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Technology Case Study: Automating Processes

into the supplier’s inventory and information with one click.


Tips
Communication is key, he says. Employees who were responsible for the manual side of business operations knew from the start they may not have a job at the end of automation, for example.


DeMao recommends distributors looking at automating processes carefully analyze and choose a software provider.


“After you make the right selection, the critical thing is how you manage the change in your company,” DeMao says. “You can imagine the chaos in our company to go from the way we did it to how we do it now.” But DeMao only lost one person who didn’t want to make the transition.


More From This MDM Series:
Technology Case Study: Wireless Warehousing


Editor’s Note: For more case studies on real distribution companies, please use the search function of mdm.com. Input “case study” and dozens will appear dealing with pricing, technology and other aspects of doing business.


The Company
Founded in 1933, C.C. Dickson is an HVAC and refrigeration wholesaler-distributor based in Rock Hill, SC. It has 108 stores and 500 employees in nine Southeast states. It was founded in 1933. The company sells more than 207,000 items.


Until November 2002, C.C. Dickson still ran its operations manually. A primitive system, employees handwrote invoices and looked up products in books. “We were late to automation, to say the least,” says company President Jack DeMao.


The company lacked the speed it needed to draw large customers and vendors. As product lines increased and customers demands went up, it was harder to keep up using just a manual system.


Customers would complain because they would receive invoices they couldn’t read. Pricing was inconsistent. Customers could go to three different branches and get three different prices. And vendors would refuse to work with the company because its system wasn’t advanced enough.


Solution
DeMao came on as president in January 2001 to help the company move forward technologically. He had 30 years in durable goods with experience in both manufacturing and distribution. It was the first time though that he had helped a company move from manual to automated processes.


He chose a single technology platform from Prophet 21 (now Activant) that included an ERP system and a warehouse management system to be implemented in three warehouses. DeMao thought it would be more efficient to implement both at the same time “a quicker payback but a more difficult investment.”


“Going from manual to state-of-the-art was quite a challenge,” DeMao says. The goal was to make three branches live on the system a week during 2002. “It was like going to the dentist for a whole year.”


The company hired two full-time trainers, and 10 employees volunteered to go branch to branch to train employees on the system and see them through the implementation. Trainers got a week off every four weeks.


Features
One feature of the technology allows C.C. Dickson to generate electronic invoices for one of its largest customers and then sends the invoices immediately, via EDI, to the customer. It improves cash flow for the customer, who can use the data to bill its customer right away.


Before moving to a new platform, C.C. Dickson placed purchase orders just once a month. “It was such a pain to place a purchase order,” DeMao said. “The process must have taken seven or eight steps.”


Now POs are placed every day, helping inventory turns increase by 25 percent. Lead times have improved as well, taking as much as 30 days off some customers’ wait times. Dead stock levels have dropped. That’s because the company’s inventory levels are more transparent it can get rid of stock that isn’t selling. And all inventory can be viewed at any of the 108 branches.


Payback
C.C. Dickson invested $5.5 million in the system. DeMao estimates the company earned back that money within two years of implementation. After going live with the new technology, the improved efficiencies helped the company snatch up 100 of the Southeast’s most coveted accounts.


The company’s employment level went from 650 to 500 people and revenues have grown 15 percent a year since implementation as a result of acquiring new accounts. And despite the growth, employment has remained stable.


Other benefits include: decreased outstanding receivables by 20 percent, and improved reporting and analysis capabilities.


“We’re able to do things we couldn’t before,” DeMao says. Now the company is one of the first vendors ask to try new ideas.


For example, one vendor wanted to try out a new system for automatic payments. Another wants to test a way to integrate the distributor into the supplier’s Web site, allowing a distributor to tap

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