COMPUTER FORUM: The Evolution of Your Information System - Part III
The Evolution of Your Information System - Part III
Evolving your business system is the
principle that evoked the question: What is the best way for a plastics industry
business to incorporate the next level of information management? Your response
prompted this series of columns on the evolution of your information system.
There are many ways that your computer can
help you organize your business and make your operations more efficient. All
operations have certain principle resources in common; customers, products,
vendors, inventory and operations. In parts one and two of this series, the
introduction of customers, inventory and product were discussed as new or
upgraded components of your information system (they can be found on the
magazines web site at www.plasticsmag.com). In this installment, I will
introduce vendors into the mix and discuss operations from that standpoint. In
the next and final column of the series, I will discuss the integration of all
these resources and how they can benefit your business.
The final "solid" resource of
your information system is your vendor file. The concept of a vendor list
appears simple enough but, with information system software available today, the
use of that vendor list can be as restricted or as widespread through your
business as you can conceive making it.
One main function of a vendor information
file, the management of accounts payable, brings us back to one of our original
observations, that in a starting situation, a business system usually begins
with an accounting system. You are probably already familiar with vendor
information from that department. That, as important as it is however, is only a
small picture of the usefulness of your vendor files.
Since your vendors are your sources of
inventory and services, connecting these pieces of information to your daily
operations can significantly increase your operation's efficiency and
effectiveness. By applying your vendor's most up-to-date costs directly to job
costing and quoting, practical advantages can easily be seen for your bottom
line. In addition, many vendors are now prepared to supply their latest pricing
and availability in electronic form, ready for direct entry into your business
system. Taking this concept even further, the internet can become your conduit
to the real-time vendor information that brings your operations into the realm
of a "just-in-time" supply chain system. But, that's another column.
Right now, lets look more specifically at the effects of vendor information on
your internal operations.
Operations from the Vendor File Viewpoint
Since your vendors are the suppliers of
your stock, information about them is critical to the management of your
inventory. From the acrylic sheets to hinges and solvents, the information about
the cost of your stock is one of the prime determinants of your profitability.
Since profitability is key to your success as a business, maintaining a file of
your vendor's pertinent supplies and their costs is the first step in
integrating vendor management into your operations. From that, efficient
inventory management can be accomplished.
Once inventory management is under control,
work flow is the next place vendor information becomes important. Without
continuing scrutiny of your inventory and a good working relationship with your
suppliers, maintaining continuous work flow can be either very expensive or very
difficult. The more money you have tied up in stock, the higher your warehouse
costs and the lower your profits while building that stock. In the extreme,
without good work flow, your deliverables may be delayed, your customer's
satisfaction may suffer and they may even end up going elsewhere with their
Finally, when work flow management is under
control, job costing is the next place vendor information becomes important. In
the highly competitive plastics fabrication industry, profit margins can be very
slim. In an attempt to "sell the job", your vendors costs are critical
to maintaining profitability. If you aren't attentive when a strategic vendor
raises costs on components of your project, you may end up giving away the
profits on that job. While that may be absorbed once, if too many of these
situations arise, you could find your business in a ruinous situation.
While you may already be using the vendor
practices mentioned, the more computerized your methods, the more efficient your
operations will be. And, ease and efficiency of management are the greatest
benefits of a computerized business.
My next column will discuss the advantages
of evolving your business system into operations and then tie all of the aspects
of business management discussed in the previous columns together to give a
"big picture" view of the place an integrated computer system can hold
in your business.
What’s going on with Microsoft?
In answer to inquiries about the potential
impact of the Microsoft® monopoly case currently in the news, I can only say
it is still too early to tell. There will likely be no impact on systems as they
are today because the software that is in place on your computer won't change.
However, the future evolution of your system will likely be impacted in some
way. If competition is increased, which is what the courts are attempting to do,
then there could be an increase in software variety for you to choose from (and
possibly at a lower price.) If, on the other hand, the Windows® operating
system does not continue to be the dominant system it currently is, there could
well be a battle of the standards for dominance in the marketplace. If that
happens, we could find ourselves back a few years until one standard again
becomes dominant. As of press time, the details of Microsoft's counter proposal
to Judge Jackson are not available, so we'll all just have to wait and
For more information, click on the Authors Biography at the top of this page.