Electrical Supply Distributors Face Daunting Inventory Optimization Challenges

Technology distributors such as electrical supply, medical and office product distributors face a daunting task as products have shorter life cycles due to development of newer technologies. As such, companies in these industries need to keep on-hand inventories at minimum levels, increase inventory turns, and develop accurate sales forecasts. Additional functionality is often needed to track serialized components, to manage product warranties, and for retail or Web storefront sales.

Electrical Supply Distributors Software Evaluation Process:

Evaluating software can be a very overwhelming task for small and mid-sized distributors due to the sheer quantity of products to choose from and the complexity of each system. Distributors typically manage their evaluation process either in-house or through contracted software consultants and evaluation services.

In-House Evaluation

Some companies prefer to manage the software evaluation process themselves.  They typically develop a long list of potential candidates through multiple sources, which may include word-of-mouth references from companies in their industry, internet searches, online software directories and product reviews, business and trade magazines, distribution association and software trade shows, and other sources. Companies who conduct their own software evaluations should dedicate an employee to the project of collecting and
organizing information for the evaluation team.

Software Consultant

Some companies contract software consultants to manage the evaluation process. As with any industry, there are good consultants and poor consultants. Wholesalers should consider consultants with several years of experience and those who are not biased toward a product that their company represents. Many
accounting firms also provide software consulting and evaluation services. In addition, there are a handful of credible, unbiased sources that provide detailed product reports and software evaluation services.
Evaluation Process Distributors should form an internal software evaluation team comprised of
representatives from different departments. A typical evaluation team will include employees from various departments within your business. An employee should be designated as the project leader. The project leader
should be responsible for managing the evaluation process. He or she will likely do a lot of the up-front work to build the initial list of software products and will work with contracted consultants or evaluation services throughout the evaluation cycle. Project leaders will also schedule team meetings and software demonstrations.

The evaluation process typically includes five phases — needs analysis, research,
evaluation, selection, and implementation.

  1. Needs Analysis
    • Establish an internal evaluation team with representatives from various departments within your company
    • Hire consultant or contract evaluation service
    • Develop needs analysis outlining requirements for a new system
    • Establish metrics using current system for future ROI calculations
  2. Research
    • Read trade and business magazines
    • Attend industry, association, and software trade shows
    • Use software directories and product reviews
    • Use search engines to find related information
    • Ask other companies in your industry what they’re using
    • Compare in-depth research provided by the contracted consultant or evaluation service
  3. Evaluation
    • Use the needs analysis to develop a request for proposal (RFP)
    • Send the RFP to vendors identified during the research phase
    • Use research and RFP information to create a list of 5-10 potential solutions
    • Schedule overview demos of each product. Overview demos will typically take 1-2 hours
    • Meet after the overview demos to pick 3-5 vendors for a more detailed product demonstration. Detailed demos generally last 4-8 hours.
  4. Selection
    • Post-demo team meetings and product selection
    • Contact the vendor or reseller, negotiate pricing, define implementation plan
    • Coordinate information transfer from evaluation team to implementation team
  5. Implementation
    • Define implementation roles and responsibilities
    • Establish implementation timeline
    • Conference room pilot before going live
    • Run new system parallel to existing business system for 1-4 weeks
    • Continue implementation team meetings every month for the first 1-2 years after implementation to monitor progress, discuss ways to optimize the new system, and measure ROI achieved through improved processes (compared to the former system)


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