Cut through the paper! (page 3)

-- Logistics Management, 1/1/2006

Page 3 of 3- Back at the home office, the software situation was becoming more and more problematic. There was no common data repository where management and operations could view information from the field. Inventory controls, moreover, were hampered by limited visibility into the progress and location of orders and shipments. Finally, inadequate landed-cost and report-creation tools made it difficult to evaluate customer profitability.

"We just couldn't get good data out of the old system," McLennan says. "It was a heavily modified package originally designed for a manufacturer, not an importer, so it had never really fit our business model. For example, the foreign-currency module, which was critical for our work, was a bolt-on package," he observes. "We were dealing with a jury-rigged system, and our own sales reports were not reliable."

All of this played out against the backdrop of a labor-intensive operation. The traditional remedy for computer system problems—adding to the back-office headcount—was no longer acceptable.

While looking for a product that could address both its import and its general business needs, Liberty Richter investigated about a dozen different software packages. But the stumbling block continued to be the currency module, which almost invariably had to be purchased separately.

The importer finally zeroed in on Toronto-based Blinco Systems Inc., a software developer that offered a global commercial management product called 3rdwave GCM.

"This package was fully integrated," says McLennan. "Its traffic module gave us much greater visibility in purchasing as well as knowledge of where our containers were throughout the cargo shipment process, a functionality we never had before." The currency and traffic modules were the deciding factors in the company's decision to purchase the package, he adds.

Performance Dashboard

Essentially, 3rdwave GCM coordinates all back-office activities, including purchasing, inbound logistics, shipment tracking, inventory control, and other information systems, with the front-office disciplines of customer service, marketing and sales, order entry, finance, and general business management.

The software's "performance dashboard" provides Liberty Richter's executive team with the ability to review in real time the organization's overall performance and to adjust business management and operational strategies as needed.

Implementation of the system took 18 months, McLennan reports, largely because it required retraining a staff that had used the previous system for 12 years.

Since installing the program, the importer has achieved numerous improvements, including:

• Reducing inventory by 25 percent
• Increasing inventory turns from 4.75 to 5.8 per year
• A 15 percent decline in annual IT spending
• Doubling of sales without having to increase back-office headcount.

McLennan anticipates that the software will help his company achieve even greater improvements in the near future. He expects to cut U.S. inventories by another 10 to 15 percent over the next year, and says the company is on target to achieve 10 inventory turns annually within another two to three years.

The software's ability to collect import information and combine it with financial data to create analytical reports has convinced McLennan that it was a worthwhile investment. "With this system, all our reports now tie in," he says. "We can generate income statements by brand and even break out profitability by product within a given brand. Most importantly for an importer, we now have immediate access to what our needs are going forward, so we can modify plans accordingly."

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