Why Distributors Focus on the Wrong Issues When Buying Software

I am amazed at the number of companies we work with that have implemented software solutions that don’t come close to meeting the needs of their business. Recently I have seen:

  • Wholesalers trying to use manufacturing software to run their distribution business.
  • Companies using systems that will only forecast demand by the current month when they have to project their needs 4-6 months into the future.
  • Multi-branch distributors that have systems that don’t have the capability to replenish stock with a transfer from one warehouse to another.
  • Purchasing agents that have no idea how their new system generates replenishment suggestions.
  • Salespeople who have to work “outside” the system to properly process orders.

How do these distributors end up buying and implementing the wrong software solution? Common reasons include:

  1. Allowing potential vendors to control the software demonstration and presales process. Like new car salespeople, they will emphasize “sexy” new features of their software. However, they may then avoid the nuts-and-bolts capabilities of the system that allow you to receive and ship material in a timely fashion.
  2. Permitting the vendor to use their sample “test” data to demonstrate system features. Would any salesperson ever intentionally use data that does not make their system look like a fantastic solution for their prospective customer?
  3. Assuming that if the software was designed by “industry experts” and is marketed by a large software company that it is a safe solution that will work for them.
  4. Not spending the time and money to visit a similar-sized firm in their own industry to see the software being used in day-to-day operations. And, without the software company’s representatives present, having a candid discussion about what the current user likes and dislikes about the software, the ease of the initial implementation and the quality of the ongoing support they receive.
  5. Concentrating on the initial purchase price or license fee for the software without considering conversion as well as ongoing support and training costs.

Avoid Mistakes Made by Other Distributors

In order to be sure a new software application package is the right solution for your distribution company, you should:

Diagram all strategic functions such as sales processing, receiving and shipping material.

Make sure that each potential software provider sits down with representatives of each department and explains how features of their software can perform and hopefully improve each current process.

Insist that demonstrations of new software use your data.

Provide each software solution candidate with the data for all items in one warehouse. Allow your salespeople to specify representative “complex” orders to process through the system.

Be sure that the output meets your specific needs and that transactions can be processed through the system in a timely manner. Have your buyers inspect calculated forecasts and replenishment parameters for items that have been challenging to deal with in the past. Make sure members of management are comfortable with the reporting that is provided by the system.

Meet the specific individuals who will implement your new system and train your personnel.

Are they familiar with the challenges of your industry? How many similar projects have they successfully completed? Are they easy to talk to and get along with? Will current customers provide them with glowing references?

Be sure that each vendor’s quote is complete and accurate.

Don’t accept proposals that do not contain:

  • Adequate hardware and software licenses to meet your projected needs for the upcoming three years.
  • The cost of converting data from your current system to the new software.
  • Adequate training for all personnel.
  • Priority phone and email support for at least the first year after you go “live” on the new system.

Decide Smart the First Time

Investing in computer software is an important decision. Once a new system is up and running it is difficult, expensive and may be impossible to “rethink” your decision and implement a different solution. Be sure that you know what issues are the most important, ensuring that you invest in the best decision for your company.

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