A distributor executes a new technology, and the processes exceed customer demands and return on investment.
A full line distributor of disposable dental and medical supplies (for 300 leading medical supply manufacturers) and its sister company (who manufactures medical kits) were simultaneously experiencing rapid growth and changing requirements as a result of entering new markets. Their outdated system had become limited and difficult to use. The old business application failed to support the new and increasingly complex business requirements:
- Manufacturer rebate pricing and chargebacks
- Demand forecasting and replenishment planning for its network of 5 warehouses
- True discrete manufacturing and kitting
- Lot control and full traceability
- Multiple unit of measure support
- Intercompany customer/supplier relationships
Over time, they had cobbled together customizations, 3rd party point solutions, and manual processes in an attempt to fill the gaps. The result was inefficient, and error prone processes and decision making tools were growing more unmanageable with the rapid growth. This began causing undesirable results:
- Missed chargeback claims and margin erosion
- Excess inventory in order to meet customer service levels
- Scheduling and tracking of all manufacturing in Excel spreadsheets
- Manual paper based lot tracking records of manufactured kits
- Manual unit of measure conversions
Management realized their strategy of continued growth and expansion into its new markets necessitated a solution, but they were unsure if they had the internal business process and ERP application expertise to craft the best approach.
KnowledgePath came highly recommended by a trusted, mutual acquaintance and business owner in the same industry who had successfully used us in the past for a similar challenge. We met with the key executives and recommended a Business Enterprise Review to determine precisely where the problems were and ultimately the best approach to a solution. After a series of interviews and business process reviews, KnowledgePath recommended a Software Selection project to replace their existing application with the best technology to support their requirements.
Through implementation of our GrowthTrack™ methodology, KnowledgePath assisted the client in choosing a new, modern ERP system that provided a higher level of integrated functionality, automation, and collaboration throughout the organization. We also helped them negotiate a favorable license contract and develop a well thought out implementation plan and statement of work. Although not yet implemented, the new software is expected to significantly streamline our client’s processes, as well as reduce work-arounds, manual transactions, and errors while providing an excellent return on investment. Our client can expect to reduce their inventory by approximately 15% – 20% in the first year which will justify the total cost alone. The new forecasting tools function across all warehouses. Low stock and past due delivery alerts will help them continually meet customer demands. In addition, they will have a true manufacturing and kitting application that will provide complete lot traceability down to the kit component level. Price realization should also improve through better price and rebate control.
The client found so much value in KnowledgePath’s expertise and understanding of their business processes and opportunities for improvement that they engaged us to serve as their Internal Project Manager for the implementation project.