This article is contributed by First Alliance Logistics Management (FALM), a leading non-asset-based pallet provider to the North American market through a cohesive network of 225 independent pallet suppliers. Falm regularly contributes articles of interest to pallet buyers as well as to its pallet supplier partners. In this contribution, FALM questions if the time is right for your pallet company (or your pallet supplier) to consider rolling out an ERP system.
If you are still running your pallet business with Excel spreadsheets, you are not alone. As one leading pallet industry ERP provider noted recently, the spreadsheet remains the biggest competitor for ERP providers in the pallet space. With market penetration still estimated to be in the low double-digits, the industry has been slower to take advantage of this technology than others.
Things are poised for change, however. The importance of pallet industry ERP was recently underscored by the acquisition of leading ERP provider Innovative Data Systems by a leading multi-site pallet company.
While uptake has been slow to date, it just might be time to revisit whether an ERP system is right for your company. The movement is well underway in other industries. Consider that across small businesses in general, 75% of them use an ERP system, according to one provider.
What is ERP?
ERP is an acronym for Enterprise Resource Planning. Microsoft describes an ERP system as a type of software system that helps organizations automate and manage core business processes for optimal performance. ERP software coordinates the flow of data between a company’s business processes, providing a single source of truth and streamlining operations across the enterprise.
The ERP can be a powerful tool for pallet operators. Starting with the sales order, it can create production and shipping schedules. It can track production costs, inventory, employee time, and production. It also facilitates integration with various accounting programs and supports integration with software for drawing or designing pallets such as PDS.
There are currently three vendors providing ERP solutions tailored to the pallet industry. They include:
Here are five reasons why you should consider investing in an ERP system for your pallet business:
1 Customers are increasingly demanding data
“There has been a big increase in interest and signup for ERP systems, with so much change and customer demand for access to real time information,” observed Phil Varley, President of Pallet Connect, one of the three ERP system providers to the pallet industry. “ it’s becoming more of a necessity.”
That sentiment was echoed by Chaille Brindley, publisher of Pallet Enterprise Magazine, in a recent Western Pallet Association webinar. “If you don’t have a good data solution for your business, if you don’t have a good ERP, you don’t have ability to provide the right information to customers,” he said. “That’s going to be an issue.”
2 Non-value added duplicate data entry, entry error, and spreadsheets
“It’s strange to see an industry as big as the pallet industry still using Excel, paper and QuickBooks to run its operations,” Varley said, “especially the smaller and mid-sized companies of less than 100 employees.” Because information is only entered a single time into an ERP system, duplicate processes and the potential for transcription errors are eliminated.
3 No pallet company is too small
“Pallet Connect has clients with hundreds of employees and also smaller clients with less than 10 employees,” Varley explained. “I would say the negative long term impact is what pallet companies need to consider by not installing an ERP system. Its no longer a nice to have but more of a necessity , especially if they want to complete with the big national players.” He stresses that no company is too small. In the case of Pallet Connect, pricing is based on a sliding scale depending on the number of users.
4 The benefits outweigh the perceived barriers to adoption
Common concerns by potential ERP customers include that it will be too expensive, that it will take too long to set up, or that the management team is not tech savvy enough to use it – or that the present spreadsheet system works just fine.
“It’s really a fear of change and when pallet companies are so busy day to day, it can seem very counterintuitive to spend so much time at the start setting up an ERP with no immediate benefits,” Varley said. But once introduced to ERP software and having enjoyed the benefits, most companies stick with it. In his experience, training can take from a few weeks to a few months. It really comes down to the commitment of management to ensuring successful implementation by providing the resolve and the necessary resources.
According to Pallet Connect, 95% of customers using Pallet Connect past 3 months or longer are still using it to run their businesses two years later. “They would never go back to the old way of working and no ERP,” he said.
5 Your employees expect it
Finally, as the employee base evolves into a generation of digital natives, it will expect a workplace that is powered by technology and is already skilled to thrive within it. Younger generations prefer to work from their cell phone and have no desire to tediously replicate data entry and shuffle paperwork.
Bottom line, the pallet industry is changing, every day. While it might seem like the time isn’t right, adopting an ERP system can be an important step in preparing your business for years ahead. If you are still sitting on the sidelines, it might be time to reach out to vendors, ask questions, and explore your options.