Acting under the adage “work smarter, not harder” is how Direct Distribution, a West Bloomfield, Mich.–based distributor of Red Bull products, managed to grow from one route (delivered from a Jeep) in 2001 to four routes a day in just two years. Still, with 1,200 sales locations and the growing popularity of Red Bull products, Hal Schwartz and David and Chad Howard knew there was plenty of room for growth and a more efficient way to do it.
Schwartz and the Howards realized the value of being able to see into all of their business processes, but they were having difficulties finding a timely way to gain that visibility. At the beginning of 2004, drivers used paper-based route books to record information about sales and account details. Chad Howard explains, “We were handwriting our invoices, and account managers would have to fax invoices over to our main office, and then our main office would have to do manual data entry into our system.” Not only was this process time consuming, but analyzing the data was difficult. “Every time we wanted to generate any type of report or get some sales data, we’d have to go into the system and manually pull the numbers to create sales spreadsheets or a previous sales history,” says Howard. Though it was possible to “see” into field data, “it wasn’t accurate, and it took forever to get it and to update it constantly.”
While at a meeting with Red Bull, Direct Distribution was introduced to Centerville, Minn.–based Slipka-Deakman Associates, whose Mobile Distributor Service (MoDS) application has helped similar small distributors to automate manual processes and reporting systems.
According to Ken Deakman, “The secret to distributor profitability is to deliver more cases and collect more money. It’s a very simple process: deliver the boxes, collect the money. But,” he continues, “the challenge, from a small distributor standpoint, is that all the best information about collecting and delivering efficiently is at the customer site, and the challenge is how to get that info from the store back in a quantifiable way so they can do something with it.”
Three years ago, Ken Deakman and Don Slipka set out to solve this simple problem of data visibility. They created a service called MoDS, which replaces paper route books with info collected on handhelds and then seamlessly syncs that info (Slipka-Deakman formed a partnership with Intellisync from the very beginning) to a Web-based database that integrates it with a customer’s backend system. “What we created was an info pipeline that allowed [customers] to collect whatever info they wanted. Rather than us tell them, ‘You need to do this, you need to do that,’ we said, ‘What is it that you want to drive from that account back to headquarters?’”
To customers, MoDS is a very simple, flexible solution, and Deakman and Slipka spent quite a bit of time investigating distributor business processes so it would be nearly transparent for end users. Deakman actually rode around in trucks with drivers, took notes and asked questions. “We wanted to really drive this from a business requirements application, rather than a technology solution,” explains Slipka.
Direct Distribution couldn’t be happier. Using MoDS on HP iPAQs (Direct just upgraded from the h1945 to the rx3115), account managers capture real-time sales and marketing information at each stop. The handhelds provide specific information for each account manager, identify the route to run each day and provide specific information about each location, including inventory levels, past-due balances, previous sales and current promotions. At the end of the day, he tallies his data, and the MoDS software creates a summary report with sales breakdowns for each product. Finally, the managers cradle the handheld and sync the data into Direct Distributions’ QuickBooks via a Web site hosted by Slipka-Deakman.
“One thing I like about Direct Distribution,” says Deakman, “is that they appreciate that you can’t change what you can’t measure. And they’re very interested in tracking quantitative measurable items, and they spend a good deal of time on that.”
Chad Howard says that the solution “works just great. There’s a tab on the program called survey, and that allows us to record what is in an account, whether
we have a full shelf in the cooler or what type of
display we have. It gives us the ability to track our equipment, which is out in the field.” Howard explains that now he can generate sales reports in 60 seconds, where before it would take eight hours. He can also now equip the sales team with the tools they need in the field, allow account managers to visit more accounts on a regular basis and spend more meaningful face time. A MoDS feature, Chad explains, that is really useful to field reps is the profitability chart. “It shows a rep’s sales history per quarter, and it’ll multiply it by the retail price of Red Bull, so our account manager can say, ‘In the last three months, you guys have already generated $800 of profit from these two items.’ It allows us to communicate a lot better with our accounts.”
The only snag, according to Chad, is the durability of the iPAQs; he says, “I’m going through more than I would like to in terms of breakage. If I open a drawer here, it’s like a graveyard for handhelds. Durability is really an issue, but I guess sometimes that’s just the cost of doing business.”
There was very little training necessary for both the application and the handhelds. Chad spent some time on the phone with Deakman, had to pull some initial info from his system and send it along, and everything was pretty much up and running. According to Deakman, “The customer doesn’t exactly understand how it works, and we’re pleased with that. We learned early that small companies aren’t interested in technology. They want results, and the fact that they don’t know how it works is fine; they get reports and that works for them.”
And with no more manual data entry to do, more time can be spent doing things like collections. Direct has even added three new routes, expanding coverage by 75 percent without adding administrative staff—all boiling down to selling more cases and collecting more money. Or as Chad put it, “This makes us a more efficient company, and we really pride ourselves on being efficient.”