Outgrowing home grown

This building materials distributor transitioned to a new ERP system after outgrowing its in-house solution

As one of the largest distributors of building materials in the United States, Savannah, Ga.-based Dixie Plywood has 10 distribution centers throughout the Southeast. The company has a tradition of believing in honesty and respect, long-term relationships, and open communication.

To help manage day-to-day business operations, Dixie Plywood’s in-house IT team built its own enterprise resource planning (ERP) system. After years of growth, the legacy system was unable to maintain the level of customer service and communication that remains deep-rooted throughout the organization. The homegrown character-based, multi-key file structure was outdated and no longer accommodated the business needs of the company or, more importantly, its customers. The sales team did not have access to real-time inventory information, leading to prolonged order fulfillment and confusion among customers.

“It is vital our employees have accurate, timely information to fulfill orders and manage the inventory,” says Bobby Awtrey, director of information technology. “Our customers are our business and our goal is to provide them with the best service and products.”

Another challenge with the legacy system was closing the financials each month. A laborious two-week process kept managers waiting to receive out of date information. In addition, reports had to be mailed from each location to ensure a secure delivery, further delaying the financial close.

New employees found it difficult to learn the ERP system. Senior employees passed along their knowledge, but several capabilities were underutilized because they were functions not routinely used by all employees. These and other factors led Dixie Plywood to initiate an RFP process to modernize the organization’s ERP. Specifically, the company sought a feature-rich, flexible solution to address current business needs, while providing a path for additional functionality as the business evolved.

After an extensive search and review of several vendors, including site visits and in-depth, side-by-side comparisons, Dixie Plywood ultimately selected Infor ERP SX.enterprise. The solution was chosen for its ability to automate control across core materials management, financial transactions, and sales operations. The company now had a comprehensive view of the factors impacting customer service, inventory levels, productivity and profitability.

Going live
In February 2004, Dixie Plywood’s first distribution center went live on the new ERP system. The remaining nine distribution centers, including an export center based in Miami, were live by November of that same year.

Almost immediately, the company saw dramatic increases in employee productivity. For example, sales representatives could make more informed decisions about a customer’s specific needs based on a comprehensive view of the account activity, leading to more closed sales and satisfied customers. In addition, the new system enhanced the order entry process and improved order accuracy. With pricing handled over the phone, SX.enterprise allowed sales reps to view accurate information on inventory levels, bundled packages and pre-pricing options.

Customer service vastly improved throughout the organization. Salespeople were better able to handle questions immediately by utilizing the extensive inquiry screens that provide real-time customer information such as order status and product availability. Because of the improved data quality, employees knew they could trust the information provided to them.

Able to view customer trends and buying history, sales reps can now provide value-added services to customers by identifying shifts in consumer demand. Awtrey explains, “If a company orders 1,000 3x5 plywood sheets, we are able to suggest the correct number of wood screws, even suggesting the same brand the company purchased the last time they placed an order for plywood. Proactively managing these types of requests has increased customer satisfaction and sales. Likewise, Dixie Plywood’s customer response times decreased, while order accuracy increased.”

In addition, Dixie Plywood is now able to effectively and efficiently track product sales and inventory replenishment. The new ERP system increased warehouse operations visibility and control, leading to reduced cycle times and a more optimized inventory mix. This centralization of information also led to more accurate product information, lower inventory costs and improved turns.

“With the volumes of SKUs and transactions that we process daily, it is imperative that sales has quality information at their fingertips. Now, information can be accessed 24 hours a day, seven days a week, from the office or on the road, in a secure environment,” Awtrey says. “We are able to increase inventory turns, pursue strategies for continuous cost reduction and continue to stay true to Dixie Plywood’s customer service mission.”

E-commerce benefits
Electronic data interchange (EDI) and electronic funds transfer (EFT) capabilities also benefit customers. By utilizing an e-commerce system, Dixie Plywood substantially increased its accounts receivable. The enhanced communication between customers and sales fosters a long-lasting and open relationship.

In the future, Dixie Plywood plans to offer a Web portal, placing control in customers’ hands by allowing them to view inventory levels, check order status, and examine their accounts payable.

The company experienced a dramatic reduction in completion time and improvements in data quality of its financial reporting process. Daily summaries of key performance indicators are now generated to reflect Dixie Plywood’s monthly, quarterly and annual sales in a graphical electronic dashboard. The simplified reporting process freed resources throughout the organization by extending their roles to focus more on strategic responsibilities. Where a report previously took an average of two to three weeks to complete, it is now available within two days of the month’s close. A Web interface with enhanced security provides managers and executives instant access to the completed report, rather than waiting on the reports to arrive via mail. The enhanced visibility across the operations and ability to drill down to a specific distribution center’s performance means managers are better able to control potential financial challenges before they escalate. Plus, the new paperless method has reduced costs and increased time savings, improving employee workflow and productivity.

“Not only is the improved reporting valuable to Dixie Plywood employees, but our customers often call us to provide reports on their individual purchases,” says Awtrey. “We probably provide more information than is actually necessary, just because it is that easy to supply.”

Employee training times also decreased with the new ERP system. The intuitive nature of the solution allows employees to promptly pick up the process and increase their productivity. Because the system is so intuitive, employees quickly learn how to use the solution and can now spend more time concentrating on new sales.

This article originally appeared in the November/December 2007 issue of Progressive Distributor. Copyright 2007.

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