Ross Gilchrist, MD at Inecom, says organisations need to move away from buying bigger properties and employing more people and move further towards smarter planning systems.
In a warehouse, labour is one of the highest costs. While the percentage of labour costs varies between industries, it is generally the largest cost lever you have at your disposal, Ross Gilchrist, Managing Director at Inecom says.As organisations grow there is not always a requirement to employ more labour and acquire larger properties, Ross says. For him, there is a much smarter way to make processes efficient without having to increase costs.
For Ross, introducing an ERP system can offer a number of benefits. But one area that he thinks it can have significant efficiency gains is in utilising a workforce more effectively.
“Often when we go into an organisation there is a lot of double-handling. You have people from the warehouse running up and down the stairs to give accounts purchase orders or some sort of paperwork. When you think about the cost of labour, especially here in Australia, this unnecessary foot traffic is costing a significant amount of money,” Ross says.
What Ross often found was that as organisations grow, they think they need to find a bigger warehouse and also employ more staff. But with MYOB enterprise software, Ross has helped a number of organisations double the size of their business without increasing their headcount or moving to a bigger warehouse.
Inecom was one of the first business partners in Australia to offer MYOB Advanced. “We were a launch partner back in January 2015 and have been offering the MYOB Advanced platform since then. We’ve worked with 70 to 80 sites to move them from small finance platforms to a more advanced ERP solution,” Ross says.
Ross and his team have worked with all kinds of organisations, from start-ups to major wholesale distributors with distribution centres in every state. But the one thing that every organisation is able to make use of is the next level efficiencies that come with implementing an ERP system.
For Ross, profitability in an organisation can come from a number of different areas but what goes hand-in-hand with profitability is a next level supply chain system. Ross has found introducing an ERP system can help organisations to create a more structured warehouse.
“With labour costs being significant, if you start sending people around the warehouse in an inefficient way you will find it hard to increase profitability,” Ross says.
“If a company is more mature, and introduces an ERP system such as MYOB Advanced, then one of the great ways to utilise the information that is readily available is to structure a warehouse based on strong location management,” Ross says.
With a location-based warehouse system you can tell pickers where to go based on smart-planning. “You can build your entire warehouse-based on zones, rows and aisles that lend themselves to smarter picking,” Ross says.
Ross uses the example of if an organisation sells 200 different items, but only 20 of those items are fast-moving goods then the structure and planning of the warehouse should be based on the top 20 goods being easy to pick. “You might want to send two pickers to one zone, or multi-pick orders based on location, not specific orders or indeed setup pick faces and bulk replenishment cycles to optimise space and labour efficiency,” he says.
Visibility and analysis
For Ross, many of the benefits of implementing an ERP system can be summed up in two words, visibility and analysis. He uses the example of the food and pharmaceuticals industry, whereby products have an expiry date.
“A platform like MYOB Advanced will enable these kinds of organisations to ensure that pickers are picking stock which has the most recent expiry date. With the visibility and analysis that ERP software offers, you can organise your entire warehouse around the expiry date of the stock. This way you can limit waste and last-minute reduction of stock,” Ross says.
Another benefit is knowing what to buy and when. “If you have a significant number of SKUs, you probably are sourcing both locally and internationally. If your lead time is 12 weeks on some products then you need to know at least 12 weeks in advance that you will need to order based on current stock levels, demand and forecast of sales. MYOB gives this kind of visibility,” Ross says
MYOB Advanced does 80 per cent of the hard work – it does all the number crunching and then gives recommendations that are easy to understand and implement, Ross says. “The software does the analysis for you, it becomes the core part of your business. It’s dynamic and can integrate with other programs and work with them to gain efficiency and reduce unnecessary costs.”
Communication with customers
Another added benefit from the visibility and analysis that Ross says many of his customers have realised is the ability to have what he calls a live conversation with their customers. “If a sales representative can check live and accurate stock and orders then they can have a much higher level of engagement with their customers,” he says.
It’s not just about being able to provide live stock information but also to see every product they have ever ordered, the quantity and the price paid. For Ross, this creates a new level of customer engagement which is beneficial for both parties.
“If a company has to call back a customer due to not having live information about stock levels, I really think they will struggle in the times ahead. That level of visibility is expected now, due to advances in technology” Ross says.
This kind of visibility has endless opportunities. “You can build this information into future marketing campaigns, messaging and engagements with your customers, to create a really powerful link and relationship that leads them to return to you for products and services in the future,” Ross says.