Frequently Asked Questions
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An IBCA Distributor was asked to
participate in an education session. Following are answers to several
Question #1: What areas within a distributorship can benefit
from the use of bar code technology?
Answer: Any place where information must be
manually entered into
the computer. For example:
- The sales counter;
- The receiving dock;
- Taking physical inventory or cycle counting;
- Verifying shipments;
- Logging serial numbers.
Question #2: How would you suggest, step-by-step, a
distributorship implement the use of bar code technology?
Answer: A short answer to this is difficult. Unless a customer
is demanding labels on shipments or the advanced shipping notice, which is an
EDI transaction linked with a bar code, a distributor should:
- Develop a working knowledge of what bar code can do;
- Review the operation and see what can be improved through
more timely and accurate information;
- Be honest about what inventory is really costing to carry;
- Be honest about how many errors
there are and the cost;
- Make a management commitment to reduce overhead by 20%;
- Briefly write down what you want to improve, how you will
measure the improvement and how you think the system will work;
- Use that concept to select a technology partner (check
out the Professional Registry at
http://www.insightu.org/registry/index.asp for qualified technology
suppliers); have them tell how their solution offering will meet your needs
and then make a selection;
- Do It!
Of course, there are training and installation issues.
Question #3: In terms of money, what have been the up front
expenses and what have been the payoffs of implementing bar code technology?
Answer: The up front expenses are what everyone sees or thinks
they see. The cost of the equipment can be anything from $200 for a scanner to
plug into your existing computer terminals, to a fully portable hand held
computer that costs $2,500. Printers can cost $500 to $2,500. But there are
other subtle expenses like management planning and design time. And there will
be software to integrate to your existing system.
What is constantly overlooked is the cost of not using bar
code. What are the real costs of errors and out of date inventory reports. This
may be hard to set a dollar figure on, but one distributor put it this way.
"I have been using bar code for about 18 months and I now ship 25% more
volume without any additional people.
Question #4: What are the advantages of using bar code
Answer: The advantages are that the bar code provides timely,
error free information that can be used to validate receipt, movement or
counting of products. It reduces key entry time, transcribing time and almost
Question #5: Why is the North American Heating, Refrigeration
and Air-Conditioning Wholesalers (NHRAW) Association promoting the use of bar
Answer: The main reason is to drive costs out of the supply
chain. If, for example, a shipping error costs a manufacturer $50 to handle the
re-pick, ship and credit, it probably costs the distributor another $50 to
contact the supplier, return the item and handle the credit memo. That is $100
in profit that is taken out of the distribution channel. At a 5% pre tax profit,
that is the profit from a $2,000 sale. Think of the cost of receiving, counting,
storing and managing inventory and you can see that the costs that bar code can
reduce are really astounding.
Question #6: As a trade association board member, what do
associations see as the future of bar code technology in the industries they
Answer: The future is bar coded. Home Depot, etc. use it to
reduce cost and eliminate errors. We canít equal their buying power and they
canít equal our product knowledge, but we can learn how to reduce cost and do
a better job in managing our inventory. Valid, timely information provided
through bar code is a major part of what association members need to survive.
Question #7: What are the consequences of NOT migrating to the
use of bar code technology?
Answer: It would be like not using telephones in the 50ís, not
using computers in the 80ís, not using FAXes in the 90ís, and not using Smart
Phones in the 21st century. This is the information and communication age and
bar code is part of it. To not use it is to not use the things that your
competitors are using. The consequences are obvious ... yo
Question #8: What would you tell a distributor to encourage
him to start using bar code?
Answer: Iíd tell him that after you knock off all the hype
about "technology" there are very good business reasons to use
efficient business tools. Iíd then ask him to tell me:
- The advantages of handwriting and then key entering product
- The advantage of not really knowing (minute to minute) what
was in stock
- The benefit of shipping the wrong item to a customer
- Why a counter person who could (using bar code) identify
and price all the items on an order in a few seconds would prefer to take
several minutes to key stroke the information into the computer.
- Why it is better to close the place down for a day or two
to take physical inventory rather than to do it in several hours and have
the reconciliation out as the job is being done.
Question #9: Sell me on the use of bar code technology!
Answer: Your biggest competitor is looking you in the eye and
telling you "bar code, oh no it is too expensive for you, you are not
sophisticated enough, you canít afford the investment, it will never catch
Your best customer just looked at you and said, "the guy
down the street has better delivery, lower price, more attentive sales people,
never sends the wrong stuff and it is always priced correctly. Sorry, but Iíve
got to deal with ĖĖthem!"