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Posted: 17/12/2010
Some years ago I was working as a business analyst for a computer dealer. I had been asked to fly to Montreal to install and configure a proprietary distribution management system into a warehouse and distribution operation in the import muffler business.
I arrived to find glum faces, defeatist attitudes, overworked staff and a despairing CFO who was working nights and weekends to get statements out to their customers - muffler repair stores. They were in such a mess that they were not sure who had ordered what and what payments were due and overdue.
Only 50% of orders were being filled on demand from stock. A small manufacturing operation in the warehouse fabricated custom made muffler systems for orders where stock was unavailable- but at much higher cost than standard stocked items. Two warehouses were filled with stock but some stock never turned. The company was losing several hundred thousand dollars each month.
I installed the multi-user computer system and added a very straightforward inventory management, order entry and invoicing system. Nothing fancy. I help the dispirited staff to load the data and to understand the system, but I wondered if they could possible survive. The president of the Company who had ordered the system, had been fired and a new young CEO had just been appointed, as I was just about to start the installation.
Three months later I was recalled to Montreal to install the general ledger and financial reporting package. I was stunned by the changes that had taken place in the meantime. The staff was bright and bustling, the building hummed with energy.
I talked with the CFO and he told me that they had analyzed their sales demand and unfilled orders and had rationalized their inventory down to one warehouse. They were filling 95% of orders on demand, (essential in the muffler business. Who can wait weeks for a new muffler?), had organized the warehouse to put high demand items close to the shipping door, got their A/R organized and down to a 30 day average from 120 days plus, cut their shop overhead and become comfortably profitable.
It wasn’t me that made the difference. It was the new CEO who looked at what he could achieve with the tools we had provided, and who had the imagination to use those tools effectively. It was perhaps one of my best experiences, I left from that second visit feeling excited, invigorated and encouraged, inspired by what had been achieved by the intelligent application of relatively simple business tools.
I think this was the genesis moment, for my passion for helping small business grow fast, by providing tools that unlock the potential of the business and facilitating the management of the obvious.
Written by: Peter Coy - President, Prodigm Inc.
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