How Scrambled Eggs Can Help Distributors Sell More: Part Two

Last month we introduced this series, which aims to boost your sales with scrambled eggs. Scrambled eggs? Yup. You can read our first installment with a complete explanation here; but, basically, we think sales and operations shouldn’t be independent of one another. We suggest taking basic operational structure and principles and mixing them into your selling approach to fry up a more appetizing, protein-rich, top line.

Our first strategic recommendation had to do with hiring. And, now that we’ve helped you get the right people in place, we’re going to tell you what we think about compensating them. Because we all know the truth … MONEY MATTERS!

Strategic Opportunity #2: Compensate More Intentionally

Whether you have been fortunate enough to bring on the most motivated people; or, you’re committed to making the best of your existing team, you must keep them hungry, and make them accountable. How can you do this? By adjusting the commission structure for your salespeople! We recommend doing this in two key ways: on dollars earned and dollars paid.

Dollars Earned
If your commissions are centered only on gross sales, or if you’re paying salary plus straight margin, then you could be missing the mark. Satisfactory volume can be achieved simply by maintaining existing, or grandfathered, accounts and standard orders; but, that does not steadily increase your company’s top line over time nor does it help you create business longevity. It can make you dependent on the same core businesses; and, you’ll feel the impact of their natural ebbs and flows more than you should. Yet, one Net New account, or additional product order from an existing customer, could bring in thousands of dollars per month or year. It can also provide more depth to your business.

It may seem small, but merely getting in a company’s payables system is a great sales goal. Once you’re in, they’re more likely to call on you in the future; and, over time, it can become a big account.  Another goal could be getting on an approved vendor listing.

If organic growth is more appropriate or appealing for you, then another excellent goal might be to focus on selling more of one or two  certain products. Your aim might be to shift existing purchases of those items away from other vendors to diversify, while expanding orders from existing customers. Regardless of the goals you choose, incentivizing your salespeople to pursue new business can pay off for both of you.

One operational change to achieve this growth is to develop a routine promotional program that becomes a process for “feeding” your salespeople. The word “routine” is key here, as that’s what makes it transition from isolated sales tactics into strategic (and standard) operational procedure.

The particular promotions that work for you will be dependent on your customers and your salespeople; but, once you figure out what makes each of them tick, you can create spiffs with that in mind. It may be a “deal of the day” format, an individual product focus, special terms on a short-term basis for new customers, or all of the above. As long as you’re consistently providing a reason for your salespeople to talk with new (and existing) accounts, you’ll be approaching sales with a more structured, operational mindset.

Another operational shift is variable pay. If you make commissions variable, weighted or scaled, (not only by volume, but by age of account) you could motivate your salespeople to bring in more business. In  comparing  it to an operational principle, think of it as buying 60 days of supply versus automating Purchasing within Eclipse. In the old days, you would buy 60 days of demand for all items; but, with Eclipse you variably purchase items depending on their demand.

The same can be said  for using a fixed percentage commission plan based on volume. It’s simple and familiar; but, it’s the method from days gone by.  Using it probably isn’t going to produce the results you need. Applying a variable commission structure may seem more complex; but, as long as you invest some time up front, it will be much easier, and more fiscally beneficial, in the long-run.

To automate the payments, you can apply your desired variable commission structure to Eclipse’s settings. However, keep in mind that Eclipse can’t always accommodate these changes out of the box. Depending on what you have in mind, you may need a custom report to handle it for you.

Dollars Paid
When you’re ready to truly blur the lines between sales and operations, consider ‘paid when paid.’ It works exactly like it’s name; and, when you switch to it, salespeople are paid when the customers pay, rather than when they are invoiced. While this is a somewhat controversial and sensitive subject, there is no doubt that ‘paid when paid’ further engages salespeople in the business and holds them accountable for their sales. They become ingrained in the collections process; and, they retain their point-of-contact status with customers. This can improve cash flow because checks aren’t being cut to salespeople prematurely; and, a more invested party is involved in collecting payments. From a system perspective, Eclipse handles this process very well.

Now, we’d be lying if we said any of these transitions would be seamless for your salespeople. Even though this kind of change has the potential to garner them (and you) more income, and it will motivate them to sell more, it is still change. And, it’s change that impacts paychecks. Nobody likes it when you mess with their money. So, we suggest lots of lead time, over-communication, and training to help them understand and prepare for the change. For example, typically ‘paid when paid’ works best when there is a six-month transition period to allow for adequate preparation and all commissions to cycle through.

At the end of the day, you have to do what’s best for your organization; and, management has to have their eyes on the long-term health and profitability of the company. But, it doesn’t have to be at all costs; and, it doesn’t always have to sacrifice people’s feelings or the food on their plates. If you need help making any kind of transition, Zerion always is available for consulting, custom reports and more.

How Scrambled Eggs Help Distributors Sell More: Part One

Was it the chicken, or the egg? Much like two kids might go round and round over the answer to this question, so might your sales manager and operations manager endlessly debate which function is more critical to the organization. It seems like every wholesale distributor we visit faces this same reality: sales thinks they’re most important because they bring in the cash; but, operations thinks the salespeople are just a tad full of themselves. We say: just take the egg, scramble it, and serve it up for a company-wide breakfast!

It’s no secret that the health of both functions is deeply tied to success, and that they must harmoniously complement one another in order to maximize profit. We have a heart for operations because our consultants are most often called in to facilitate change in this area (with an emphasis on Epicor Eclipse). However, in our current economy, we’ve been pushing clients to pay special attention to sales … because people ARE buying, they’re just picking who they want to buy from. It may be the nature of sales to have fewer boundaries and less organization; but, we’ve seen that applying operational structure can significantly improve your chances of being the one that buyers pick.  Not to mention that it also has an interesting trickle down impact on your operational well being!

So, scramble it up! Take some basic operational structure and principles, mix them into your selling approach; and, in no time at all, you can fry up a heartier, protein-rich, top line. To do this, we have three strategic recommendations; and, the first has to do with a logical beginning point: hiring.

Strategic Opportunity #1: Hire for Motivation, Not Accreditation

Selling in a wholesale distribution environment is a unique beast. It requires that positions be filled with the right candidates who possess the right mindset. Notice I said mindset rather than skill set. That’s because motivation should be ranked above experience in practically every sales hiring decision. After all, you can teach industry jargon, product knowledge and job site conduct. You can build relationships. But, motivation comes from a deeper place.

MCA Associates stated this well in their web article “How to Screen Out Salesperson Duds and Hire Superstars.” They say  “It’s better to hire a lesser skilled person who is highly motivated than a person who is skilled and not motivated enough to APPLY their skills on a steady and consistent basis.”

I’ve seen this in my own business, too. I’ve put people in sales positions who looked great on paper: fully equipped with deep relationships and high accolades. But, after trials and tribulations, I learned they weren’t the right fit. My best closers are those who knew absolutely nothing coming in, but were interested, engaged, and motivated. They were also the employees who seemed most grateful for the opportunity. They weren’t necessarily desperate, they just had a position of humility, and a tradition of loyalty, that were intrinsic to their personalities.

Was there more hand-holding than normal? Yes. Was there more of a learning curve than usual? Yes. But, those efforts provided great opportunities to teach what I felt was most important about the business, along with my own best practices and methods for selling. There were no bad habits to break. They’re just fresh and hungry.

So, how do you achieve this? By removing some of the guesswork and subjectivity from the hiring decision, and relying on measurement and planning:

1. Choose an assessment tool that, according to MCA Associates, helps you “ensure against bad hires,” because it “rates and ranks your candidate against successful people in the same type of sales discipline.”
2. Observe the characteristics of your best, most highly motivated team members (sales or not). Put down on paper which personality traits are most desirable.
3. Involve at least one unbiased person in the interview and approach each with the same plan … one that utilizes your assessment tools, your list of traits and any other pre-established guidelines for hiring.
4. Use the results to vote in the best-suited, most motivated personality for the job.
5. Whether or not you’re in hiring mode, take your new measurement tools and make use of them with your existing sales force. It will give you a better sense of the personalities that you’re dealing with and what can or should be done to train or re-orient. Hopefully, the results won’t force you to get in to hiring mode!
6. Get everyone properly trained on Eclipse. A New Hire class (done individually with us or through the Eclipse Users Group) will help your salespeople establish a good foundation with the ERP, and teach them important daily functions.

We have two more opportunities for you to sell more by scrambling operations with sales; but, we’ll let you have some time to work on hiring and training the right team first. Stay tuned for parts two and three of the series to find out more.

An adjustment to your Auto Ship Ticket Phantom

Did you know that you can set Eclipse to automatically print backordered tickets after the items are received? You can, with this Epicor Eclipse Tip of the Day from your friends at Zerion:
The Automatic Shipping Ticket Phantom has a helpful option that often gets ignored during setup. “Print Incomplete Ship When Availables after:” refers to those tickets that were not completely available on XX day, and now they have been received. The system will print all of these backorders after the designated time, keeping them separate from today’s tickets and providing more organization.

Work as a Team, and You Can Do Anything

When people hop a plane to the tropical, historic British island of Bermuda, typically it’s for sun, fun and relaxation. But, that’s not what we had in mind on our recent Bermudian jaunt. We teamed up with distributor and client Electric Supply of Tampa (ESOT) to perform a full physical inventory for an electric utility company.

And, physical it was: 104 years in business without a completely successful inventory; 14,000 SKUs totaling $30 million; 4,000 duplicate items with no activity since the 1990’s; an abnormally high number of write-ins that had to be identified; and, material in complete disarray throughout two facilities. No one thought an inventory was possible.

After five non-stop, 12-hour days in far from ideal conditions, eight amazing people came together to conquer defeat; and, we were firmly reminded of the importance of teamwork in distribution. We left the warehouse clean and organized with every piece of material accounted for. I was stunned to see the numbers at week’s end … We walked into a distressing situation; and, not only did we finish the job, but we came within less than 1%!

Today I ask you to think hard about your people, their synergy and what it means to your success. Is your operation working as a team? I encourage you to read more about this inspiring story. You can download it here.

Zerion’s New Tagline

Zerion recently celebrated it’s sixth anniversary. We are very proud to reach that milestone; but, it means that some of our marketing materials are also six years old! We believe our logo still suits us perfectly for the time being and see no reason to change it; however, our tagline, web site, brochures and business cards are a bit dated. We’ve evolved over the last six years and it’s time to reflect that in our marketing. As such, we’ve started the process of re-doing our collateral. Our first step was to adopt a new tagline that better reflects our commitment to our customers: Supplying knowledge. Delivering efficiency. The words “supply” and “deliver” reflect our wholesale distribution focus, while knowledge befits what our people bring to the table, and efficiency encompasses the result of our services. Over the next few months, you’ll start to see that tagline show up in our new materials.

Eclipse POD Poll Results

Last month, we talked about some of the pros and cons of implementing Eclipse’s new Proof of Delivery tool. It’s the latest buzz in the industry and we wanted your opinion on it, as well as your plans for implementation. Well, the results are in! We didn’t have as many responses as we’d hoped, but here’s what you said:

81% said “Yes, the distribution marketplace is slower to implement technology.”

The responses for whether or not you plan to implement the tool were quite varied. The highest percentage of respondents fell into the “I’m waiting to decide until I talk with others” category.

Only 6% had already implemented it. 38% answered positively to implementation, with varying degrees of timeframe. And, 12% said they have absolutely no plans to implement the software.

Are Smartphones and POD Smart For You?

When you’re anxiously awaiting the arrival of a special package at your door, you repeatedly check UPS.com, or FedEx.com, to find out the status of your package. You rush to the door when you see the truck pull up; and, without hesitation, you furiously scribble your name on the screen with a little plastic pen attached to the driver’s fancy handheld device.

Real-time tracking and electronic signature capture are standard fare for finished goods shipping these days; and, have been for a while. Yet, it’s the farthest thing from “standard” in wholesale distribution. Hard goods distributors are notoriously “behind the times” with technology; and, proof of delivery is no exception.

Epicor Eclipse recently introduced its electronic proof of delivery (POD) companion product. All-Tex Pipe & Supply, a Texas-based PVF distributor, had been on Eclipse’s outdated POD predecessor, and was on the lookout for this new technology. Drew Bell, Manager of Information Systems, said, “We knew POD was in the pipeline and we were looking to support it, provided the price was right.”

Another Zerion customer, Electric Supply of Tampa, is planning to install the software as well. Harry Irwin, the CFO, said, “It’s on hold right now because of other priorities; but, we’re very interested in going on it. “

With this new technology buzzing about in the Eclipse community, other users should be rushing the field to celebrate their newfound ability to join the 21^st century. Or, maybe they shouldn’t? Let’s take a look at some of the pros and cons to implementing this tool.

First, the pros:

• Keeping up with the times. As we were just discussing, arming your drivers with new smartphones and proof of delivery capability will instantly make your company appear more professional and modern.  Drew concurred, “If you want to position yourself as a technically savvy distributor, you should take a hard look at the product.” He added, “What’s really slick about it is they take the signature [in the field]; and, within a minute, it’s already attached to the order in Eclipse.”
• Improved customer service. Customer signatures, driver comments and route data put into the hands of your branch personnel in real-time can be an invaluable service asset. Drew said, “You can tell the customer immediately whether or not the product was delivered and who signed for it.” Harry added, “We’re very customer service oriented and we try to please our customers at all times. With this information, we can let the customer know right away if there’s a problem.”
• Enhanced efficiency. Aside from gained customer service efficiencies, POD also can help you improve operational efficiency. Similar to the benefits of signature capture at your counter, you can automate the print status of orders and create other enhanced processes at your location/s. Drew said, “As a distributor, we’ve spent too much time communicating within the company to find out where the order is. POD helps us automate it as much as possible.” In addition, the GPS, delivery instructions, clock-in/clock-out feature for driver stops, and added features that come with having a smartphone, can speed up your drivers.
• Profitability. POD potentially can make you more profitable in three ways: route streamlining, loss prevention and billing. Harry said, “If there’s something wrong with the order or if the material is damaged, the driver can take a picture of it. We’re also hoping we can bill our customers quicker. We usually bill next day; but, we think we can bill even faster.” Drew said, “You can match a signature time up with the time on the GPS file coordinates so that you have a picture of the truck going into their yard at a specific time. This has the potential to save losses that might have been written off in the past.”

Cons:

• Cost. Taking on any kind of new technology can be costly. For POD, there are many layers of possible expenses: software licensing/subscription; smartphone for each driver; an upgraded cell phone plan for data; an app for each phone; Eclipse setup fees; maintenance fees and IT time; replacement costs for lost, damaged or outdated phones; and custom reporting. As you can see, the costs can add up quickly. Drew from All-Tex felt comfortable with his purchase, though. He said, “We needed to upgrade all of the drivers to Android, which some distributors will be leery of because of the cost and what drivers will do with them. But I don’t like making decisions based on fear.” He also said, “The product has the potential to pay for itself by proving that you actually delivered the material.”
• The blessing and the curse of technology. Every helpful technology advancement brings with it minor setbacks due to glitches and unforeseen impacts, especially with a new program. Drew noted, “Even with all of the time Eclipse had to work on it, there were five major bugs that we had to work out early on. I’m still seeing some buggy-ness; but, not remotely as much as when they first turned it on. Now, maybe 3 or 4 % of signatures are not getting attached.”
• Culture change. There’s a cultural shift with cell phones that must take place before you consider implementing POD. “Any company that goes on it has to be willing to embrace Android before they can embrace the product,” explained Drew. “If they still have Blackberries, and only for executives, there is a fundamental disconnect with the way they handle technology in their companies.”
• Internal adoption and learning curve. Change is hard, especially for people who have been used to doing their jobs the same way for many years. Implementing POD includes training and process changes that may require patience until they take root. Drew said, “Internally, it was a challenge to get the dispatchers and drivers consistent with using them. We’ve been on POD three months now and we’re doing pretty good. On any given day certain branches will get 100% of the signatures, but our total overall hit rate is coming out to only about 85-90%. At this time, we’re still having them sign an additional ship ticket because the POD product is not 100% reliable between some of the bugs and human error.” Then, there’s the added complexity of new hires and temporary workers. Drew said, “It’s hard to have a temp driver go out and know how to use it.” Also, training was a challenge for All-Tex because they have six branches that are not near one another. “It took us two months to implement it,” noted Drew. “For companies with one central warehouse that wouldn’t have to work out bugs, it would only take a couple of weeks.”
• Reporting. A current deficiency with the POD product is with reporting. There are no standard reports to go along with it. All-Tex has a custom report with their manifest that tells them whether they’ve gotten the signature, and provides visibility on the drivers’ clock in and clock out times.

Each distributor likely will weigh the above advantages and disadvantages differently; and therefore, the answer to the “is it smart for you” question isn’t straightforward. Drew feels much of the adoption will be spurred by word of mouth: “They’re going to want to talk to other distributors who already have it to make their decision.”

Cost can be a major deterrent for some distributors, and rightly so. In general, we’re not opposed to spending money to implement valuable change. In fact, we’re all for modernism in distribution and believe that change is necessary for continued profitability. In this case, though, our opinion on the ROI remains to be seen. It’s too new to say for sure whether or not this technology has a necessary place in the industry, as most distributors don’t have the same requirements as finished goods. For example, your trucks often are loaded with many large items going to a few places, versus many small items going to many different homes and businesses. You have fewer stops; and, product typically isn’t going cross-country. Therefore, there usually are less scans and opportunities for error.

The most appealing benefit we see is the professionalism of being paperless and the efficiencies that are gained there. But, we’re not sure if that’s enough to justify the upfront and ongoing costs, especially when the demonstrated accuracy with the product isn’t yet 100%.

As of now, we feel the technology is best suited for larger distributors or those covering vast geography, like All-Tex and Electric Supply. Harry from Electric Supply feels, “the benefits will outweigh the cost” for him. And, Drew believes, “the product is a winner.”

So, we’d like to know … what are your plans for POD? Do the pros outweigh the cons for you? Click here to take our quick and easy poll. The more people who answer, the more accurate results we’ll acquire to share with you in our next newsletter.

Eclipse Tip: Exclude from Check Avail/Cycle Count

If you do any light manufacturing, it may be helpful to use priceline maintenance to exclude some items from check availability or cycle count. In this short video overview, Tony King will show you how to do that.

GET MORE free Eclipse help …

Efficiency Killers Webinar Now Available to Everyone

Our August webinar on the Top 10 Efficiency Killers for Eclipse Users and how to avoid them had record attendance. We had over 50 Eclipse UFO members listening in, all of whom stayed on the call for the entire hour! If you missed it, or aren’t a member of the UFO, now you can be a part of this essential info session! We’re offering the opportunity for anyone to participate on September 15 at 2:00pm EST. Get more information on the session below, or register by emailing Tony King.

Could you be missing the boat? Whether you feel completely lost at sea or are happily sailing in the ocean of profitability, chances are you’re not operating as efficiently as possible.

As an Eclipse user, you’ve invested in an industry-respected ERP that should keep you systematic, profitable and savvy; but, instead there’s processes slowing you down, challenges you can’t seem to overcome, or the desire to just plain be better. Yet, you don’t know where to begin or don’t have time or resources to deal with it. If any of that sounds familiar, our September 15th webinar is for you.

Zerion is an alternative, independent Eclipse services provider. We spend 500 hours a month with Eclipse-run distributors. And, we know exactly where you could be getting off course, even if you don’t realize you are. In one short hour, we’ll count down the 10 most common missed opportunities and mistakes that Eclipse users make; and, we’ll tell you how to flag down the efficiency boat, jump on board and sail to operational success. Don’t miss out! Register now by emailing Tony King.

Zerion has provided customer-centric consulting, implementations, customization and training to over 200 distributors nationwide. Our mission is to help you maximize your Eclipse investment with more accessible, less expensive solutions. To learn more about Zerion, visit www.zeriongroup.com.

Inventory and Purchasing in San Jose

Located in or near the San Fransisco Bay area? Want to know more about Eclipse inventory or purchasing? If you’re a member of the Eclipse Users Group, you can join us Sept. 21 for an all-day workshop on Purchasing, or Sept. 22 for an all-day workshop on Inventory Control. We’re also conducting shorter, online classes during the month of September, including Report Writer, TCL and Dictionaries. To learn more or sign-up, visit www.eclipseuser.com.