Touched by technology

A reliance on a wide range of technologies has made White Cap Industries a leader in specialty tool sales.

by Richard Vurva

Seated in his tidy corner office, Brian Etter scrutinizes his computer monitor. The chief financial officer for White Cap Industries scrolls down the company intranet site, surveying the choices before him.

A click of the mouse and he’s viewing HR Online, where he can access human resource forms awaiting his approval. Another click sends him to the company directory to look up the extension or e-mail address of any of White Cap’s 1,250 employees. He clicks again to read about the company’s newest product offerings and monthly specials, and another click accesses current financial data, including sales figures the system updated automatically the night before.

Technology provides executives like Etter with the information he needs to make informed business decisions. But the CFO isn’t the only White Cap employee with access to critical business data. From salespeople who log on any time during the day or night to check their commission reports, counter salespeople who check what products are in stock at any of the company’s 51 locations, to warehouse employees using radio frequency technology, virtually everyone at White Cap has been touched by technology.

A reliance on technology is one reason this Costa Mesa, Calif.-based distributor has grown to nearly $400 million in annual sales. For example, using the extensive data elements available in the Prism enterprise software system for distribution developed by Systems Design Inc., the company developed business intelligence capabilities that can quickly access reports detailing which products are selling on a daily basis and which are not. The transaction system runs on AIX, IBM’s Unix operating platform, and the Citrix-powered intranet operates on Windows 2000 servers.

“We have visibility of the fastest selling items by company, region, location, salesperson, or by customer,” says Etter. “A sales rep can log in and view a variety of sales reports. He can view a sales rep variance report, which is a comparison to his prior year or prior month sales.”

A sales manager can request a simple trend report comparing one salesperson’s gross profit performance in a given time frame to other salespeople in the branch, region or company. A regional manager can compare top selling products in his region to other regions in the company’s nine-state territory.

The object is to provide employees with the tools they need to do their jobs most effectively, says Mike Walz, director of information services.

“We’re making it easy for them to stay in the field selling. Anything they can access at work, they can access from home. The Prism system, the intranet, all their e-mail is available to them wherever they go. All they need is an Internet connection,” he says.

Interpreting data
Providing crucial data to employees when they need it is only half the battle. Knowing how to interpret data can have a major impact on a company’s profitability. White Cap learned that important lesson when it tried to improve inventory turns without the aid of technology.

Like most distributors, during slow months White Cap instructs branches to reduce inventory in order to save money. In the past, however, branch managers might stop buying fast-moving items because that was the quickest way to bring inventory levels down. But it also negatively impacted customer service levels and fill rates.

The company had much greater success when it began utilizing the auto min./max. feature built into the Prism software. The calculation takes into account seasonality, lead times, safety stock, whether a product is considered an A, B or C item and similar factors.

“It factors in a number of different variables and then determines the appropriate min./max. levels for each location,” Etter says.

The system generates an automatic purchase order suggestion each day to make sure each store maintains proper stocking levels. An automated sourcing tool notifies the branch that it needs the item, but before placing a purchase order with a vendor, the system searches other White Cap locations. If the product is an overstock item at another location, the system automatically transfers it to the branch.

The system knows when a vendor has a two-week lead time on orders, for example, which is information the branch purchasing agent may not remember as he or she is walking through the store writing purchase orders. Using a manual system, the branch manager also might not be aware when inventory was available in another branch.

Salespeople tend to get nervous when a company tries to improve inventory turns. They’re afraid products won’t be on the shelves when customers need them. That’s exactly what happened when White Cap initially tried to adjust inventory levels, Etter says.

“Relying just on demand for products can take items off the shelf that need to be there for merchandising purposes. You may have odd sizes of products that aren’t going to sell on a recurring basis, but you want to keep them on the shelf for display. That took some time for us to build into the system,” he says.

Once it worked out the bugs, however, the company saw inventory turns improve from four to four-and-a-half times a year. In the past year, in spite of opening four new branch locations and absorbing an acquisition, White Cap’s inventory levels remained fairly flat.

“After putting these tools into use, we saw that overall inventory levels came down and our fill rates went up because we were utilizing our internal inventory and ordering it from the vendor in a more timely manner,” Etter says.

Tracking lost sales
Tracking lost sales is another White Cap capability. Suppose a contractor visits a White Cap branch and requests an out-of-stock item. Because the customer couldn’t wait for the product to be shipped, the branch lost the sale.

“We can create a lost sale and go back and look at sales that we’ve missed as a company,” Etter says. “The branch purchasing agent and the branch manager would take a look at sales lost at that store and decide if that’s something they should stock.”

The system also can help determine proper inventory levels in other ways. For example, suppose that same customer visited White Cap’s Dallas branch in search of a product not in stock at that location. But the counter clerk ran the request through the central order desk and discovered the product could be shipped from White Cap’s Portland, Ore., branch. In that case, the system can help each branch determine which products shipped from what location, so managers can decide if they should add products to their local inventory.

Don’t forget the customer
Whenever a distributor makes a change that affects turns, it’s critical to know how that change impacts customer service. What distributors perceive as a valuable service might cause administrative problems for customers. For instance, even though the typical White Cap branch has nearly a million-and-a-half dollars in inventory, sometimes it’s necessary to ship products from more than one location to fill a customer’s order.

A White Cap truck might deliver one item direct to the customer’s job site and ship two other packages via UPS.

“We’d pat ourselves on the back, saying we’ve done a great job because the customer got everything they needed when they needed it,” Etter says. The customer, however, has to deal with three separate delivery receipts and the accompanying paperwork.

“Now, we’re taking a look at those orders and trying to determine the best way to get it to a customer. Clearly, next-day is most important, but sometimes it’s important to the customer to consolidate those three shipments at one branch and deliver just one shipment to the customer,” he says.

Time for training
Companies that rely on technology as much as White Cap understand the importance of providing ongoing training for employees. Walz says White Cap uses a variety of methods to keep employees up to speed on technology tools.

The IT department regularly sends e-mail bulletins to Prism users notifying them of program updates and also developed comprehensive user manuals complete with screen shots describing common functions. The company also uses Web-based training programs.

“We don’t have to centralize training and bring people to a classroom. We can do it at their locations,” says Walz.

One particularly high-tech training tool enables employees to sit at their terminal during a conference call while someone from the IT department takes over their terminal and walks them through an onscreen process.

“We’ve done conference call training where each person accesses their own information while someone explains what buttons to push. We call it ‘shadow,’ where someone in IT can literally take over your session. When you’re talking to someone, you’re both looking at the same thing,” says Walz.

Before rolling out any new technology tool, Walz tests it first to make sure it’s a worthy investment. For instance, a few southern California branches are currently testing new handheld scanners, wireless merchandise carts and radio frequency technology to improve stocking procedures.

“When an order comes up, it will appear on the handheld device and logically walk the employee through the branch to pull the order. Our newest employee will be our best employee because they’ll learn the new technology and follow the system through the location instead of guessing,” Etter says.

This article originally appeared in the March 2003 issue of Progressive Distributor. Copyright 2003.