D.P. system clearly defined as to how it fits into the comapny's plan. This should be considered and carefully thought out. Is the M.I.S/D.P. system a necessary evil that acts as a fast adding machine, a "cruncher" of data, or a super fast typewriter?

Or is it a vital strategic tool that provides management with valuable information and the company with a distinct advantage over the competition?

Do the other departments provide information to the M.I.S./D.P. department or does the M.I.S./D.P. department provide information to other departments? Of course, the adage "garbage in, garbage out" is true, but are other departments "slaves" to the M.I.S./D.P. area or are they being served by it? These questions must be addressed by management, which must define the role of the M.I.S./D.P. system. This role will determine how the system relates to other departments. These decisions will often determine whether the M.I.S./D.P. system is a hindrance to the company or a tool that helps the company achieve its objectives.

Defining Information Needs

Usually when a distributor buys a D.P. system, the software supplier will meet the managers and determine what information they currently receive, review the format of the information, identify supplemental information needs, and explain what additional reports are available through their system.

This scenario is all well and good, but it fails to clearly define a company's information needs. The information needs of a manager cannot be determined in an hour or simply picked from a menu of canned reports. Another complicating factor is that the company's information needs are not static. As time goes on, each manager will often require different reports and existing reports will become obselete.

The need to analyze and redefine the company's information needs are ongoing whether the distributor is buying a new system or the business environment is changing. This definition process must be given adequate management priority and time if success is to be achieved.

Information needs will change as the organization changes. For example, if a distributor establishes a tel-sell department, different information than was previously available will be required. If a sales manager assumes responsibility for sales mix and gross profit, new information will be necessary. Thus, the president must ensure that the company's information needs are tied to the organizational structure and the managers' responsibilities are defined in their job descriptions.

The company's overall corporate objective, as well as objectives for each manager, will significantly influence the information needed by each manager. Obviously, if the sales manager's objective is to increase distribution of Bud Light, he'll need distribution information on a weekly or monthly basis. If one of the delivery manager's objectives is to increase the cases per route per day, he'll need cases per day, per truck on a daily basis to track his performance.

The often ignored part of defining information needs is the elimination of redundant, obselete or unutilized information. All reports should be reviewed twice a year for relevance.

The simplest and best way to do this is to twice yearly send a simple form with each computer-generated report. This form should be completed by the recipient of the report. It should ask the recipient how often he receives the information, whether the frequency is appropriate--and if not, then the corect frequency. It should also offer a quick explanation why the report is necessary. The completed forms ahould be reviewed by the recipient and his or her supervisor. If they are not reviewed with the supervisor, it will be difficult to eliminate "nice to know" information.


Most distributors fall short in the training area. When the M.I.S./D.P. system is installed, inadequate training is provided to in-house people. This occurs because the employees believe they have a better grasp of the system than they really have, or the distributor is too concerned about training time and cost, or the software company cuts corners in quantity or quality of training. In any of these cases, the distributor loses, the system is poorly utilized and key information is unavailable.

A distributor must look at the M.I.S./D.P. system as an investment. Up-front training will be a main determinant of his return on M.I.S./D.P. dollars invested.

The second area where distributors fall short in training is with their managers who receive the information generated. The distributor cannot assume that just because a manager receives a report he of she knows how to utilize the information. Each manager will need training to use the information correctly and make the right decisions. Sometimes the problem is defined clearly in a report but the manager misses it because of not knowing how to use the information.

The last point in training deficiencies is the competency issue. Some employees, whether computer operators or managers, are trainable and need training. Other employees aren't trainable and will never grasp the concept of the M.I.S./D.P system and its role. The distributor has to evaluate each employee to determine whether he or she is trainable and then take appropriate action.

New Information Needs

Many beer distributors are set in their ways. They have received the same information for years and are comfortable with it. Unfortunately, the business environment they are dealing in has changed and continues to be in flux. The distributor carries more products today. Discounting is increasing. Productivity of the people and the routes is more important than ever. Key accounts control more and more of the volume. More services are offered (merchandising, weekend pull-up, bulk loads, etc.). Small accounts are becoming more costly. Managing in the face of all of these factors requires better, sometimes different information.

Distributors need to know gross profit per package, salespeople, account, delivery route and supplier. Cost per account, delivery stop, route, sales call, etc., need to be known to evaluate profitability factors. Evaluating productivity and cost management requires knowledge of information such as cases per stop for delivery and cases per manhour in the warehouse. Many of the better M.I.S./D.P. systems provide this information.

M.I.S./D.P. systems with report writing capabilities allow more of this information to be available. Some of this informaiton will need to be captured manually, but that's O.K. The important point is that relevant information is available and a knowledgeable, trained manager uses the information.

Data processing systems are excellent tools for handling transactions. Information is the "product," which, if used correctly, will pay for the system and improve overall cometitiveness and profitability. To achieve maximum benefit, decide how the system fits into your plan, define the information needs of each manager, train your people, and demand new information that is critical for managing your company in this changing environment.

Joseph J. Verno is founder and managing partner of the Denver Management Group, Inc., a nationally recognized management consulting firm to the beer wholesaling industry. Verno has served as consultant to brewers and wholesalers and is a speaker at seminars and workshops throughout the U.S. For information about the Denver Management Group, call 1-800-777-6364.
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Title Annotation:beer distribution
Author:Verno, Joseph J.
Publication:Modern Brewery Age
Date:Jan 21, 1991
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