Article: 6 Signs That Your Current ERP Software Solution is Not Letting You Fully Manage Your OPE Division
Whether you own one home and hardware store or a whole chain of them, you need some sort of enterprise resource planning (ERP) software solution to run your business – otherwise, you wouldn’t last long in today’s competitive market.
After all, even online retailers such as Amazon are after the same customers as you, which means that in order to beat them at their own game, you need to be as tech-savvy as they are.
Most hardware stores do in fact have a solution in place, but in many cases, that solution doesn’t cover every aspect of their business, particularly the outdoor power equipment side of it. This, of course, means that your power equipment sales are often below-average and your service department isn’t as efficient as it could be.
So, how can you tell if your current ERP software solution is not good enough for your outdoor power equipment department? Well, here are the six vital signs you should watch out for:
1. Updating Part Information is a Nightmare
If your system doesn’t provide you with preloaded manufacturer and aftermarket price files, automatic price file updates and supersedes and other crucial details, then you’re likely stuck entering all that information manually, including the:
- Part number
- Part description
- Supersede of the part number
- Manufacturer’s suggested retail price
- Invoice cost
- Pricing based on different criteria (e.g. customer, commercial, etc.)
Each time, the manufacturer makes changes, which can be quite often, you have to manually follow along or risk having inaccurate information or wrong parts altogether. No matter how good you or your team may be, manual entry always leads to errors, which in turn leads to lost time and inaccurate pricing.
For example, if a particular part number doesn’t match what the manufacturer has on file, then there is no way for them to know what you actually need – especially if you haven’t provided any extra information. You would then have to spend additional time to correct and resubmit the order.
Without an industry specific solution that integrates directly with the supplier, we have discovered that in some cases, up to 50% of what power equipment dealers order is not accurate.
2. You Don’t Cross-Sell or Upsell Anything
If your system doesn’t make it easy for you to cross-sell or upsell any of your products on a regular basis, then you’re missing out on a great opportunity to earn extra money.
What is cross-selling, exactly? It’s the practice of recommending products to a customer that complement or enhance the ones they’ve already decided to purchase.
For example, have you noticed that whenever you buy an item on Amazon, you get to see a set of recommendations for similar items at the bottom of your screen? That’s cross-selling. Amazon claims that 35% of its sales come from those recommendations each year.
According to power equipment dealership expert Bob Clements, cross-selling can lead to a 20% increase in parts sales. So, if you sell $300,000 worth of parts each year, adding that 20% can help you earn $60,000 more on them. And if your gross profit margin on those items is 40%, your return will be $24,000:
That’s too much money to just leave untouched. So, if your system doesn’t provide your counter reps with product recommendations, then it’s failing your business.
3. Warranty Claim Reconciliation is Too Time-Consuming and Costly
Do you have tons of warranty claims that are just sitting there? If so, it’s likely due to one of the following two reasons:
a. Your staff doesn’t prioritize warranty claim reconciliation or think it’s worth the effort
b. Warranty claim reconciliation is far too time-consuming and costly
Assuming that you’re a successful business, it’s more than likely that reason “b” is the culprit. If you have to manually hunt down each claim to find out how much you’re owed and enter the same exact information twice – into the work order for your customer and the warranty claim for your supplier – then you’re spending far too much time on your warranty claims.
And of course, with the amount of information involved in all of this, you’re very likely to make mistakes, which leads to more time spent on warranty claims.
A good system should perform all of the above-mentioned tasks automatically, saving you time, eliminating errors and boosting your bottom line.
4. You Can’t Track Your Shop Efficiency
If your system doesn’t let you track the efficiency of the technicians within your service department, then you can’t determine with any degree of certainty as to how profitable it really is.
One of the most common ways to track efficiency is by looking at a work order to see how many hours a tech has spent on it and reconcile that with the revenue generated.
The problem with this method is that you can’t be 100% sure that the amount of time stated in the work order is accurate, since in many cases, it’s just an educated guess on the part of the technician.
You also have to make several manual calculations by relying on a formula like this one:
So, if you’ve decided that repairing a Briggs & Stratton engine should take about four hours, but your employee has taken only three hours, then based on the above formula, his/her efficiency is ~133%:
Dealership expert Bob Clements states that techs must operate at 75% efficiency just to break even and need to be operating at a rate of 85% or more to be producing any real profit for your business.
Measuring employee efficiency this way can take a lot of time if done manually, which is why many power equipment businesses without a proper software solution simply don’t do it. As a result, they are likely spending more money on labor than they should.
With the right software, you can check out how profitable your techs are individually or zoom out to see how profitable your service team is as a unit. In addition, you can time each employee from the moment they start a particular job to the moment they complete it.
5. Your Reports Lack Crucial Details – or Don’t Exist at All
If you’re running a multi-location operation, you need to have clear visibility into what’s going on at each location at any given time. To keep track of all that more easily and accurately, you should automate your reports using a proper software solution.
A good system should let you set up a dashboard composed strictly of the metrics and reports you’re interested in, and get a high-level overview of your entire business without pouring over multiple lengthy reports. This includes vital details on:
- Overall business performance
- Parts sales
- Unit sales
- Service performance
In addition, you should also be able to easily pull up information on any of the following:
- Work order lists
- Work order labor item list
- Work order code list
- Work order history
- Employee time clock
- Employee billed labor
- Employee labor efficiency
- Scheduled appointment list
- Product lists
- Product labels
- Product category lists
6. You Don’t Use Mobile Devices
If your technicians have to go back to their desk in order to create a work order, then your software system is out of date. In today’s world, technicians should all be equipped with tablets and have the ability to create and modify work orders on the fly – whether they are near a terminal or somewhere on the parking lot.
This in turn allows them to spend less time running around and more on doing their actual job, which is, of course, servicing your customers.
The most up-to-date system should always come with a mobile app that you can easily install on any mobile device – whether it’s a tablet or smartphone – and then use throughout the dealership, making standard desktops nearly obsolete.
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Okay, You Got Me – I Need to Explore Other Options. Now What?
This is not an uncommon challenge among hardware stores with outdoor power equipment divisions. So, if you feel like your current software solution isn’t up to snuff when it comes to power equipment, then consider adding a system designed specifically with that industry in mind.
Dozens of hardware stores like yours have already successfully used the Ideal software to grow their power equipment divisions. So, if you want the same, continue your research right here and find out if our solution is right for your business.