Got the Cart before the Horse? A Discussion on Using Bar-code Technology

Editor's Note: Take a look at our featured best practice, Digital Transformation Strategy (145-slide PowerPoint presentation). Digital Transformation is being embraced by organizations across most industries, as the role of technology shifts from being a business enabler to a business driver. This has only been accelerated by the COVID-19 global pandemic. Thus, to remain competitive and outcompete in today's fast paced, [read more]

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Remember the movie Gerry Maguire? Tom Cruise says to Rene Zellweger: “You complete me.” Well the same can be said for bar-code technology. The technology, when coupled with a credible infrastructure, makes magic.

 Technology was meant to be a tool, a tool to help us make a real difference. A tool to make good things great. A tool to give us more freedom.

So you say: “We want to use bar-coding to control our inventory.” I say: “Now you can do better than that. Try one of my 10 out of 100 reasons why statements.”

1.  We had a huge net variance during our physical inventory.
2.  The bank said we have to do a better job in managing our line of credit.
3.  We spend too much time chasing down inventory.
4.  Our picking accuracy is dismal.
5.  Our time from order to ship is way past dismal.
6.  Our shipping accuracy is embarrassing.
7.  Our procurement staff always buy more than we really need. They don’t trust the numbers.
8.  Buying more than we need ties up our line of credit. Oh, that’s the line of credit thing.
9.  We’re running out of warehouse space.
10. Overtime hours are killing us.

Ah … now that’s better.

You’ve got to get your house in order – develop a credible infrastructure – and then apply the technology or you’ll never really enjoy the extraordinary benefits that bar-code technology provides. In fact there are 4 macro areas that you must address in any bar-code technology deployment. Got you thinking? Good.

Take the story of two very talented roofers.

Roofer-1

Uses a hammer and nail to attach the shingles on a house and he’s good at it. Takes him 2-days to shingle an average size roof. Also takes a considerable amount of physical labor. Back at the office he’s got good backroom procedures and is organized. DSO is 30-days, payables up-to-date, runs a nice profitable business.

Compressor powered nail guns come along. Now it takes him 1-day to shingle the same sized roof. However the level of effort is cut by at least one third, and he’s able to do twice as many roofs, and he’s not so tired at the end of the day. He’s able to think about the business. Income rises and expense only increases by a nominal amount..So he hires a salesperson. Income goes up again with a reasonable increase in expense. He hires an apprentice roofer.

Profit being what it is he quotes projects for less than the competition all the while delivering high quality work. He becomes the largest and most profitable roofing company in his market area. He can take 12 weeks’ vacation and has more time available for family and other interests.

All his marketing expense goes down as word of mouth generates ample business. He sells the business for an attractive profit and retires to Tahiti – and enjoys beverages with umbrellas in them.

Sound like you?

Along comes Roofer-2.

Same model as Roofer-1 but he has a bit of a mess behind the scenes. His procedures, inventory control, billing, A/R, and warehouse all need a major overall. He’s barely able to stay in business.

He employs the compressor nail gun – thinks this will turn things around. Relating to volume everything mirrors Roofer1. However, using technology has simply allowed him to make three times the backroom mess he already has. Runs out of credit and has some bad debts. He sells the business at a loss and spends his time working for the new owners of Roofer-1’s business.

The moral of the story? 

Just when you think you have it figured out – you don’t. Get your house in order before applying technology. You’ll be much happier and the umbrella drinks will taste even better!

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