How one distributor's transition to a nearly paperless system reaped rewards

The age of technology has increased the need for real-time data. In order to stay competitive and ahead of the curve in todays marketplace, distributors need to manage a variety of functions online, including tracking inventory, checking stock prices and reviewing a customers purchase history, quickly and accurately.

Speed is the winning hand and those that do not make the transition to using real-time data will be left behind.

Sue Koehler, operations manager of Sanders Tools & Supplies, Peoria, Ill., experiences the benefits of real-time data every day. Sanders Tools sells industrial cutting tools, precision gages and fixturing products, and machine shop supplies. Major customers include Caterpillar and Inland Steel.

The company uses Prophet 21 Acclaim, a comprehensive technology solution that incorporates mission-critical distribution capabilities to provide real-time data enterprise-wide. The UNIX-based suite of applications helps Sanders Tools streamline day-to-day operations, improve customer service, increase sales, manage inventories and remain competitive in the MRO industry.

Know your customer
Cultivating background data on a customer used to be a time-intensive, paper-laden task. Today, most inside staff and outside salespeople use real-time enterprise-wide information accessible on their desktops. The company stores critical information and customer history online.

It is no small task to exceed customer expectations in this mature market, says Koehler, a Sanders Tools employee for 16 years. By using a system that provides us with real-time data, we have increased employee efficiency and customer loyalty substantially. Sales have increased more than six-fold to more than $28 million.

Today, the company averages about $750,000 sales per employee, nearly twice as much as the average industrial distributor.

Because the sales staff can access a customers account online, they can review customer information such as order history, pricing and receivables without shuffling through piles of papers. Using real-time data has eliminated the nightmare of missing or misfiled data. Salespeople now know up to the minute what products are in stock, in what quantities and the physical location at any given time. This real-time information enables them to better fill customer orders, which ultimately enhances customer service.

We feel data is important for making decisions, Koehler says. Therefore, we give employees a lot of accessibility to data.

For example, salespeople have the ability to check the last time a customer purchased an item.

We can now drill down to the last time a customer bought an item, get the item code, the vendor, the quantity, the price, the cost, Koehler says. With the hot key, we can bring all that back to an existing order without re-entering it.

It saves time and creates consistency for customers. For customers pursuing ISO 9000 certification, this allows them to always get the same item and utilize the same data.

Smarter inventory
Many companies are beginning to use on-site order entry to empower customers by providing them with a quick and easy method to replenish their own stock.  On-site order entry frees employees to concentrate on the more difficult multi-step orders.

Sanders Tools takes the process a step further by providing kanban cards (tickets attached to the product). These bar-coded cards allow customers to place orders themselves by scanning the part number and quantity needed online. The procedure eliminates phone orders, automates the process of repetitive purchases and can also reduce the number of inside sales staff needed.

The on-site order entry process also generates an electronic trail that enables the company to make informed decisions about stocking inventory. With information such as pricing history, quantities sold and which products are cyclical, companies can forecast more accurately, increasing customer service levels and improving buying efficiencies. Instead of buying products to meet a supplier- mandated minimum order amount, distributors buy based on actual usage information.

The forecasting capability is becoming increasingly important to major customers like Caterpillar.

Caterpillar used to tell us what we had to keep for them on the shelf, Koehler says. Theyre no longer going to do that. They want us to make those decisions.

Purchase history becomes more critical than ever. In some cases, employees must access data going back 12 to 24 months to view trends, production cycles and machine downtime.

We have to go back and see if they pulled 10 of a particular item in the last year. Did they pull 10 at one time, or did they pull one every month? she says. We need to have 10 items on the shelf when they need them. We have to forecast for them, where before they handled the forecasting.

Streamlined information
Streamlining purchasing and expediting operations minimizes paperwork and results in additional revenue potential.

Prior to installing the new system, a manual system was susceptible to human error. Today, one person performs a job that previously required four people. It is also critical for all employees to have the ability to generate and place purchase orders online, especially for rush shipments.  For this job, they need accurate, real-time data, such as the amount of products currently in stock. Additionally, orders are now automatically faxed direct to vendors from the desktop.

Improved purchasing enabled Sanders Tools to substantially increase customer service levels.

When a shipment is received, warehouse employees immediately compare the packing slip to the purchase order online for accurate quantities, products and prices. They post discrepancies in the material reconciliations file, which is accessible to employees in the payables department, who can seek quick resolution with vendors.

Automating the shipping process also reduces the amount of time and effort to fill orders. Sanders Tools previously had an accounting person confirm every shipment by hand and enter freight cost. Now, shipping papers automatically print in the warehouse (if stock is available), where employees pick and pack orders for shipping.  Next, the UPS manifest system automatically inputs freight and confirms what actually shipped to ensure accurate inventory counts.

This has increased the number of packages shipped and delivered without the need to hire more employees. Sanders Tools customers now receive more accurate and timely shipments.

The benefits of automation are tremendous when a company decides to go paperless. It enables distributors to operate in a real-time atmosphere, saving thousands of dollars, improving customer service and increasing employee productivity.

Koehler believes the move to a paperless system has made Sanders Tools more competitive.

The utilization of real-time data can be felt throughout our entire business and has allowed us to stand up to our philosophy of quality, reliability and customer service, she says.

This article originally appeared in the January/February 2000 issue of Progressive Distributor. Copyright 2000.

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