By Polly Wang
Vice President/Accounting and Finance
International Data Products
Gaithersburg, Maryland
Implementing a new accounting system that
automates critical facets of the order entry process made it possible for International
Data Products to grow from $7 million to $80 million in sales while reducing order entry
staff from four to two. Order entry is a critical function at the company because its
forte is its ability to provide virtually any type of computer system to demanding
government customers. With the previous accounting system, it was necessary to enter each
of the individual components of a computer as a separate line item and also duplicate this
information along with serial numbers in a separate service application. The new system
automates the bill of materials and service functions so that only a single line item
needs to be entered for each type of computer. The two-person order entry staff now
handles a business volume that would have required about 20 people with the old system.
International Data Products manufacturers
laptop and desktop personal computers for the government market. Last year, the company
delivered over 25,000 computers. The company specializes in meeting the demanding
requirements of government buyers. It provides the ability for a customer to order a large
number of computers with each unit being specifically configured to meet the individual
user's needs with regard to CPU, memory, hard drives, sound card, CD-ROM, etc.
The company also installs software as
required by the particular agency so that it is ready to run when received. IDP even
installs special security software to meet the requirements of sensitive customers such as
the FBI and U.S Army. IDP is also experienced in complying with the special requirements
of doing business with the government such as providing invoices in a special format.
In the past, the company used a general
purpose accounting system for all financial recordkeeping. The biggest problem with this
system was that it did not provide bill of materials functionality. It took a considerable
period of time to enter each individual component for every order. Having to enter each
individual component on the invoice also made it easy for competitors to determine exactly
where IDP was sourcing its components.
The old accounting system also couldn't
record the serial numbers of individual components. When a component fails prior to the
expiration of the warranty period, IDP immediately repairs its customer's machine but is
also entitled to collect from the company that supplied the component, making it essential
to track serial numbers of each component in every system it sells. For that reason, the
company developed a custom service application that tracked serial numbers. This meant
that each individual line item had to be entered a second time, in the service database,
and the customer number and order number also had to be duplicated.
Other problems with the old system were that
it did not allow for drop shipments and it did not track shipments from one location to
another within a company. The old system also provided less than ideal record-locking
functionality. In order to post to a particular module, all of the other users had to
leave that module. Since a considerable amount of time was required for posting, this
meant that for the most important modules, such as order entry, all posting had to be done
at night when there were no users on the system. IDP investigated modifying the old
accounting system to provide the desired functionality. Management discovered that it was
very expensive to purchase the source code and that the system was written in a language
for which experienced programmers were difficult to find and very expensive.
At this time, the company had four full-time
order entry people including two who ran the service program. The company was heading into
a period of rapid growth and management saw that it would be necessary to substantially
increase the staffing in these two areas to handle future growth. Instead, it decided to
evaluate alternative accounting systems. The key goal was finding a system that could be
easily and inexpensively modified to automate order entry, service and other applications.
The Excellence SeriesTM from SouthWare Innovations, Inc., Auburn, Alabama, was
selected because of its strength in sales and order entry, inventory and purchasing as
well as its strong financial accounting features. Another reason for selecting the
Excellence Series was its maturity. It was first released in 1984 and has been
continuously upgraded and improved over that time. IDP runs the Excellence Series on a
Novell network with its own computers used both as clients and the server. HLA
Connecting Point, a SouthWare® value added reseller in Beltsville, Maryland, was
selected to provide installation, training and customization for the program.
Key to the improvements provided by the new
system is its assemblies adapter which integrates with the order entry module so that
orders are automatically exploded into the components required to produce them. The
assemblies module also interfaces with the inventory module to debit inventory in each of
over 20 distinct locations defined by IDP. Assemblies integrates with the purchasing
module to automatically generate purchase orders for each of the components needed to
produce the order. Finally, the assembly adapter integrates with an equipment servicing
module to keep track of the serial number of every component sold. This last module also
integrates with order entry so that customer and order numbers do not need to be
re-entered. HLA customized the service module so that it automatically generates
nonrepeating, sequential serial numbers.
The result of this integration is that about
90% of the work previously done by the order entry department is now automated. This made
it possible for the company to accommodate a 1200% increase in sales volume while reducing
the order entry staff by 50%. The two service management jobs were eliminated by virtue of
the fact that component serial numbers are now generated automatically by the custom
application mentioned above. Of course, the rapid growth of the company easily made it
possible to find new positions within the company for the employees whose jobs had been
eliminated. The remaining two people order entry now handle a sales volume of $80,000,000.
This is believed to be one of the highest ratio of sales to order entry staff in the
computer industry.
The improvements made in purchasing were
nearly as great as those in order entry. The key here was customization to the base
code by HLA that, when an order is received, automatically creates a sales order in
the accounting system of the plant that is assigned to build that particular model. The
ability of the base code to track multiple locations made this customization a relatively
simple process. The individual plants run separate SouthWare systems and are linked by a
leased line. This feature plus the previously mentioned generation of purchase orders to
outside vendors which is included in the base SouthWare program, have made it possible to
handle the company's recent dramatic growth without increasing purchasing staff.
Approximately 80% of the 5000 purchase orders
produced each year by the company are now generated automatically. Currently, two buyers
and one expediter handle the company's entire sales volume and even buy office and
miscellaneous supplies as well. At least five times as many people would be needed in the
purchasing department if the old system was still in use.
When HLA created the customization to create
sales orders within the company, they also added another feature that, when it is fully
implemented, will be unique in the personal computer industry. Customers will provided
with terminal software that will allow them to dial into IDP's SouthWare system and
generate a purchase order that will be immediately converted into a sales order for IDP.
This will provide customers with added convenience and further reduce the amount of time
required for the order entry function at IDP.
Another useful customization was one that
organizes orders into configuration groups that greatly simplify the manufacturing
process. For example, a customer may order four different basic configurations of
computers with a certain number of computers of each configuration requiring something
special such as a memory or hard drive upgrade. In the past, it might take someone several
hours with a spreadsheet to break the order down into a series of specific line item
entries. This information is now generated automatically by the order entry system.
The system has also dramatically improved the
capabilities of the service department. In the past, when a customer returned a defective
part, it used to take hours to find the original invoice which was the only place that the
serial number was recorded. If the serial number couldn't be found, then IDP had to absorb
the cost of the defective part. Now, the entire order is serialized and the number of any
component can be found in seconds by querying the service management module. The biggest
advantage is better customer service. Service technicians can immediately determine the
configuration of a customer calling in with a problem. They also know the serial number
and source of every component on the machine, which makes it much easier to return bad
parts to their source.
All in all, the new system has made a major
contribution to IDP's success in the last few years. The ability of the new system to
automate 90% of the order entry and purchasing process has facilitated the company's
growth by virtually eliminating the need for hiring and training people in these
departments. The fact that the system can be easily customized provides assurance that it
will be a major contributor to future growth as well.
