Service center operators were historically reluctant to adopt technology, but they have been coming around on all software can do for the business.
The world of business systems software can become a nightmare of acronyms for the service center operator with a limited tech background: ERP, CRM, SaaS, EDI, etc.
Gradually, however, it seems the metals distribution business is beginning to get a handle on its ABCs.
Historically slow to adapt to technological innovation, service centers are now looking at ERP as less of a necessary evil and more as a means to maximize their businesses. And there are a host of service center-specific software developers who are eager to help usher them into the myriad possibilities offered through data.
“The industry comes kicking and screaming to change. They like what you’re showing them, but they don’t want to go through the change to get there,” says Shawne O’Connor, a director at Baltimore-based Paragon Consulting Services, makers of Metalware.
That perspective is changing, driven somewhat by transformation in management from older generations to newer leaders more comfortable with technology in their lives. “You always had those clients who were pushing the envelope to get it, and now everybody else is recognizing it’s important for them to do it too,” says Mike Voran, a regional sales manager for Enmark Systems, Ann Arbor, Mich.
Sometimes it’s not a reluctance to change that drives their technology hesitance. “The market is bifurcated in my mind,” says Tom Scala, product support manager for OpenTrac Metals software. “At one end, there are a lot of companies that are low cost, low cost, low cost. And, at the other end, companies who are high service, high service, low cost. Low cost is always in every conversation.”
But software providers would argue this is a penny-wise, pound-foolish perspective, as modern systems, properly implemented, can improve both the bottom and top lines.
Those who embrace the opportunities service-center-specific software can provide a business are looking to get more out of their ERP, now and into the future. It starts with simply unlocking the information that’s already there.
“Obviously, the basics of inventory control and getting sales orders very quickly, everybody wants that. But for all the potential customers we’re talking to, what they’re looking for is being able to get data out of their system through reporting modules,” says Paul Parsons, vice president of sales and marketing for 4GL Solutions, Stouffville, Ontario. “And that has proven to be difficult for them with their legacy system.”
“New prospects want a cloud-based metal ERP software with a modern technology stack and easy ways to integrate data with outside systems. This cloud-based software would mean a native web-based user-interface that can be hosted in any cloud environment with a full library of APIs to easily move data in and out,” says Ray Vasson, president of Dallas-based Invera.
With older software systems, either off-the-shelf or cobbled together over time, getting that information out is immensely difficult. That may be partly due to the unique nature of the distribution business. “A lot of companies that do production, they take 10 parts and make a lawnmower. In our industry, it’s all about taking one piece and turning it into 20 pieces, with all of the traceability of physical, chemical properties and specifications depending on the type of material,” says Rodney Toor of Jonas Metals Software, La Palma, Calif.
But service center-specific software is designed to account for that business model, allowing it to stockpile and sort that valuable data for use by the operator. Today, it’s presented in a variety of dashboards and other methods, providing quick and easy access to information such as orders, inquiries, sales by product line, customer visit information and more.
And this kind of information is not just available on the newest lines of software. The information can be retrieved if the system has been in place for several years. Paragon has been running Metalware Renovation projects, instructing their existing clients how the software can be used to extract valuable data. “We are doing this renovation project and we’re introducing them like a new client. There are things you want to start taking advantage of because the software has grown in that period of time,” O’Connor says.
The importance of data will only grow in the years to come. “The future of ERP systems will be leveraging the power of the cloud to make real-time analysis and predictive analysis using the data in the ERP. These advanced analytics are now possible with the advancement of fully web ERP systems hosted in the cloud,” Vasson says.
Another area of attention for the distribution space is the interest in CRM, customer relationship management, a system where the business manages all of its interactions with customers.
O’Connor says CRM is one of the areas she hears about most from customers, particularly in the changing business landscape where the sales team is often working offsite.
“We’ve been getting a lot of queries from our customers on CRM, what we offer, what’s out there and what we can do?”
The most prominent name in the field is Sales Force, but many service centers shy away from the brand because of its high cost. Service center software offers versions of CRM that won’t break the bank.
“The typical service center is not going to invest in something like Sales Force; it’s such a burden on the budget,” says Greg Bayer, founder of Bayern Software, Carmel, Ind. “There are good DRMs out there that are half the price of Sales Force.”
O’Connor agrees. “Sales Force seems to be a very expensive endeavor for a very small piece of their business.”
Bayern has long offered CRM-like capabilities, and now partners with a sister software provider that delivers a tightly integrated CRM system that integrates with Bayern’s Steel Plus and Capstone systems. Getting customer buy in is the next step in the equation. “We’ve got to get people to see the benefit of those things, so they realize the additional cost is a great value,” Bayer says.
As with Bayern, Jonas is looking to capitalize on its parent company’s vast software offerings to deliver value to its customers. Toor points to the accounting software offered by one of his sister companies that is ideal for operations dealing with multiple branches and transacting in multiple currencies.
“All of these are kind of beyond the scope of what our expertise is, which is inventory and its visibility and sales tools to protect the margins of what you’re selling,” Toor says. “What we can do, as a niche software company that can’t make great accounting software is to integrate seamlessly with these other products.”
“The tech space is starting to recognize you don’t have to do everything well. You have to do what you do really well, and have the flexibility to link up with other software that have proven themselves in a niche space,” says Voran. “Our customers are constantly asking, ‘Can you connect with this?’”
This ability to integrate with other systems, whether inside the plant or outside, is likely to be the key point of emphasis in the years to come. It’s the backbone of electronic data interchange, or EDI. “One of the things service centers are looking for is being able to eliminate manual tasks by implementing EDI. By automating transaction orders, purchase orders, advance shipping orders, MTRs, they can handle all those electronically from their supplier and index it into their business management software,” Parsons says.
Toor says EDI has been easier to adopt for flat-rolled businesses rather than long products, where “there are so many producers and not many standards.”
And automating tasks is growing ever popular, for obvious reasons. Over the past two years, service centers, and all industrial businesses, have struggled to staff positions throughout the organization, from the warehouse to the sales office. Such a condition has created immense challenges, but also opportunities for software vendors.
“One of the things we always say about software is you can do more work with the same amount of people. You don’t have to greatly expand. Anything that’s going to add automation or eliminate errors is going to help, especially as people have trouble finding employees now,” says Benjamin Upell, a regional sales manager for Enmark.
The ability to take away manual processes comes in all forms, from eliminating manual input or checking of data to enabling customers to smoothly handle tasks previously done by staffers.
“In all of our lives, we do self-service all the time and not even think about it. It’s also happening in the metals industry,” Scala says.
A really good example of how software takes repetitive tasks away from service center personnel comes in data validation, as the systems make sure everything matches up end to end. “We’re validating different aspects, from heats to invoice amounts to orders,” Scala says. “It’s all part of streamlining and automation.”
Vasson says the gains aren’t just against using nothing at all, but also compared with off-the-shelf products. “An efficient metal ERP software would not require as many personnel to perform the same tasks as a simpler or generic ERP, which would require a lot of tasks to perform the same task.”
For Bayern, one prime area of focus has been to acknowledge the changing nature of the service center business. Year after year, more distributors are engaging in processes that more closely resemble fabricating, including welding, forming and drilling. Such an evolution demands a software that recognizes the unique needs of these processes.
“I differentiate processing from fabricating. I think of processing as dealing with one input at a time, which is pretty commonplace with service centers. Now you’ve got people who are drilling and beveling edges, using multiple steps and multiple input items,” Bayer says.
To deal with that, Bayer last year introduced a full fabrication order system, “and all we’ve been doing since then is trying to make it better and faster, taking feedback from our customers,” he says.
Despite a possible slowdown in activity, or perhaps because of it, ERP providers across the board are anticipating a pretty strong year, based on existing arrangements and quoting activity. “I think customers made a lot of money during COVID and decided to reinvest those profits into upgrading their business systems,” Parsons says.
And as with any major facility upgrade, whether that’s new equipment or a new ERP system, doing so during less than breakneck conditions is always preferable. “The best time to implement software is when you’re slower,” says Upell. “But I haven’t really seen a pullback in activity. All of the customers I’m talking to are remaining pretty busy.”
But some distributors sensing a decline in activity may be ready to act. “You don’t know what the future brings, now is the time to prepare yourself so you’re ready. You have the funds available now,” O’Connor says.
And, all sides of the equation can attest, do it right.
“One of the main things when we’re prospecting is companies don’t want to switch ERPs every five years. They want to invest in a company that’s been around for a long time and is reinvesting in the product,” Upell says. “They want what they’re purchasing to be the last product they have to buy.”