Networking and Analysis Having touched on technologies that optimize core service and other customer-oriented functions, it’s important to also focus on a number of other systems that dealers have deployed one step back from customers that can deliver significant returns.
For example, Costa Mesa, Calif.–based White Cap Construction Supply, a $495 million company with 71 locations that recently was acquired by The Home Depot, internally developed inventory “dashboards,” or graphical computer-based analysis tools, to analyze inventory activity and requirements for fulfilling customer demand. It does so by pulling data from large systems called data warehouses. “It gives us the ability to look at that day’s inventory profile so it’ll show us inventory amounts, inventory turns, what’s moving slow, and what’s excess,” says White Cap CFO Brian Etter.
In the past, business managers needed to wade through reports to cull the same information they can now get in visual formats. The business impact: inventory turns have increased from four to almost five times in the past 18 months. Etter noted, however, that that increased flow of inventory can’t entirely be attributed to the inventory dashboards; the company’s powerful growth—including through acquisitions—is also a key factor in greater inventory turns.
In other areas, several companies are using radio frequency (RF) technology to let employees walk around inventory areas, loading docks, and warehouses and capture product information that is relayed by radio back to business applications such as inventory systems or databases. Clinton, Okla.–based Elk Supply Co., a 130-employee company that operates 13 Ace Home Centers, is currently using RF technology and expects it to play a major role in future merchandising strategy and execution. The company is using RF to ensure they are purchasing the right products from the right vendors based on selling activity in the store. “RF helps us maintain those [product] sets. Once we pick the product sets, we need a way to be in front of the product creating labels, making sure we have correct pricing while we’re looking at a product,” explains Jesse Owsley, Elk Supply’s IT manager.
Specific information being captured with RF terminals includes quantity, pricing, and product numbers. Once the information has been recorded, it’s sent to the company’s inventory and retail management system. “Our primary goal relative to the RF terminals is to control merchandising, control pricing, and control the product on the shelf to make sure we have the right assortment and make sure the merchandise is priced and presented properly,” Owsley says.
Others such as Curtis Lumber are taking advantage of advanced networking technologies to lower their costs of doing business across multiple locations. Curtis has installed connectivity based on virtual private network (VPN) technology, which creates a secure “tunnel” inside another network such as the Internet, ensuring performance and security of data within that tunnel. VPNs can overcome the need to have dedicated lines leased from phone companies to carry data traffic.
Curtis Lumber says the cost of VPN connectivity in some cases is one-third the cost of its previous leased lines, which were based on technology known as frame relay. Stores used to pay $670 per month for frame relay and are now paying $219 for VPN services, Walker says. They are also getting more available capacity, or bandwidth, to send and receive data.
Hancock Lumber is planning a major initiative this year that will optimize the efficiency of its fleet of delivery trucks. Hancock recently rolled out a centralized dispatch/shipping management system. Prior to using that system, Hancock’s 10 lumberyards served as their own distribution centers, handling orders and shipping autonomously. With the dispatch system, Hancock will centrally manage its 100 trucks and determine how inventory gets from 10 different locations to customers using cost-effective, optimized routes. “The system is looking at all orders, where they’re going, what they’re comprised of, and matching that up with the most efficient plan for which location we should ship from, who’s got inventory, and the right size truck that’s available for each load,” Kevin Hancock says.
These projects typify much of the technology implementations going on among lumber and building materials companies: They help make internal operations run better but also deliver meaningful benefits to customers and help keep smaller companies competitive with the big boys. —Tom Smith is an Amherst, N.Y.–based freelance business writer.
