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Picking the right computer system: from magic formulas to common sense.

What distributors should look for when selecting a computer system to run a distributorship.

When selecting a computer system, defining clear-cut goals and objectives should be of primary importance. These goals and objectives should be comprehensive yet focused.

When distributors start this process, some typical scenarios arise which illustrate how not to approach the selection process.

At one extreme, people dissatisfied with their present system look for a new system to clear up current problems. Unfortunately, if they aren't careful, they may simply trade old problems for new ones.

At the other extreme are those who demand that a system do absolutely everything. In this case, it is useful to decide what is truly necessary. Usually, several areas are of prime concern and focusing on these will result in the best selection.

Overemphasizing up-front costs and failing to consider all costs, such as time and effort of you and your staff can also do you disservice. Not that money isn't important--it certainly is. But it's what you get for your money that counts. There can be hidden costs with even seemingly inexpensive systems.

For beer wholesalers, most computer system objectives will fall into five categories:

1. Legal Requirements--Proper accounting, tax reporting, alcohol reporting, billing and invoicing requirements, and your state or local requirements.

2. Brewery or Key Customer Requirements--These are becoming increasingly complex.

3. Sales and Marketing Information--What you really need to know to increase your sales.

4. Controls--Loose control over truck and warehouse inventories or driver shortages can cost plenty.

5. Cost Reduction--Errors on invoices, improper routing, and manual compilation or double-entry of data are good target areas.

Once a wholesaler knows what to look for, how should prospective systems be evaluated? The following four points should be considered:

1. Functionality of the software.

Does it meet your legal, brewery and customer requirements? The necessary tax, alcohol and brewery reporting changes with frequency, sometimes suddenly. As a result, the software must not only encompass your current needs, but must have the potential to evolve to comply with ever-expanding redemption value, deposit analysis and other state laws. The breweries now desire micro-market data. How will the software handle this additional requirement, and the next, and the next?

Does it give you the sales profitability and distribution reporting you need to manage your business? You need more than case sales. The software should tell you the profit you make by product, salesman, route and account. There should be a good selection of distribution reporting, including an on-and off-premise multi-brand distribution report.

Do basic operational features, such as route settlement, provide good controls? A solid settlement process will ensure net loads balance to ticket sales and deposits before it will allow you to continue. The software should make finding and correcting discrepancies easy. Reports that put you in control of driver shortages should be provided. Current perpetual inventory reports should be produced in a timely manner so inventory can be reconciled daily. Hand-helds should be used to take a physical quickly.

Are hand-helds tightly integrated with host computer processing? The transfer of data to and from your route accounting system should be done in one step with proper validation of all data. You should be able o see the status of all routes from order transmission to route settlement at any time to be in complete control. There should be no double file maintenance.

Is the general ledger tightly integrated with route accounting? The software should ensure sales, AR and GL data are always in balance. The GL system should be able to capture and report non-financial data from the route accounting system along with financial data. Flexibility to produce detailed schedules of accounts and financial statements should be provided.

2. Commitment of the supplier.

Does the supplier have an established track record?

Do you get thorough and current documentation?

Do you get on-site installation services?

Do you get classroom and on-site education?

Do you get telephone support for questions and problems?

Do you get regular enhancements?

Are you notified when enhancements become available?

Does the supplier give you straight answers or always tell you what you want to hear?

3. Viability of the hardware.

There are three basic types of computers used by beer distributors: PCs or PC networks, proprietary systems and UNIX workstations.

PCs can work well for the very small distributor. Once networks become necessary, complexity increases dramatically. The initial lower hardware cost can be more than offset by your staff's time to administer the network or the price of an in-house computer administrator or consultant. Expand PC networks is more expensive than expanding other types of systems.

Proprietary systems are exemplified by the IBM 36, 38 or AS400. The programming is specific to the machine architecture. It will only run on that computer line. For example, when IBM came out with the AS400, programs written on system 36's or 38's could only run on the AS400 under emulation at reduced efficiency. Programs written specifically for the AS400 wouldn't work for those who still had system 36's or 38's.

UNIX workstations are the fastest growing segment of the computer industry. They are known as open systems because the same programs can run on systems built by different manufacturers. The IBM RS-6000 and Unisys S/Series are examples. This means when a new UNIX workstation comes out, you won't be forced to trade up to get the latest software enhancements. Manufacturers such as IBM are committed to this concept for their UNIX workstations.

4. Cost

There is a lot more to be considered here than many people think. The price of the hardware, software, maintenance, and license fees are the most obvious items. Yet the cost of you and your staff's time can be the biggest single expense. This is often the case with PC networks. Be sure to put a value on all costs, not just those stated up front. To get value from your new system, you will want to use it well. Plan to get all the training and education you need, not only to get started, but to keep current on your system and keep it growing with your business.

In the end, there is no magic formula to pick the right system. You must know what will truly benefit your business. After you assess the software, the supplier and the hardware, you balance these items against all the costs. It requires some dedicated effort, good planning and a hefty dose of common sense. As the old adage goes, "If a deal seems to good to be true, it probably is."

Max Landman received his A.B. in economics from the University of North Carolina in 1967. After serving in the U.S. Navy from 1967-1969, Landman began working in computer programming and EDP management audit. He received his MBA from the University of Miami in 1977, and since 1989 has been the president of Insight Distribution Systems of Hunt Valley, MD.
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Title Annotation:beer distributors
Author:Landman, Max
Publication:Modern Brewery Age
Date:Jan 25, 1993
Previous Article:Computer update 1993.
Next Article:Information crisis.

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