Making the transition to ERP - Easier and more affordable than you think!

This is Encrypted Ambition, a podcast about the builders rewriting the rules. Join Petronella Technology Group as we decode the ideas, challenges, and momentum behind tomorrow's business, technology, and leadership breakthroughs. All right. Well, today, welcome Len Rio.

Tell us about yourself, Len. Thank you, Craig. So, yeah, I'm Len Rio, president here at the TiVo. Founded the company about 25 years ago after a career of about 10 or 15 years in in manufacturing, mostly in.

Director of finance and like cost accounting manager roles, and I fell in love with with systems projects. Um, and in particular, how a company's profitability can be significantly affected by managing information well. My observation is is that, especially in the United States, that.

We do a great job of automating, you know, facilities with conveyors and all kinds of automated equipment, but yet we we manage our information flow nowhere near as effectively as our materials flow. It's almost like a stepchild, and unfortunately, um, with the with the the digital transformation, um, really taking hold and.

Accelerated by the pandemic, and you know the need to be remote, those kinds of business processes are really holding industry back, and and that's just an area that is so easy to remedy. So, Craig, I'd like to maybe.

You know, talk a little bit about, like a, you know, just a case study to share with you what we, who we work with, and and you know how we help them. Absolutely, please. Sure. So, you know, at at the core, we we provide accounting and ERP solutions. ERP being, you know, the logical predecessor to a basic accounting system.

Like QuickBooks, the difference between accounting systems and ERP is that the ERP system ties together all elements of information flow within an organization in one unified system, rather than the traditional islands of automation or silos that live in.

You know, Craig's spreadsheet, or Len's system, or you know, it's in QuickBooks, but it hasn't been updated yet, and all of those kinds of of problems. ERP systems are typically real time, and can become very, very much real time through barcode data collection.

When when any kind of inventory moves, some kind of a scan takes place, much like we see with with UPS and FedEx. They know exactly when everything has moved from one hand to the next. So we work with smaller businesses, typically manufacturers and distributors, some service companies who do.

Repairs, installations, that kind of work, and by small I mean two million to fifty million dollars in revenue. Most of those companies are just starting their journey to move from a basic accounting information system to an ERP system.

Those are perfect customers for us, especially if it's a manufacturing company, for instance, that's in what I call a complex industry, one that has a lot of compliance requirements. Maybe it's a food manufacturer that has USDA requirements, or a medical device manufacturer that's governed by the.

FDA and their regulations. Anyone with a high degree of quality management, quality control, and traceability of materials is usually the real the real cam the the the the the straw that breaks the camel's back. So in in the food industry.

You know, the farm-to-table traceability is incredibly important. It has become far much, much more important. There's been a lot of a lot more recalls since 2017, when some more stringent requirements went into place, and the the.

Existence of allergens or different kinds of contaminants, like any kind of manufacturing that is guaranteed to be free of any kind of nuts, peanuts, you know, tree nuts of any kind. There is an incredible amount of oversight to make sure that that product is truly what it says.

So the lot numbers and the batch control, through the the commodity receipt to the the production to the to the transit to the retail locations, all of that has to be tied together, and the only way to do that is with a warehouse management system, one that can actually make the transactions at every single move.

Like UPS and FedEx does, so these are the kind of problems that we love to solve, because invariably there's a real business case. If there's there's you know money to be saved by taking these initiatives.

Or compliance that will, you know, keep the company in business and not be forced to recall every product they they possibly ever produced in the last two years, because you can't prove that it's not otherwise. Or, in many cases, revenue enhancement opportunities.

A good example of this, a good case study, is we recently finished implementation of SAP Business One with a a small pet food manufacturing company. A lot of their product was sold on an e-commerce website, and their production manager had to come in at four o'clock in the morning to.

Key enter all of those orders that were emailed to them, taking about two and a half hours a day out of his time at a very early hour of the morning. That's an incredible waste of talent to have to to have a missing link in terms of the integration of information flow.

We all know when we jump on Amazon and we make an order, we we immediately get an order acknowledgement. These are the kind of things that we're that are non-negotiable. So, these are some of the kinds of things we do. There's all of the basic blocking and tackling, like the accounting and the inventory control, but when it comes to

Traceability, planning by virtue of a system knowing sales history, as well as open orders, as well as on-hand inventory, to generate a material plan. These things save hours and really help a company optimize inventory levels.

So that they maximize customer service and eliminate, you know, stock outages that in many cases can stop the presses. So, a lot of satisfaction in moving a company from a state of islands of automation to an integrated system to, you know, a lot of tools of automation allowing them to.

Leverage what our best practices essentially. Great, thank you for explaining that. Going into that depth and detail, is it fair to say that you specialize in working with manufacturing companies or physical widgets opposed to digital widgets, or is that incorrect?

That's a very good question. Most of the time, when we think of inventory, it's it's it's a physical object requiring logistics to move it. But there's really no difference in digital commodities. If you want to think about it that way, they we still have to produce them. We still have to store them.

Then we still have to deliver them, and we still have to charge for them. So it's kind of the same cycle, except no truck had to back up, right? In order to move the product. Okay, so your software could support that, though, right? Is that absolutely okay? Cool. So, kind of like you were mentioning Amazon. So, you know, maybe Amazon with their Kindle service, for example, you know, digital book delivery, right? They have the system that.

Deliver, you know, sells the book on the e-commerce site. You buy the book. It delivers the book to their Kindle or their device or their app. So your product tracks that whole journey and helps with the automation. Is that right? Or all of it? Correct. Okay. Because behind the scenes, there's also.

There's typically a serial number associated with that particular copy that you know Greg Petronella purchased versus the one that I purchased, because I can't hand it to you. The serial numbers wouldn't match. We don't even see that, but it's behind the scenes. Behind the scenes, right? In most cases. So does your software.

Help the company auto-generate that. Is there an algorithm, or do they need another component to do that piece of it? If they don't have that, well, you know, the interesting thing is that the the the the newer systems, like SAP Business One, are designed to support the Internet of Things, right?

So the order entry system within the ERP would automate, you know, automate the and trigger the request to the digital automation device that creates a serial number and makes it available for download to you. Got. And then once that's completed, another signal can be sent back to.

The ERP system saying this transaction has been completed. Here, record this. You know, Craig is now a customer of ours, and and then maybe even some automated marketing can swing into motion and start sending you. Customers also ordered this when they right ordered when you ordered. Cool. So you mentioned QuickBooks before. Obviously, QuickBooks is popular. You know, made by Intuit.

Accounting level one hundred and one, you know, the most basic version. I started on QuickBooks. I still use QuickBooks online myself. You mentioned a couple of areas that where a company might transition to a full ERP system, like what you have. I'm also curious to know, you know, a lot of new businesses, especially ramping up after COVID, for example.

Are adopting things like Shopify, you know? So, how does your system, like, if they're on Shopify, do they move to your system or do they keep Shopify and also use your? How does that work? Yeah. So, the ERP systems in general, including SAP, don't try to do everything. Okay, they recognize that.

You know Shopify and WooCommerce and Magento and and all the other great shopping cart platforms do a a wonderful job of what they do. Same thing with with shipping, certain CRM systems, and so forth. So the logical thing to do is create a native integration, so that, like for example, with Shopify.

Customer data can be exchanged between the two systems. Item information, inventory availability, pricing schemes - all of that - so that when an order is entered, everything is passed over in real time to the ERP system. So that's how SAP has handled it. Is through their - they have an intercompany.

And integration hub, as they call it, that connects to many, many popular kinds of things like e-commerce. Gotcha. So, does your company resell the SAP one product, or is it in replacement of that product? No.

We we are resellers for SAP, and in particular their SAP Business One product, along with a couple of other products that they work with, plus a number of other common, I'll call them third-party add-ons that customers often request. Like I said, shipping systems and and such, so that.

We can deliver what we refer to as a Tivo All-in-One, which is powered by SAP Business One, but includes any other software application that's required, the integration thereof, the implementation and training for it, and we do that all as a and a subscription price, very you know low cost.

People think that ERP is pretty expensive, but just a ten-user system of SAP Business One costs less than fifteen hundred dollars a month. And the truth is, comparing that eighteen thousand dollars a year to the whatever you're going to pay for QuickBooks plus the add-ons that you might need.

Is there's a very, very high return on investment from the the automation of tasks that are now eliminated because, well, they're automated within the system. We don't have to do another Excel spreadsheet, and we don't have to re-enter this. So it replaces a lot of manual processes. Okay. Very.

So, streamlining that double data entry is what you're. Okay, sorry. Yeah, exactly, exactly. We do it with a, and and Greg, just to to you know, it turns out after after doing this for twenty plus years, I recognize that when you know our customers are really depend on us.

To provide the kind of technology leadership that is is required. I mean, it just changes so fast. Even we have difficulty keeping up. And some of those customers have been around for twenty years. And so, with the advent of subscription pricing, and and they, and then providing just a.

Fixed, affordable implementation fee. If we invest a little bit in that company as we're doing that implementation, and and then earning a little bit every every month, keeping in touch with the customer, the long term value of that customer is much higher than it used to be when you had to buy ERP software as a great big capital project up front.

A big time and materials implementation, so the customer benefits. You know, we benefit. It's just a win-win situation with the way you know software is being sold and our mindset of customer success now. So, I'm I'm enjoying our our.

Our work a lot better. I don't have to worry about oh, we got to close that next deal to you know make payroll this month. Or it's like that's off the table now. That's great. So is it accurate to say that your team helps create this?

Single pane of glass for financials and ERPs. So you you have an implementation team that that helps helps connect things together, maybe via API or native integration. Because, like you said, maybe they're using Shopify or these other technologies or software as a service solutions like a CRM, and and you help kind of connect it all together.

From a financial perspective, if there's financials to be gained from there or taken from those systems, and streamlining workflows and eliminating double data entry or manual labor - is that fair? Very well said. And you know, the when when we start an implementation with with a new customer, we'll do a thorough assessment.

Of all of their business processes, you know, in in each functional area of the business, there's 20 to 25 questions that we have to ask, and whatever else they might come up with, to find out how they're doing, whatever it is they're doing, what issues arise as a result of that process, and then we essentially brainstorm with them.

To come up with the process improvement initiative, well, after five or six hundred questions about how a business is operating, chances are we've got about one hundred and fifty to one hundred and fifty plus process improvement initiatives, all with you know some urgency and priority. So, our our.

You know, our go-live milestone, our first milestone in the in the project, usually has maybe a third of those included. The reason is, I mean, the customer usually has to produce product and ship ship stuff to make make payroll. And the other thing is, it's just it's it's just too much technology to assimilate all at once.

So, there's always a a phase two, phase three, phase four, phase five. By that time, you know, new business requirements come down the pike, and we're just reprioritizing and and moving along a path of continuous improvement. And I bet in this process, in working with a lot of folks over the past 20 years, you probably have a nice.

Portfolio and library of common solutions that maybe can adapt and you know be customized for new customers. Oh, sure. There's in your staff meetings, you'll you'll hear a lot of that. Hey, just like we did for customer A, right? What we need to do for customer B is something similar, except and and yeah, I mean.

We've got a pretty seasoned team of about 20 individuals, very, very smart people, and it's really fun to be working around them to to do the problem solving and and make a big difference. That's awesome. So I I could see you as a great accelerator and catalyst to help a business improve.

Well, first assess what they have, and then improve their processes and workflow. Eliminate as much labor as possible, manual entry, automate as much as possible, and and just make kind of more. The goal being a a much better, well oiled machine. Precisely, we are enablers, business enablers, if you want to think about it that way.

And yeah, I mean, there's one customer I'm thinking of right now that we started working with in 2014, and they had a they had 25 users. We're we're now skimming past 340 users. Wow! In in three different countries, five different countries. Excuse me. That's awesome! So, congrats.

Yeah, they they they keep us hopping. That's awesome. So, anything else that people that are kind of like like you said before in the QuickBooks world, or in Peachtree, or in a traditional accounting system.

What what are some questions that you would kind of ask them so that they know? Okay, this is the right next step for me. This is when I should. This is when I should plan this and make this transition. Yeah, that's a great question. I you know, first of all, anybody that starts you know skipping by two three million dollars a year in revenue needs to start thinking about an ERP system.

But the ones that that have some unique requirements, such as all of a sudden they're doing business in multiple countries and they need to deal with multiple currencies, or they're opening opening up a second location or sending inventory to some kind of a consignment location, and now we have to keep track of inventory in multiple locations.

Or within a given location, the facility is so large that we have to assign bins, and we need to know where we put that stuff. And then, certainly, when you know serial numbers and you know lot and batch numbers come into play, that's usually the the time that you've got to hop. Otherwise, you need you know a duplicate inventory system. It has to be maintained outside of QuickBooks.

And it's either going to be in Excel, or it's going to be in some expensive add-on that does some synchronization. So that's the time. Rather than just saying, "Oh, what can we add on to QuickBooks," it is not as hard to get into an ERP system as it used to be. It's very easy to do that. I mean, it's affordable.

It's definitely affordable. Yeah, it sounds like it's a no-brainer. So, are there any verticals that are just not a good fit? Like, is there any disqualifiers for our company? We we we do not work with, say, government entities, nonprofits, the kinds of of.

Industries that are that have different accounting kind of requirements, like the two that I mentioned, and then there are some some verticals like the the garment industry. It might be certain kinds of chemicals that that have unique vertical ERP solutions that have been designed.

For their unique processing, we're more, you know, general manufacturing and wholesale distribution. But, and that's what most of the most popular ERP solutions will support. But there's nothing wrong with those vertical solutions either. That's the right place for them to be.

Okay. Excellent information. Any case studies or anything that you'd like to share with the audience? On yeah, is one of my favorites is a large seafood importer and distribution company headquartered in Los Angeles.

We had well. First of all, they were using they they they bought a brand new facility and put in a giant freezer, had eight thousand pallet positions in it. They're an importer, so they they have fish coming in from all over the world. You know, tilapia from Vietnam and crazy places, and you say, "Wow, that's a long way for fish to come."

But it comes in on a on a on a the the the floor of a trailer, and then it immediately gets palletized. And at the time that it's palletized, we're we're scanning in the information regarding what's on that pallet. So you know the item number that carries the description, obviously, the the lot number.

The expiration date of the product, or the best by date in food speak, and then the country of origin, because certain retailers will not take tilapia from Vietnam, but they will take it from China, and so all of those factors have to be, you know, tracked within the system. Then, with the logic that we built into the warehouse management system.

It knows where to put that that pallet, where the open spots are, in relation to similar kind of product, so that it can get close to its its cousins that came in last week. Oh, nice! So, so like optimized workflow, correct? And then on the way out, you know, because of the.

Because they're they're shipping nationwide, certain product has to have more shelf life if it's going to go to say New England than if it's just going to go to Torrance, California. So, we needed to identify by by customer the the shelf life and and obviously the preference regarding country of origin.

In order to recommend what pallets to to ship when it came time to pick that product and ship it to them, interesting. So that's very interesting. That's a great, great little completion of that. One of the one of the most difficult things in that project was finding the handheld scanners that would actually operate in a freezer that where it was minus ten degrees Fahrenheit.

Because it's electronic equipment. If it's going in and out of a freezer, if it isn't protected properly, it would you know you get condensation inside the scanner, and within a couple of months, you know, a twenty five hundred dollar scanner would be worthless. Right. So, was it Westinghouse?

I forget the name of the the brand, but one of one of the the brands that we found actually has a heater built into the scanner, so that you know it eliminates any condensation buildup. Wow, that's fascinating. Yeah, awesome. They're fun projects. Yeah, it sounds like it. That that that one in particular, too, for sure. Yeah.

That's that's a pretty large customer. I mean, they they need a high degree of automation. And if we have, do we have another minute? Because I can tell you the story. Yeah, I'd like you to talk more about the automation and and the workflows too. Because I'm curious on that side of of of the the setup. Like, is that something that you guys do on your side, or is it, or can the customer roll their sleeves up too and create automations, or how does that work?

Well, there has to be, you know, members of the customer team, you know, working with our team. So we're handling the the technology side of the equation. They're proving out and doing the system testing. I got that. You know, the process flow that has been designed makes sense, and all the data is right in order to support it.

But the the second project involving scanning had to do with all of the the the grocery store fulfillment that is typically done by the by the carton. So a grocery store order might have required two cartons of salmon, you know, three cartons of Alaskan king crab.

You know, a pallet of something that's going on special, and so they wind up with six, seven pallets of product, and they were working from paper-based pick tickets, sometimes three and four pages. And when picking that product, they were actually writing the lot number and the expiration date.

With gloves on, mind you, and the country of origin, and that paperwork was being rushed into the office where there were three accounting clerks actually keying in all of the, you know, the quantity they found and the lot number and the this and the that, and because it's handwriting, and you and you know, you're dealing with warehouse folks, these.

Probably don't have the best penmanship in the world, and they have gloves on. They sometimes the lot number wasn't there, and so because the truck is now waiting and it's running, they just do an inventory adjustment to bring on that ten cases of salmon with that erroneous lot number and ship it, because they have to have paperwork to go with the truck. Right.

The next day, someone would have to come in and figure out. Well, what lot number do they really want to do? Undo that ten cases that they put it into inventory, and then basically issue out the right one. So, we've eliminated two out of three order entry clerks with scanners because they're just scanning the product onto the onto the pallet.

So they're picking faster. They eliminated all those errors. It it just was a phenomenal process improvement. That's awesome. Fantastic. Well, thank you, Len. I appreciate it. Is there anything else that you'd like to go over? This has been really cool. Now, just you know, just keep this in mind when you see a customer that has.

A lot of paper in their offices, or they have, you know, the typical forty-two spreadsheets. It's it's time for us to have a conversation and see if there is a business case and and move them to make their help them make their digital transformation. Awesome. So, how do they reach you? How do they contact you?

Well, our as always, our website ativoconsulting dot com, or just by emailing me len at ativoconsulting dot com. You might see us on LinkedIn quite a bit, or on Facebook. But anyone in provisors probably knows who I am. So, of any of you who know some really fine folks like Craig.

They can also refer you as well. Awesome. Well, thanks, Len. I really appreciate it. This has been cool. Yeah, Craig. Thank you very much for having me. I really enjoyed this. Absolutely. That's a wrap on this episode of Encrypted Ambition. Subscribe wherever you listen, and if today's guest inspired you, leave us a review or share the show with someone in your circle.

To learn more about how we support innovators with AI, cybersecurity, and compliance, head to petronella.tech.com. Thanks for listening, and remember, the future favors the bold.