One POS To Rule Them All
Wouldn’t life be easier if all of your members used the same POS and ERP system?
Your Buying Group could more easily capture sales data. You could more easily create customizations specific to your group. You could create training materials and best practices for your members.
Why Not Adopt a Common Software System?
It may be difficult finding one system that satisfies all of your members. Smaller members have different needs and budgets than larger members. Some members focus more on B2B sales and others B2C. Some member-distributors belong to more than one vertical (and more than one Buying Group). Some members have a stronger need for eCommerce than others.
Even if there is a suitable system for everyone, it can be dangerous putting all of your eggs in one basket. Just like you wouldn’t rely on a single supplier for key products, you shouldn’t make your membership vulnerable to a single software provider. Costs and customer service change. Companies go out of business. A little competition is healthy.
Given the above, some groups attempt to create their own POS software, specific to their Buying Group. On the surface, this seems to eliminate problems of cost and customer service while providing your members exactly what they need. Unfortunately, Buying Groups are not software companies and most initiatives are doomed to failure – especially once employee turnover occurs.
Requiring a single POS or ERP system may also inhibit adding new members. Changing systems is expensive and disruptive, adding another barrier to joining your group. Invariably, exceptions get made for certain new members, defeating the purpose of a single system.
The nature of Buying Groups and their independent members goes against the idea of a group-imposed software system. Members tend to be fiercely independent. It’s their biggest strength (and their biggest weakness). They know what is best for their business.
What Should a Buying Group Do?
Start by surveying your members and identify which POS/ERP systems they use, what they like about them, and what they dislike.
Next identify not only the functionality that your members need, but also the functionality that will advance your Buying Group’s initiatives. This functionality should include:
- EDI capability. You will want all of your members invoices flowing electronically through your group so that you can accurately track rebates, assess preferred vendors, negotiate event buys, etc. You will also want electronic ordering to gain extra rebate revenue. Inexpensive integrations with your members’ ERP systems are crucial.
- Data feeds. As is commonly said, data is the new oil. If you can capture members’ sales data, you can more effectively run your group. Equally as important as getting data out of the system is getting data in. Do you intend to use a common PIM and send product data to your members?
- Common product numbers and product hierarchies. As a group, you can’t compare member category performance if your members use different product numbers or assign those products to a different merchandise hierarchy. Members will be reluctant to adopt a common taxonomy (see above comments regarding independence). A good system will allow you to assign a second product number and category in alternate fields. Make sure these fields are included in the sales data fields.
- Support for the group’s private label credit card or loyalty cards. Does your group accept Airmiles? Do you have a branded credit card? Make sure your members’ POS systems support it without manual keying.
Once you have your list of must-have functionality as well as your list of most common providers, treat them like you would any of your preferred suppliers. Negotiate a vendor buying agreement that includes costs, terms, and levels of service. Establish a rebate program. Work towards reducing the list down to 3 or 4 providers (as opposed to one) like you would in any other product category.
Remember, access to your annual or semi-annual shows is important to POS providers. It’s a key time for them to connect with their customers and generate revenue. Restrict access to these shows to preferred software providers.
Most importantly, make your list of functionality a requirement of becoming a preferred supplier. If a provider does not commit to providing the functionality you need, remove them from the list. There may be times where you need software customizations very specific to your group, and you may be required to pay for them. It will be more cost-effective negotiating on behalf of your members than for your members to do it themselves.
Maintain Active Relationships With Software Providers
Include them in communications you would provide all of your other vendors. Take the time to understand their product and assign them scorecards like any other supplier. By setting up a strict preferred supplier program with a small number of POS/ERP providers, your Buying Group can attain many of the same benefits as having a single provider without the risks.
Written by Steve Seguin
LBMX offers a business-to-business marketplace platform, helping independent businesses, their Buying Groups, and suppliers buy better and sell more. Its Private Group Marketplace for Groups has transformed billing and ordering, rebate management, real-time analytics, e-commerce and product information management across the building materials, HVAC, plumbing, sporting goods, industrial supply, manufacturing, and agricultural industries. Its LBMX Supply Cloud platform allows suppliers to look at their industrial distribution customers through one lens, offering full EDI, PIM, Analytics and Payments.