When business slows, the tendency for distributors and manufacturers is to go into a “bunker mentality” — eliminating expenses like travel and training, and even reducing the size of their team. The bunker mentality is all about cutting investments, working harder and asking your team to keep doing things the way they always have. Forget investing in an upgraded ERP or other process improvements to deliver better automated services.
However, I recently spoke with a unique distributor/manufacturer that chose to avoid the bunker mentality and instead invest in automation.
Rocket Industrial is an industrial packaging provider based in Wisconsin that has grown from a single location to become a coast-to-coast leader in the U.S. and Canada. They provide a unique set of value-added service and product solutions and chose to upgrade their ERP to better automate both the order entry and accounts receivable and payable processes.
The goal was to reduce the amount of time it took for their associates to enter orders and lower their days sales outstanding and improve cash flow. They invested in the following areas:
Upgrade Bolt-Ons to the Existing ERP
Rocket Industrial added modules to their existing ERP to be more cloud based (which came in very handy went everyone went home), improve system speed and product searchability. These upgrades also made their e-commerce platform faster and easier to place orders.
“We decided to be smart and add the right modules to our existing ERP to remove as many manual processes as possible. We put a plan together of how to stage each of these bolt-ons to manage the change successfully,” says Traci Leffel, director of finance.
Add Automation to Account Payables and Account Receivables
Getting paid on time is always a challenge and the disruptions from COVID-19 have made getting paid in the best possible time frame difficult. Bringing automated solutions to both accounts payable and receivable can help to free up your team to work with your customers and suppliers more effectively.
“We chose to automate our AR and AP to cut down on paper checks and manual processes. Every time you write or receive a manual payment, you are losing productivity. We wanted to have our teams working with our customers and suppliers to grow together versus spending time entering and processing payments,” says Leffel.
Making the right strategic choices for your business is critical in the current climate. For Rocket Industrial, the investment delivered a rather profitable equation: Less time spent on manual orders + improved cash flow = $$$ and a happy CFO.
My first distribution mentor once gave me this golden rule to follow: If the CFO is happy, it improves the chances of happiness for all of us. I’ve found this rule is always accurate.
Gunderson is vice president of analytics and e-business at MDM. He has held senior distribution leadership roles in analytics, marketing, e-business, category management, pricing and sales over a 20-year career across multiple distribution product sectors. Reach him at john@mdm.com.
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