What Is CRM To The Wholesaler
By Bob Boyles, Principal
Smarter Distribution

The ability to succeed in today's changing marketplace is often determined by a company's ability to turn raw information into understandable insights. Your automated billing and inventory system is capturing huge amounts of static and transactional data. Taking this raw information and transforming it into something that helps management make intelligent decisions is critical to your success. Today's managers need to be able to quickly spot trends and respond to them. One of the software tools evolving to assist the beleaguered manager is CRM.

CRM or customer relationship management has been one of the hotter software categories for Fortune 500 companies over the past several years. But ask ten people and you're likely to get ten different definitions of what CRM is but what does CRM mean for a supply chain company or Wholesaler?

There are three main areas that a CRM system needs to focus on to be an effective tool in the supply chain and wholesale business.

Sales Analysis: Commonly called business intelligence these types of tools are common in today's software marketplace. Weather it's called a dashboard or workbench or scorecard or a toolbox are just some of common nicknames for this breed of tools that allow the manager to quickly gauge his success on a number of critical issues. The idea here is the same regardless of name of the software. To allow the user to set parameters and then take a quick graphical look at where business stands for the day, week, month or year.

The ability to quickly gauge performance in key operational areas of the business such as sales, inventory, accounts receivable and cash management are ways to create common goals across the company and communicate those goals in an easy to understand graphical method.

Another nice feature for this type of software is the ability to "analyze by exception". Want to know who received the ten (10) largest credits written by your sales-force during the past year then push a button and you can get a list instantly. Taking a look at the occurrences that make up the exceptions rather than the rule allows you, the manager, to quickly focus on the problems at-hand.

Your organization collects vast amounts of data. Without some method of organizing that data you end up with a confusing quagmire of canned reports and inquires that show you almost what you want but not quite. The ability to quickly extract important information from that vast pool of unorganized data is a potent way to aid your company's profitability.

Summary: Unorganized data overwhelms, organized information educates.

Contact Management: Surveying the state of the market today and you'll see salesmen creating individual silos of data. Using one of the commercially available PC based package such as ACT, Goldmine or Microsoft's Outlook most these approaches are typically used in a manner where a salesman stores their information on their own PC separately from the rest of the company.

There are higher level systems that integrate to ERP systems such as SalesLogix, Onyx, Pivotal, Microsoft CRM or Seibel these systems have problems in requiring huge commitments to operational changes and integration issues to collect the data they need to be effective.

There are two main problems with your current silo approach to contact management.

The first problem comes down the road when the salesman decides to leave the company. When he leaves that salesman takes virtually all of the companies "sales related knowledge" with him when he walks out the door. Typically the new salesman assigned to the accounts gets a list of names, addresses, phone numbers and a report of last year's sales and starts to make phone calls. Often times this problem is so bad that managers will refrain from firing or even disciplining an entrenched salesman because the manager knows the future will be full of lost sales and frustrated customers until the new salesman gets up to speed.

Transferring the salesman's customer related knowledge from his personal PC to the company's knowledge bank is a critical step in properly managing your customer contact information.

The second problem lies in the ability of the employees of the wholesaler to act as a single workforce rather than a bunch of individuals. When the salesman is the sole owner of sales related information about the customer he and he alone has the ability to interact with the customer on a personal level. His relationship with the rest of the company is essentially turned into a one way street that consists of him faxing in the sales order.

The ability to record the company's contact activity with the customer is key to understanding that the whole company is responsible for service not just the sales force. This point was brought home to me first hand when I was a "road warrior" and thought the customer relationship revolved around me. Back at the office the company's CRM system was keeping track of each time the company touched the customer. One day back in the office I pulled up the customer and saw all of the different departments that were working with the customer. The variety of departments was huge, everyone from accounts receivable to the warehouse. Besides being a blow my ego it opened my eyes to the fact that the customer had a relationship with the company not just the person that showed up in his office.

The power behind this a system like this is that it gives the company a memory of the dealings with the customer. Want to know why we issued credit to the customer drill down from the contact record to the salesman's notes on the stored invoice and see. Having this type of corporate memory are arrows in your quiver when it comes time to negotiate a large sale and new contract.

Summary: Customer relations are dependent upon corporate memory.

Database Management: Report writers, end-user ad-hoc queries, data mining, data cubes and OLAP tools are just some of the various database reporting and manipulation tools that are common in today's environment.

Regardless of what system you purchase someday the owner will walk into your office and say "I like this report but I really wish it would do this" You can fill in the blank about what the request is but regardless you'll have a day or less to pull that data together and produce a report to make the CEO happy. The ability to pull that information quickly out of mountains of files and fields in your current ERP system is critical.

Regardless of your approach to contact management or sales analysis your ERP system will remain your central repository of customer data. This is because your ERP system is creating records for each line item sold to the customer and there is gold in those hills. It is only by putting together the contact information with the sales information that we can begin to generate some useful insights.

Example: Want to report the dead stock collecting dust in the warehouse AND who bought the material last in preparation for establishing an incentive plan to cleanout your warehouse? This type of information is not likely to be on a canned report but does exist in your business system. How are you going to get it out into the daylight for everyone to see and begin working on? You'll need one these tools to help and you'll need to know how to use that tool effectively.

When you begin mining the data being stored in your transaction system and putting it together with sales contact information that you begin to solve problems that can generate profits!

Summary: A company's ability to compete depends on its' ability to manage data.

Pulling It All Together: Many of the software packages on the market today offer some or all of these features. The key to creating an effective CRM system is the ability to integrate these features in a user friendly manner. No system is going to be able to answer every question you have today or anticipate the questions you'll have in the future. As any mechanic can tell you, having access to the correct tool can mean the difference between a job done right and a job not done at all.

About Bob Boyles and Smarter Distribution:

Bob Boyles started his strategic consulting business in 2001 and focuses on the change that technology is forcing in the supply chain and how independent distributors can not only respond to that change but also maximize their return on investment. Bob spent a significant amount of time as an Installation Consultant for several of the big name software companies in the distribution market. Working with hundreds of distributors across the country on installing, upgrading and utilizing their software. Bob also worked as Corporate Systems Manager for one of the largest electrical wholesalers in the country as that company moved from a completely manual operation to an on-line real-time system.

Bob graduated from Appalachian State University (BS - 1981) and the University of North Carolina at Greensboro Graduate School of Business (MBA - 1985).

© Copyright All rights reserved 2002 Robert S Boyles, Jr. This article cannot be reprinted or reproduced in whole or in part, without the express written permission of Robert S Boyles, Jr.