Yesterday we started the publication of our Lessons Learned whitepaper in installments, and we continue today with parts 2, 3 and 4. Again, the purpose of this whitepaper is to introduce some important considerations about enterprise software to brand owners. Let us know what you think. 2. Know Thy Business: Divisions, Product Lines, Warehouses One of the most important decisions that you will make in brand solution configuration is how you will measure the business. This is one area where starting at the end and moving backwards is very helpful. How you will eventually slice and dice the data is very important. What does this mean? Well, ask your self these questions and you will start to get a feel for what's at stake: > How will you sort team members' responsibilities?
> Who is in charge of what products and sales channels?
> How will you measure their results in their areas?
> How will you budget the business?
> How will you look at profitability? By Product? By channel? By product Line? By Product Line within Channel?
> How will you compensate channel/product managers and members?
> How many warehouses will you manage, and where will they be located?
These are just some of the questions that you need to consider. Each Brand Owner is going to have a completely different set of answers, depending on their markets, their product line, their channels, and, interestingly, their volumes. Our experience has taught us that expected sales volumes and expected $ volume per sale are very important determinants for how the business structures the software for optimal business analysis. Companies looking to enter Brand Ownership must take the time to consider these questions before beginning configuration. Your business plan should help to guide you. Those Brands Owners who are already operating should think about whether their current structure meets all of their needs. Over the course of time, your decisions on how to measure the business may change. This is to be expected. You must build flexibility into the system at the same time that you build structure. These are not opposing goals: Prioritizing your requirements and understanding the system's native functionality helps you to use the system wisely and keep some options open for future development.
3. Know thy Debits and Credits The enterprise suite is, after all, an accounting engine as well as a tool for CRM, Inventory Management, Partner Management, etc. Creating a useful Chart of Accounts (COA) is very important not only for the accountants, but as well for anyone else who needs to measure various aspects of the business. It's important to think about the story that financial reports will tell you about your business. Brand Owners may purchase raw materials, move them to the manufacturer and pay for the manufacturing process; or, the manufacturer may purchase the raw materials, handle logistics, and the brand owner purchases finished goods. These are very different scenarios and each will require a different chart of accounts. Using the accounting system to its fullest extent will enable your business to transact not only the normal business of buying and selling, but also the unusual transactions of the Brand Owner's eco-system. For example, many brand owners who deal with large retailers must pay these customers for co-operative marketing. This can be any number of things, from planogram space to catalog advertising fees. Managing the customer payment process and tracking it over time is important to customer profitability metrics. You should try to understand and test these transactions prior to project sign-off. They may require configuration that had not thought of when processing standard transactions. On the other side of the ledger, some brand owners receive funds from vendors, also for a wide variety of reasons. Setting these transactions up correctly requires time and effort to understand the requirements exactly and test thoroughly. Having a well crafted chart of accounts is the first step. Using it correctly requires that you understand how the system operates to take full advantage of the COA. Setting up Inventory and Cost of Goods Sold accounts may not be very helpful if you do not understand how to use the Purchase Order.
4. Know Thy Channels
Many brand owners begin with one channel front and center. They focus on an e-commerce market, or perhaps one or a few large retail stores, or catalog sales. At the end of the day, however, we have seen all brand owners move to a multi-channel sales model. Though your initial focus may be one channel or another, it's wise to consider other channels when you start to implement. You may eventually have to measure the business from a retail/wholesale perspective, and without some mechanism in place this will not be easy. After you have considered the several sales channels you will attack, consider how you are going to attack them. This is a perplexing process for many brand owners and the main reason why most them focus on just one or two channels: They plan for what they know and are comfortable with. But in the end, your brand will end up in many channels and you should begin to understand the processes of each as soon as possible. Direct sales, partner/dealer sales, direct to consumer sales through your own catalog, e-commerce sales are just a few of the ways that brand owner products are sold. All of these require different processes and different moving parts. Selling via partners will require the ability to calculate partner commissions, for example. And of course sales channels also determine how you decide to distribute product. Third party logistics companies work really well in some channels and not so well in others. In all cases, a sale is the transaction created by marketing. As you consider various channels, ask yourself how you are going to announce your brand in the market via these channels. In many cases, the brand owners that we meet are very focused on the sale and for the marketing, well, not so much. Everyone now understands the importance of web site to the company, but this is the least you can do with internet marketing. What the world wants to hear is your story and it's a very interesting story. Go to #7 for more details.
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