Progressive Distributor - The WOW factor

The WOW factor

D&D Tool & Supply technology impresses customers and makes them more profitable.

by Rich Vurva

Changing software providers every two years equals disaster for most distributors. During the mid-1990s, D&D Tool & Supply began investing in technology to gain a competitive edge in the marketplace. In its search for the right software, the company found itself jumping from vendor to vendor.

As the turn of the century approached, company owner Georgia Dutro wanted D&D to achieve three key goals: increase operational efficiency, customers’ profitability and key vendors’ market share. So, Dutro and her management team established a department of communication and technology and named company controller Glenn P. Murray director of the new department.

The first item of business was not new at all: Switch to a new software provider, the fourth in six years. It seemed crazy at the time, but Murray saw the move as the right one.

“Obviously, you don’t want to switch from a major software investment in such a short period of time. But we were looking to strategically differentiate the business and be more efficient with technology,” says Murray.

D&D Tool & Supply is headquartered in San Diego and operates six additional branches that expand the company’s reach as far south as Tijuana, Mexico, north to Los Angeles and east to Barstow, Calif. It began as a saw sharpening operation in 1947 and slowly evolved into a full-line distributor of cutting tools and industrial supplies with annual sales of about $40 million.

Despite its long history and solid reputation for providing applications expertise and a wide range of products, the company needed a way to differentiate itself from other West Coast distributors. It sought a “wow” factor to capture customer attention while also streamlining its own operations. Cutting costs out of the supply chain was key to staying profitable as a distributor.

In 2001, D&D picked Intuit Eclipse to help it achieve the results it needed. Additional investments in new Windows Network and Microsoft Exchange Servers improved data sharing between branches and field salespeople. In the past three years, D&D invested more than $500,000 in technology upgrades. Dennis Shields, vice president of contracts, says the money was well spent because it gave the company the competitive edge it desired.

“We compete with a lot of good companies. We’re always looking for a way to get an edge so we can be more competitive and offer more to our customers,” he says. “We try to use our technology to help the customer make transactions more automatic so our people can spend more time with them working on improving their processes.”

A star is born
D&D uses the term Star Technology to market its technological capabilities to customers. Its services include:

D&D Star Online. Customers place orders online, check accounts payable status, research back orders and communicate with D&D employees. About 150 customers regularly use the online order entry system, generating more than $1 million in annual sales. The system is faster for customers and frees D&D personnel for more important tasks.

D&D Star PDA. Using personal digital assistant (PDA) technology, D&D helps customers organize and manage inventory. End-users scan items they want to order, sync to D&D’s Eclipse system and place orders themselves, or D&D employees will manage the customer’s inventory for them.

D&D Star Intelligent. Point-of-use dispense systems offer secure inventory at multiple remote locations, and provide security and custom reporting that ties into the customer’s business system.

Marketing materials describing Star Technology emphasize how the technologies help D&D Tool operate more efficiently to provide better customer service.

“When we approach a prospect that requires production assistance, we can say we’re the company that has all of these wow factor technologies, and we can improve production so you can be more profitable. Price isn’t the issue; your costs will be far lower if we increase your productivity,” Murray says.

After placing an order online or by phone, customers immediately receive a fax or e-mail notification confirming the order. On targeted accounts, the system also automatically notifies D&D salespeople of the order to keep them in the communications loop.

Some improvements are unseen by customers. For example, salespeople and D&D product specialists (known as “The Experts”) use cell phone text messaging technology to stay in touch. The company intranet hosts important supplier information, Web site links, customizable .pdf documents and instruction manuals for new employees, marketing calendars and sales forms, all with remote access.

A new voice over Internet protocol (VOIP) phone system will soon improve branch communications, allowing remote users to access e-mails, voice mails and faxes when out of the office.

A Windows Network Server and Microsoft Exchange Server improved data storage capacity and information exchange between branches. From any remote location, users can send and receive e-mails; they can also gain entry to contact databases and scheduling software.

“As a distributor, we get beat up on product price every single day. It’s like managing costs by counting paper clips. Technology can make us more efficient on the simple stuff, so customers can use our people to help them improve their processes,” says Shields.

Contract customers who place large orders on a regular basis can submit a Microsoft Excel spreadsheet with the items they need, and D&D uploads the order into its order entry system.

“In the past, we had to spend weekends and long weekday hours entering each order. Now, we save untold man hours of data entry by just uploading an Excel file using Eclipse,” says Shields.

Supplying the military
Its contract to provide MRO supplies to the military demonstrates how embracing technology helped D&D land and retain a large customer account.

The company manages about 2,000 supplies at the nation’s busiest military base, Camp Pendleton, home to the First Marine Expeditionary Force, the 1st Marine Division and 1st Force Service Support Group. It stocks supplies such as lubricants, hand tools, power tools and other items in store rooms at Camp Pendleton on consignment, meaning the military doesn’t pay for them until they’re checked out of inventory.

D&D tracks the inventory using hand-held, personal digital assistant (PDA) technology.

“The system automatically tracks what we sent there, anything that was returned and, when we synchronize the PDA, it automatically creates the billing for the items that were used. There’s no manual data entry,” says Murray.

Before acquiring the technology, Murray estimates D&D spent up to 10 hours at each consignment account performing manual inventory counts and reconciling physical inventory to invoices.

“If we didn’t have this technology, we would not have acquired this customer,” says Murray.

Pleased with D&D’s ability to manage the consigned inventory program, the military has placed other orders with D&D.

“We acquired the customer with the technology, we helped the customer improve because their accountability is better, and we acquired more business because we were the best vendor for the job,” says Murray.

Because of a desire to stay abreast of the latest technology, D&D Tool & Supply obtained the operational efficiencies and wow factor it was looking for. Its new, technology-focused department set the path and now D&D can better meet its goals of increasing customer profit and vendor market share.

By striving to differentiate itself from competitors, D&D Tool & Supply became an altogether different organization that wows customers and improves their profitability at the same time.