Success Stories

Prophet 21 Enables Distributor to Make Across-the-Board Business Improvements

Matthew Bell can't imagine living without real-time business information -- and doesn't understand how many distributors still manage to exist without up-to-the-minute sales, inventory, and profit and loss (P&L) reports.

"How can you survive without a real-time balance sheet?" asks the vice president of Appliance Replacement, Inc., a Pennsauken, NJ-based major appliance wholesaler. "With Prophet 21, I can access a P&L report anytime I want. I can see what's been sold in a product group this month or this morning."

Mr. Bell credits Prophet 21, Activant's Windows-based, SQL Server solution, with giving him the information -- and the power -- to make smarter, better informed business decisions. Better business decisions have led to increased profit margins, decreased stock levels, improved customer service, and perhaps most importantly, higher confidence and comfort levels for Mr. Bell and his employees.

"I always know exactly what and how we're doing," Mr. Bell contends. "All of that information is like a pacifier."

A Move that Made Sense

Prior to moving to Prophet 21, Appliance Replacement operated on software that wasn't distributor-friendly. "The inventory management was weak, we couldn't generate POs automatically, and worst of all, I couldn't access a lot of the information in the database without hiring a consultant," Mr. Bell remembers.

Prophet 21 provided Appliance Replacement with a distribution-centric solution, complete with strong inventory management tools. Mr. Bell attests that these tools -- coupled with easy-to-use reporting functionality -- enabled his staff to reduce stock levels by hundreds of thousands of dollars.

"Since we now track usage so easily, target order points are as close to the quantity we sell during the item's lead time period," Mr. Bell says. "It really helps us turn our inventory."

Average yearly turns have increased; prior to moving to Prophet 21, the average "A" or "B" item turned between 11 and 13 times per year. Turns now average 15 to 18 times each year -- and some product groups turn as many as 24 times per year.

"C" and "D" item stock levels have decreased dramatically. Each week, a Prophet 21-generated report listing all of the company's "D" items is automatically distributed to sales representatives. "We had a whole wall lined with appliances that were just sitting forever," Mr. Bell says. "Six months after we started sending that report to our reps, everything sold. We reinvested that $50,000 in better inventory."

Overall, within two years of going live on Prophet 21, Appliance Replacement's average inventory level decreased by about 40 percent, dropping from $1.6 million to $1 million. "Prophet 21 has absolutely improved our ability to manage our inventory," Mr. Bell says.

Increasing Margins

For years, Mr. Bell paid sales representatives revenue-based commissions because it was difficult -- if not impossible -- to create and maintain any other payment structure. As a result, sales representatives would often sell a product for far less than its potential. "They would almost give products away to sell more and earn more," Bell says.

Prophet 21 has simplified the task of managing commissions, and offers Mr. Bell flexibility in how he pays his representatives. Using Prophet 21, Mr. Bell created a commission structure based on profit margins. Consequently, margins have soared by 19 percent.

"As their margins increase, commission levels increase," Mr. Bell says. "They can monitor their own performance through the Commission module, and they're working really hard to keep levels up."

Does his staff enjoy the profit margin-based commission structure? "I think so," answers Mr. Bell. "They're certainly making more money -- for themselves and the company."

Innovative Thinking, Achieving Results

In addition to distributing major appliances to residential property management, senior care, and lodging businesses throughout the Mid-Atlantic area, Appliance Replacement manufactures cabinets and countertops in an on-site shop.

Prophet 21's Production Order functionality has greatly simplified processes in the shop, resulting in a 25 percent overhead reduction. Before Prophet 21, every project was started from scratch, beginning with workers compiling a list of components necessary for completion. Now, the solution handles many of the processes that were once handled manually.

Through Prophet 21 and Crystal Reports, Appliance Replacement has been able to transform keyed-in orders into machine code with no redundancy of effort. Shop workers can now focus on creating a better product instead of just getting the work done. "They're not running around, fishing for information -- and they're creating more," Mr. Bell says.

Less Reactive, More Proactive

Mr. Bell contends that Prophet 21 has helped improve morale across his company. "Because we're more efficient, we can manage more," he says. "We can listen to people's needs instead of just reacting to problems. We're more proactive."

The solution has also helped his staff develop better relationships with customers while offering them better service. Instead of putting customers on hold and going to file cabinets for information, Appliance Replacement employees can quickly offer customers whatever they need from their desks, in one phone call.

Plus, Prophet 21 has enabled Appliance Replacement staff to help customers better manage their own businesses. "We constantly generate reports for our customers, too," Mr. Bell says. One of the most commonly generated reports is one that details what a customer bought from Appliance Replacement over the course of a year. "It's really useful for when they have to create budgets," Bell says. Plus, it almost guarantees that the customer will return for another year.

Mr. Bell says that he has definitely seen a measurable difference in his business since moving to Prophet 21. "We've experienced a reduction in overtime, inventory, and an increase in time to manage our business," he says. "We do more with fewer people, and our people spend more time managing than reacting to problems. Morale is high. Prophet 21 contributes to a positive attitude at Appliance Replacement."

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