Think of your wholesale business as a race car and your back office as its pit crew. Without back office support, your wholesale business doesn’t run well, can’t function, and certainly won’t be winning any races.
When your back office slips, so does the efficiency of your operations and the strength of your bottom line. As a wholesale executive, you want to focus on driving the car, but without a good pit crew, your car will keep letting you down.
Here are some key back office areas that are critical to your wholesale business’ success.
Without solid back office support your wholesale business is likely to suffer from poor enterprise resource management. Enterprise resource management incorporates the accounting and financial departments of your business with all the other areas of your wholesale operation, like design, production, logistics, and sales. These systems are complex and take years to master. When contemplating the purchase of a new system, check under the hood and kick the tires, have your system users provide input, but most of all look at the actual reporting that they currently deliver. If the reports aren’t flexible and customizable you may end up with information that doesn’t serve you in your real world day to day needs. But with a solid back office provider you can maximize your return from these powerful software systems. It becomes the service provider’s responsibility to master the ERP so you don’t have to.
Manual Processes and Peak demand
Even with EDI orders, the average customer’s sales information is manually processed at least three times. Add on top of that the volume of accounting and production transactions and you end up with a lot of human interaction. For any wholesaler, this can be an extremely time-consuming process and subject to human error.
And at times, the workload is even more intense. Wholesale business operations shift in demand from month to month and week to week. So you need to have a strategy in place.
Back office services companies can help by eliminating some of manual processes, which in turn reduce the number of human touch points, and the associated cost of administrative errors, like:
- Duplicate order entry
- Inaccurate conversion of HFC or Bulk orders into confirmed orders
- Incorrect information such as port location on purchase orders
- Wrong customer information
- Incorrect shipping/receiving information
- Late routing
- Shipping without credit approvals
If you are running your own back office, review your processes to eliminate keystrokes, create checks and balances, and make sure that you have a plan in place to handle peak demand. Having your staff work extra hours is only sustainable for short periods and the strain can result in lost orders and an increase in errors. If you are considering outsourcing your back office, make certain that your potential provider has the capacity to handle not only your day to day business but your peak demand business as well.
If you are handling your shipping and logistics in house you may not be utilizing the most efficient processes to gets goods picked, routed, shipped, and billed. Back office service providers include support for file exchanges with your 3PL and integrations with direct-to-consumer portals. They maintain a routing master and oversee all 3PL routing. They maintain an electronic archive of all BOLs and PODs for easy reference. If you choose to keep your back office in-house, create a detailed plan on how you will handle each of these areas. Determine whether you have the in-house expertise and whether your software can efficiently handle these processes. If not, you may need additional training or personnel and you may have to upgrade or purchase new software .
A qualified back office service provider manages every transaction that occurs in the warehouse. From shipping and receiving to picking and packing, back office support allows you to keep goods flowing, helping to ensure that customers receive the right orders and on time.
Production to Sales
Back office support enables you to make more informed purchasing decisions for your wholesale business. Your back office lets you know when products are oversold or replenishment inventory is running low, so you can take action and purchase the inventory you need to fill customer orders.
Without solid back office support, you may not have auto alerts in place to let you know when you are facing out-of-stock or excess stock situations. With good back office support, however, you can track your stock levels and ensure that your inventory is accurate, updated and always at the optimal level for your business.
Increased Visibility and Reporting
For a wholesale business to be successful, each department needs visibility into other areas of the business’ operations. For example: sales people needs information from production and vice versa. This is true across many areas of your wholesale business, yet too often that isn’t happening. Outside services could be the solution and provide that transparency. If you keep your back office in house you should meet with each of the teams and develop efficient systems that enable accurate and timely information flow.
Inventory reports are a critically important sales tool that are used every day by multiple users at most wholesale companies. Most software systems and ERPs have all of the data you need, so why is it so difficult to extract usable, readable, and value-adding reports? If you are struggling with reporting, finding a back office service provider could be the answer.
Wholesalers that have solid back office support services generate higher revenues. Ultimately, the success of your wholesale business depends on design, production and sales. Yet none of that the matters unless you have an efficient back office in place.
Wholesale Executive Insider is a publication dedicated to helping owners of wholesale companies stay up to date with the latest industry insights to improve their operations and increase their bottom line.
Our team has deep industry knowledge, and a network of solution providers that help wholesaler’s optimize wholesale back office operations to cut costs. If you’d like to get free advice and recommendations on wholesale back office optimization, feel free to book a time to speak 1-on-1 with one of our knowledgeable industry advisors to get your free wholesaler operations strategy session.