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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.

Vendors

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 business.

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 see.

For more information, click on the Authors Biography at the top of this page.

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