Service centers have been employing ERP systems for years, but the collection and application of data to truly revolutionize the business remains in its infancy. Software providers continue to provide new and better ways for distributors to use technology to take costs out of the business, to improve efficiencies and to create new paths to profitability.
The software companies are attacking the issue on several fronts. From inventory management tools to across-the-company visibility into production and sales to improving the logistics operations, ERP providers are offering new paths for distributors to follow to better their bottom line.
And, these changes can’t come soon enough. As the older generation of workers gives way to a new cohort of workers, such a transformation is absolutely necessary. Younger workers are not just comfortable working in a digital world, they often know no other way.
Metal Center News spoke with a handful of software providers who highlighted some of the trends they’re seeing in what their products can do, and what their service center customers are looking for.
The Cloud Has Settled
ERP systems have truly migrated to cloud computing.
“We obviously see a huge push in web-based software, people going toward a licensing model, which is a monthly opex cost, rather than purchasing outright,” says Brad Stropes, who works in sales for SecturaSoft, Cincinnati.
“Five years ago, that was a buzzword. From what our data show, the surveys we do show, that has completely flipped, with 75-80 percent of businesses running critical enterprise applications on the cloud,” says Tony Barnes, senior manager, Crowe-Horwath, Indianapolis, makers of Crowe Metals Accelerator.
From his perspective, the benefit for the service center community with the shift to the web-based cloud computing model is a leveling of the playing field. “Before, if I was a regional service center, with three or four locations, I couldn’t invest the millions in an in-house data center to do the types of computing available. Now, because that’s on the cloud, it’s way more affordable. The availability to take advantage of the latest technology that comes in the cloud is leading to some big changes for service centers.”
For service centers, it’s not just important that your software is able to talk to you, but also communicate seamlessly with other systems.
“Integration with different types of software, such as CRM, is something our customer base is looking for,” says Ben Vaughn, ERP sales manager for P.S. Data Services, Middletown, Ohio.
Peter Doucet agrees. “There are a number of good EDI suppliers on the market today, and the ability to easily integrate with those EDI suppliers is a key component of our software.”
“The standard is X12 and being able to provide X12 interfaces either inbound or outbound is critical to an EDI implementation. The EDI supplier shouldn’t have to know your software. They should be able to get it using X12 standards,” says Doucet, vice president of sales for Dallas-based Invera Corp.
For years, service center employees, whether in the front office or in the warehouse, have required a desktop computer of some kind to access information. Sales people worked from their desks. Floor personnel had to return to a fixed computer to complete necessary taskwork or check on issues. And that’s only where spreadsheets and whiteboards weren’t the preferred communication medium of choice.
Today, software providers are increasingly putting the information into the hands of a workforce wherever it exists. “We have added a lot of things to our mobile app. We’ve hired a dedicated developer specifically to enhance the mobile app for people who want to use their cellphone or tablet or any device that has access to the mobile market,” Vaughn says.
The list of employees who fall under that umbrella continues to grow. “It’s a different workforce. They once went into the factory and logged in. Today, they check their cell phones before they check in to work,” says Terri Hiskey, vice president, global product marketing, manufacturing, Epicor Software, Austin, Texas. “They want an alert that says your supplier from China is not delivering. They want visibility into things that could become crises later.”
And staying connected doesn’t have to require being connected.
“We think shop floor communication and data collection is something that people should be more actively looking at from the point of view of maximizing operations and investments. Traditionally, that has been done by a terminal or Wi-Fi. We’re looking at developing some apps for mobile devices that don’t necessarily have to be connected to a Wi-Fi device,” says Leigh Harrison, general manager of Jonas Metals. “They’re low cost and they allow people to update the system remotely or communicate back information from the shop floor.”
It’s All Analytics
At the heart of any software package is the ability to collect and sort vast amounts of data, in ways that weren’t feasible at the human level. Taking that data and using it is one of the ways to truly unlock the potential of a system.
“Dashboards and analytics is a growing area for our company,” says Ray Vasson, Invera’s president. “We’ve gathered all this information, and we need a way to allow operators to visualize that in graphs and charts. We’ve started to build out functions and screens so the moment someone flicks on a screen and starts to use our software, they’re up and running on a dashboard system that gives them a complete overview of the business.”
As for the data, Barnes says service centers are doing a decent job at taking the information and applying it effectively when it comes to operations. “The first place everyone looks from an analytics perspective is on the production line, slitting, cutting-to-length, etc. OK, we’ve got all this quality data, can I do something with that?” he asks.
However, there remains more untapped potential for data analytics when dealing with external elements of the business. “The area where we see opportunities is in better connecting supply chains, connecting the service center and the customer and their supplier. Especially on the customer side, where it can be predictive on ordering,” Barnes says.
Catering to the Next Generation
As service centers begin to fill vacancies within their sales, purchasing and operations departments, they’re slotting in individuals intimately familiar and comfortable with using technology for virtually every task. The software companies are trying to tailor developments to meet this changing workforce.
“Over the past several years we’ve seen a lot of people coming off text-based software onto our Windows-based software, because the user groups are younger and more used to point and click rather than the old technology,” Vaughn says.
Epicor’s Hiskey agrees. “You can’t have an ERP screen from 20 years ago. Folks coming into the industry want a clean, interactive, touch-screen type of experience.”
And it’s not just dealing with new workers in your industry, but ones employed by your customers. New employees everywhere expect to port their experiences outside the office to the work setting.
“One of the big trends we’re seeing, and we’ve been investing in, is around customer experience. The business-to-consumer behavior we’re seeing bleed more into the business-to-business side,” Hiskey says. “We’re seeing a lot of customers who want to configure and customize an order online without having to talk to somebody. They want to do it just like they do on Amazon.”
The company has introduced Epicor Commerce Connect, which allows some of its smaller customers to develop an online presence where they never had one before. “They never really thought it was necessary, until the new generation of workers started coming hard into the workforce.”
In the low-margin world of metal distribution, pricing your materials and your services right is critical to successful operations. Helping service centers get the most accurate, and positive, pricing structure is a significant element of the software.
“I am seeing a lot more interest as far as pricing strategies go. That falls two ways: staying in touch with vendors and making sure they have a good handle on not just pricing changes from the vendors, but also surcharges that might be coming down the pike. And recognizing and keeping their own pricing strategies in check so they’re not caught behind the eight-ball,” says Shawne O’Connor, director for Baltimore-based Paragon Consulting Services, makers of Metalware.
“The purchasing departments are not rolling over and placing orders, but truly working with vendors on pricing strategies. We saw that starting at the end of 2017, and now with what’s going on with tariffs and such, I see that probably exploding,” she says.
“The thing on a lot of people’s wish lists is quoting and estimating. They want to be able to utilize technology rather than the inherent knowledge we’ve had before,” Stropes says. “Somebody’s been in the business 35 years, he can look at a part and say it’s a $5 part. The guys coming out of trade school can’t do that, so they want to utilize software to get that feedback.”
For each software provider, one aspect of the work is figuring out just what a service center customer might need, even if the distributor is not aware what it needs. Typically, only the software maker fully knows what the system is capable of, or what solutions can be developed if the problem is brought forward.
“We’re still beholden to what our customers are looking for. At the same time, we’re trying to come up with some stuff that gives us a competitive edge or makes sense for more of the market,” says Brian David, vice president of the metals division for Compusource, which is merging its operations with the UK’s Metalogic Ltd. to create Jonas Metals and developing iMetal. His colleague agrees. “Sometimes they don’t know what they don’t know,” Harrison says.
And in some cases, the answers are already there. “Most of our service centers really did not take full advantage of the capabilities these systems provide,” says O’Connor. “But I see that slowly turning around, and companies are trusting the technology in the warehouse and trusting their employees with the technology. It’s not necessarily new technology. It has just taken people awhile to embrace it.”