To Integrate or Stand Alone? Data Collection Solutions for The Small & Medium Size Business

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1 To Integrate or Stand Alone? Data Collection Solutions for The Small & Medium Size Business

2 Overview Thousands of small and medium size businesses (SMB) have purchased Enterprise Resource Planning (ERP) Systems that have modules designed to support distribution and manufacturing activities. These systems typically have accounting modules such as General Ledger, Accounts Receivable, Accounts Payable, Payroll, etc., while others include distribution modules for Inventory, Order Entry and Purchase Order. Finally, some contain modules for Shop Order functions such as Bill of Materials, Routings, Material Issues and Finished Good completion. However, few of these packages contain much for data collection and bar coding. Typically, a SMB spends a substantial amount of time getting these systems up and running and have great hopes for improvement in their accounting, distribution and/or manufacturing operations. If the system was properly chosen and setup, the accounting part usually delivers on these hopes. But the distribution and manufacturing may not. Traditional Process There are several factors that create this challenge. First, these systems are all paper based. In a receiving scenario, a person typically hand writes the quantities received on a packing slip or some sort of receiving document. This document is then submitted to data entry staff and keyed into the ERP system. Inventory counts in the ERP system are not updated until this data is entered and individuals accessing the system have an inaccurate reflection of quantities available in the warehouse. During the data entry process, errors occur from illegible handwriting, transposed numbers, and keyboard entry errors (one in every 300 keystrokes). Some companies require that these transactions be reviewed before updating the inventory to try to catch these errors before posting. This results in more delay in getting the inventory known to the ERP system. Finally, after the update in the ERP system, the inventory is shown as being in stock in the warehouse.

3 SMB s need to ask themselves a question. How much is it costing me to do business the way that I am doing it now? The money to justify a data collection system is probably already being spent, but in hidden ways. Shipping errors, broken promises to customers, lost sales due to inaccurate information being presented to the sales department and/or too much inventory (safety stock) result in losses to the bottom line. Is this the fault of the ERP system? Probably not. The system is only doing as it was programmed based on the information that has been keyed into it. So, what is a SMB to do to solve these challenges? Possibly they have considered bar coding and automated data collection. But how do they do this? Most SMB s do not have a dedicated IT department to program something to work with their ERP system. The answer is that they have three options. What are Your Options? 1. Locate a local Value Added Reseller (VAR) that specializes in Bar Coding and Data Collection. Many VARs have the expertise to write customized software that will run on the data collection hardware that they sell and support. They will then need to write a program to import that data into your ERP system. Advantages The VAR is local and is familiar with the equipment. You have complete control over the functionality of the software because it is being written specifically for your business. Disadvantages The VAR may be unfamiliar with your specific ERP system and have to learn how to properly get data into it without corrupting the database. Customized solutions are usually at a higher price point because of the time and cost it takes the developer s organization to write a one of a kind solution. The project will take a substantial amount of time to complete and there is bound to be bugs as there is with any new software.

4 Each time the ERP system is upgraded, the VAR will have to upgrade their custom solution. This oftentimes results in significant time delays. 2. Purchase a stand-alone WMS or Data Collection system that has its own inventory control software and usually shipping and receiving functions. Advantages The data collection hardware and software has been designed to work together with the stand-alone host database. Most of the bugs have probably been fixed because this software has been installed elsewhere. These systems typically have all of the bells and whistles to handle most all warehouse functions. Disadvantages Full WMS systems generally have high price tags due to the large feature set. Carefully evaluate whether or not the functions are necessary and useful to your business. In some cases there may be substantial overkill causing unnecessary complications resulting in a delayed implementation and higher costs. They are stand-alone and either require duplicate data entry into both the ERP and the WMS systems or require database synchronization for both exporting data out of the ERP systems and importing data back in. Exporting is generally fairly easy to accommodate. However, importing is another matter, and again the WMS software company must be very familiar with your ERP system to ensure that the imports do not corrupt your ERP database. The SMB should carefully consider this dual database approach before choosing this option. 3. Choose an integrated Data Collection System written specifically to work handin-hand with your ERP system. Advantages

5 All inventory transactions are sent to the ERP system real-time eliminating the need for paperwork A single database eliminates duplicate entry These companies generally have large numbers of installations and, therefore, less bugs. There is substantially less risk of data corruption since the Integrator is very familiar with the ERP transaction database structure. Disadvantages Integrated solutions are truly integrated and may have fewer features due to restrictions in the ERP systems. Solutions are off the shelf and you may need to pay additional money to customize the solution to your specifications. Who Develops these Integrated Systems? The developer company is usually a firm focused on developing software specifically for a given ERP system. They should have expertise in bar coding, data collection and scanning technology. Their systems are designed to properly interface to the ERP modules such as Inventory, Sales Order, Purchase Order and Manufacturing out of the box. These firms will generally have a relationship with the ERP software company and are in fact recommended by them. Many ERP systems including but not limited to Sage MAS 90, Sage MAS 200, Sage MAS 500, Exact Software s Macola, Microsoft Great Plains and Microsoft Navision have third party developers that have developed these integrated systems. How do Integrated Systems Work? These systems will generally read the ERP system on a real-time basis; any changes made to the ERP database are instantly displayed on the handheld. There is no need for synchronization of two databases, there is no need to export or import information from a second database as there is in a stand-alone system. For example, Scanco s RF Barcode Master integrates with Sage MAS 90/Sage MAS 200 and functions as follows:

6 Receiving Using the same receiving scenario described above, goods arrive at the receiving dock ready to be received into inventory. Rather than manually checking the goods off of a packing list, the user employs either a batch or radio frequency (RF) enabled handheld computer and scans the incoming inventory. If the items are not bar coded, the item number can be looked up by purchase order on the handheld. After scanning, bar code labels are immediately printed from a belt mounted RF printer or a desktop bar code printer with item information. These receipt labels can be customized to include bar coded item numbers, lot and or serial numbers, and/or item descriptions. Once the labels are applied, the products are put away and the bin is scanned to record the location of the item thereby solving the problem of workers wasting time trying to find items in the warehouse. Once the order is received and put away, the receipt of goods transaction is immediately created in the Sage ERP system and if desired, the transaction can automatically be posted thus updating inventory real-time. The system eliminates paper delays, and virtually all errors. Shipping Shipping is handled in a similar way. The sales order to be shipped is either scanned, looked up or keyed into the handheld with all information instantly validated against the ERP s database via the RF connection to the ERP system. The item numbers are scanned as items are picked and instantly matched against the items on the order. This instant validation eliminates shipments of the wrong items. When the user completes the shipment, they wirelessly send the transaction to the Sage ERP system. The invoice transaction is immediately created and the transaction can automatically be posted thus updating inventory real-time. No more paper work, delays, or errors.

7 Inventory Transactions Other transactions such as bin moves, warehouse transfers, inventory issues, material issues to shop orders, etc., may also be available in these systems. Thus all of the distribution and manufacturing transactions can be automated and integrated with the ERP system. Finding an Integrated Solution Provider When an SMB is considering such a system, they should contact the reseller of the ERP system and inquire if they have knowledge of one of these companies. If they do not, perhaps the ERP parent company can supply the information. The SMB should ensure that the firm is recommended by the ERP Company. The software integration company should be able to supply references of installations done in the past with the ERP system. Be cautious about some firms that do a custom job for one client using an ERP system and then try to market the custom job as an off-the-shelf product. Make sure the company has many installs not just two or three. About Scanco Scanco is a Sage Master Developer and has been selected as Sage Software s Bar Code vendor of choice for their MAS 90, MAS 200 and MAS 500 ERP systems. Since 1989, Scanco has been providing integrated data collection and bar code systems for Sage software and for Exact Software s Macola ERP systems. For information go to or sales@scanco.com SCANCO1 ( )