Technology enhances operations. When it comes to automating procurement, however, the divide between companies that invest in this capability and those that do not usually starts with annual revenues around $25 million.
This is the view of Steve Fout, vice president of customer solutions at Godlan, one of the largest U.S. resellers of Infor ERP manufacturing software.
Godlan, of Clinton Township, Mich., is an Infor Gold Partner, which means it sells the software and also develops and modifies versions based on customer needs.
I interviewed him about a recent study from American Shipper, which found that 67 percent of small (annual sales less than $100 million) and midsize ($100 million to $1 billion annual sales) shippers use manual and spreadsheet-based procurement systems for transportation and 69 percent have no immediate plans to add automation.
The figures seemed out of line with the benefits of automation in productivity, inventory management, logistics, cost savings, and other areas. Fout says, however, it’s not unusual for small companies to pass on automation.
“We have companies in the $10-million-per-year range that use our software, but as a rule-of-thumb, [ERP] automation becomes reality above annual sales of $25 million,” he says.
When small companies show an interest automation software, Godlan works with them on cost-effective versions. One basic feature, for example, is a credit-tracking function that declines orders without manual intervention if a client exceeds a credit limit.
When it comes to shipping, automation is a good fit for large and complex operations. One ERP product Godlan provides, SyteLine, coordinates shipping dates, preferred carriers, pricing, and other needs. If a load arrives too late for a designated carrier to pick up and deliver on time, the software automatically searches for another that can meet the deadline and adjusts pricing.
The automation divide between large and small companies may soon diminish. If so, Fout says social media will be largely responsible. Godlan is beginning to see these platforms move orders. “It used to be that companies took orders by telephone or fax, and then e-mail. Then it morphed to web portals where orders could be placed via online catalogs,” Fout remarks. Now, purchasers see products on Facebook or YouTube, “and with a couple of clicks are redirected to ordering sites,” some of which go right to a manufacturing floor.
Social media will have a big effect on procurement and related areas such as shipping and logistics, Fout believes. In fact, the next release of SyteLine will be “one of the biggest leaps forward” for the company in this area, with its integration of apps.
If social media has an outsize influence on the use of automation in procurement, programs could be as ubiquitous and affordable as apps for smart phones, tablets, and other portable electronics. This, in turn, could extend automation to all companies — large and small.
It sounds promising, but like everything about the future, we have to wait for it to arrive.