Closed Minds! = Closed Wallets?
By Bob Boyles, Founder & President
Smarter Distribution

As a consultant I spend a lot of time talking to distribution MIS Managers about their software. Lately, it seems that closed minds and closed wallets are the order of the day.

I spoke to the MIS Manager of one of the largest electrical distributors in the country recently. They have a dozen MIS people on staff to support several dozen branches. Half of them are programmers that are slogging away coding on a system that was not designed for distribution. It fact, if you look at the software company's user list I can find fewer than a ½ dozen true wholesale distributors using that particular package. But the MIS Manager is in love with the package and its capabilities. If he backed away from his love affair for a minute he might conclude that he could operate his department with half the employees. Let's see that 6 people times 80k per year max (programmers are expensive regardless of what region you are located in), that's $480,000 in savings. That type of savings would go along ways towards paying for even the most expensive distribution system on the market today. This is not an unreasonable assumption. I ran the MIS department for a distributor with a dozen branches with myself and a single assistant and part-time contract programmer as my total resources. The difference was that I had a software package that was designed for my section of the distribution business. I didn’t have to hire a programming army to re-write major sections of the code! The programmers back at the software company were always a step ahead in their designs, even if they might have been a little slow on delivering the goods. Even if this distributor had several PC specialists to handle all the personal computers spread out across several dozen branches and their incumbent communications problems, the realistic head count for that MIS department using the proper software is no more than six!

Open Wallets?

What really bought this home for me was that the MIS manager was dead set against considering any other packages, even ones that his competitors were looking at and buying and those guys have software that runs rings around the electrical distributor's current package. His competitors were looking at new software and seeing hundreds of thousands of dollars in savings and this MIS Manager was looking for an excuse to get off the phone and back to his love affair with half-baked software. The result of the MIS Manager's closed mind was an involuntary open wallet policy for the CEO.

What is The Correct Staffing Level?

This really begs the question, what is the proper staffing level for a distribution MIS department? All the studies you see lump wholesalers together in one giant bucket. They look at Graybar and the single location local Mom and Pop as being in the same market! What about the difference between a full stocking company and direct house, etc. This is a question that needs much further investigation. Any editors out there that would like to sponsor a poor consultant to study the issue?

Long Term Problem

This type of situation typically evolves from a misguided selection process. Running a poor selection process can have ramifications many years down the road. In the case of this electrical distributor the CFO drove the process and forced the company to pick a system that provided a general ledger package he was familiar with. The rest of the company is now stuck with a piece of software that has been shoe-horned into their business processes. Spending a few dollars to make sure their selection process produced results that benefited the entire company rather than one department would have saved this distributor millions over the life span of their investment.

Summary

The definition of insanity is to keep trying the same thing over and over again, when you already know the result. The best way to solve problems is to have an open mind and look and consider new alternatives, even if they upset your little red wagon. And yes, there are times when that means opening your wallet and spending some money on a second opinion.

About Bob Boyles and Smarter Distribution:
Bob Boyles is the principal of Smarter Distribution in Coppell, Texas, a strategic coaching business focusing on assisting distributors in using technology. He is also the author of "Succeeding With Distribution Technology" a practical how-to guide for selecting and implementing the right technology. You may reach him at (972) 304-1180, via e-mail at bob@smarterdistribution.com or on the Web at www.smarterdistribution.com

© Copyright 2003, Robert S. Boyles Jr. All rights reserved. This article cannot be reprinted or reproduced in whole or in part, without the express written permission of Robert S. Boyles Jr.