News

Distributor Sees Immediate Return on Investment

YARDLEY, PA, April 6, 2005 - Dan Cornish wasn't surprised when a Prophet 21 Application Consultant looked at E.F. Bailey's processes and suggested ways to maximize the company's use of its Prophet 21 solution.

What did surprise Cornish, general and operations manager at E.F. Bailey Co., was the speed at which the company realized benefits from the engagement: "We saw a return on our investment almost as soon as the consultant left. It was amazing."

Just two and a half months after meeting with the consultant, Cornish saw accounts receivable (AR) days drop by 31 percent and profit points increase by 1.5 percent, and he expects overall inventory value to drop by about 10 percent. "Every improvement we've made is the result of working with the consultant to find better ways to do things," Cornish said.

One of Prophet 21's many Professional Services offerings, Application Consulting helps distributors streamline daily operations by providing insight into how they can best use their solutions. Distribution experts, consultants can offer unique insight into the best ways to handle processes.

"Our consultants know what makes and breaks a distributor's business, and can offer advice that will put him on the right track," said Chuck Boyle, Prophet 21 president and CEO. "Hundreds of our customers have benefited from their advice."

How it Happened

Prior to the Application Consultant's visit, maintaining manufacturer price updates were difficult for E.F. Bailey employees simply because they didn't understand the most efficient ways to import information into their solution. The Application Consultant worked with employees to understand their processes, and suggested ways they could get the data into their solution most efficiently. Thanks to his suggestions and process improvements, E.F. Bailey employees automatically import prices as soon as they receive them, instead of waiting weeks or months. And, best of all, the profit exception reports - once four pages long on an almost daily basis - now show two or three line items.

"We're happy that margins have increased by one-and-a-half percent," Cornish said. "But we expect even bigger returns in the long run."

The Application Consultant also worked with purchasing and warehouse staff to improve E.F. Bailey's stock classification structure. "We didn't have a clear vision of how we needed to handle this before," Cornish said. The consultant helped them reclassify slow- and fast-moving items, and determine purchase points for a good portion of the company's best-selling SKUs. "We learned to buy a year's worth of something if it only costs a few dollars," he said. "Otherwise, it's not worth someone's time to cut a PO every two weeks." Cornish estimated that improvements to inventory management practices should save the company about 10 percent annually.

The consultant also explained the impact of outstanding receivables on the company's bottom line. As a result, employees worked with the consultant to develop processes that ensure employees intervene when an account reaches a certain number of days outstanding. "Now that we know how serious it is, we react much more quickly," he said. Thanks to quicker reaction times and a process that helps deter outstanding customer debt, average AR days have dropped about 31 percent.

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