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Increasingly we are seeing distributors being pinched between spiraling shipping costs and rising customer expectations. Orders are getting smaller and customers are demanding faster and faster delivery methods, all without expecting to pay anything extra to cover the additional costs of the shipping. I thought it might be interesting to reach out to a market-leading regional distributor and discuss what they are doing to figure out this “last mile” transportation problem.


Werner Electric Supply Delivery Trucks and Drivers


I interviewed Rory Mueller, Logistics Manager at Werner Electric Supply to see how they took this increasingly complex problem and turned it into a market advantage and a key differentiator for doing business with them.

Who is Werner Electric Supply?

Werner Electric Supply is headquartered in Appleton, Wisconsin with one regional distribution center (DC) and 13 branches located in Wisconsin, upper Michigan and North Dakota. Their trucks deliver over 1,000 stops a day and currently are running about 40 courier vehicles for local deliveries. They supply electrical parts to the local industrial and contractor marketplace and describe themselves on their home page as “Werner Electric delivers on solution, supply and support to be our customer’s competitive advantage…“.


For me this statement describes their focus perfectly. Werner places the statement “our customer’s competitive advantage…” as the very first thing on their home page — not selling the cheapest or best electrical supplies, but providing their customers with a competitive advantage! Let’s look how they do just that.

Werner’s Transportation Marketplace

Werner is operating in a very hostile marketplace. They are under extreme pressure from online vendors like Amazon Business and many others, because customers can easily shop around online and find goods cheaper. Competitors are also springing up all over, since starting up a specialized distribution company is easier today than ever before using online services. Customers are expecting more and more out of their vendors and they now know they have many choices.


When I interviewed Rory, I asked him how Werner decided to react to this business challenge. His reply was very simple and very profound, “We went and talked to our customers.” In effect, they went looking across their customer base for problems that were pervasive and that had significant impact on their customers’s day-to-day business.

What Werner Discovered

Rory explained that Werner discovered that, for contractors and other electrical goods customers, carrying inventory is a real cost and a real pain — they always have loads of stuff in their trucks but it’s never the right stuff. Having to predict several days in advance what they need for each one of their active jobs is difficult and complicated. When their job priorities change, having the materials they need to be able to react is almost impossible, and customer delays generally ensue.


When I walked through these points with Rory they all sounded so familiar — inventory carrying costs, accurate forecasts, dealing with rapid changes in schedules — common problems to us supply chain guys, but just on a micro rather than a macro scale.

What Werner Did About Their Transportation Problem

Werner implemented a very aggressive logistics program:

  • Order today and we’ll deliver it to your job site tomorrow — before you get to work!
  • Order early enough today (and tell us you need it badly) and we’ll deliver it today if we can!
  • And, by the way, shipping is free!

The effect of this, as Rory described it, is that now their customers, mainly contractors and industrial electricians, don’t need to carry inventory! They just call Werner every day and tell them what they need tomorrow, and the goods are at their job site before they get to work! If they get halfway through the day and are short of something, they call back and usually get it the same day!

The Result

The result of all this innovation is that their customers are incredibly loyal. Not only have they adapted their business model to not carry inventory, they now expect the level of service that Werner offers! In other words, “Don’t try to sell to me unless you can match this level of service, because I will never go back to having to forecast and order my parts days in advance!


It’s important that I point out that this logistics program is not the only innovative thing Werner did. They continue to innovate in many other areas such as custom wire cutting, providing contractors with pre-cut-to-plan lengths of heavy wire, and are pushing more and more services personalized to their customers’ needs, all with the goal “to be our customer’s competitive advantage…


Werner Electric Supply has now become the dominant electrical parts distributor in their marketplace, and they continue to grow. They are a private company, so company financial figures are not public, but their beautiful new distribution center is evidence enough that they are doing very well. [ Watch video ]


Werner Electric Supply video

Finishing Thoughts

Analysts are saying that this change in the marketplace is permanent; customers will continue to demand and pay for smaller orders, delivered faster, and in a way that is personalized to their needs, but they will not pay for the increased cost of shipping. Top performers like Werner Electric Supply are becoming dominant in their marketplaces by listening to their customers and innovating, using logistics and other personalized value to provide a level of customer service that is impossible to compete with unless you are specialized, local and have a focus on service.


What do you think about the approach Werner took? How is your organization adapting to the new business model and today’s “last mile” challenge? Is there an opportunity to innovate in your marketplace like Werner did?

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Not that long ago, distribution networks happily and conveniently operated through strategically-placed distribution centers, delivering, say, a pallet a month through LTL (less-than-truckload) carriers. Things might have seemed complex at the time, but there was no real thought about what could possibly happen next.


Distributor being a courier


Now, many regional distribution centers (DCs) are being driven to try and take on the task of customer delivery themselves. Why? Because of higher-than-ever customer service expectations and the increasing cost of using commercial carriers.

How Do I Know if I’m Becoming a Courier?

What about you? Ask yourself…

  •   Am I being forced to deliver orders within the local area of my distribution center?
  •   Am I concerned about giving my top customers poor courier service because I lack the tools the big commercial carriers have?
  •   Am I able to tell when a delivery will be a problem before it becomes a customer disaster?

If you answered “Yes” to any of those questions, you are probably a distributor becoming a courier, and this white paper on How to Overcome Last Mile Deliver Challenges shows you what this new landscape looks like.

How to Overcome “Last Mile” Delivery Challenges

It’s no longer enough to simply deliver packages from Point A to Point B. Regional distributors are discovering that “Last Mile” delivery expectations are higher than ever, and competing with UPS or FedEx as a “courier” requires matching their capabilities. Here’s a look at today’s delivery landscape, and at some of the capabilities that distributors-becoming-couriers need to implement to keep up.

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I was recently interviewed by Modern Material Handling for the article Health Care Embraces E-commerce Trends. In the article, it is clear that supply chain practices in healthcare have come a long way in the past five to ten years. Historically, the margins in this specialized industry have compensated for lack of advanced supply chain capabilities. Now, though, the industry is no longer standing still due to the increasing pressures on margins, traceability and customer demands.


As customer demands create a convergence between healthcare and e-commerce, it is tempting to simply apply the latest e-commerce capabilities to this very different industry. However, lots of uncertainty exists in emerging trends as healthcare comes to grips with the regulatory requirements of DSCSA and UID within the US and global variants. In seeking out expertise to guide folks into the future, organizations will need to carefully evaluate their partners in the journey. Much like the era of Y2K panic, newly educated ‘experts’ may flood the market, based on limited experience and knowledge, to help companies cope with change. The most successful healthcare-focused organizations will start their journey early to create advanced supply chain capabilities before the need becomes critical — and will do so in a strong partnership with others in the industry.


Let me know your thoughts by posting in the comments below. Thank you!

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A new era of buyers has arrived, and they are focused on the customer experience. It’s not enough to simply deliver a product into a buyer’s hands. No matter the industry, today’s savvy consumers expect a seamless, superior experience that delivers on a company’s brand promise. They want faster service, higher value, and 100% fulfillment. They want to feel good during the buying process. And they want this across all channels wherever they touch the brand.


With that in mind, everything a company does from its messaging to the sales process to what occurs after the sale is part of the customer experience. If a company has deficiencies in any area, it could result in a customer having unmet expectations and a poor experience. If they are left unsatisfied, the company – and brand – could suffer detrimental effects.


At the heart of the customer experience is buying process and getting the product they want into their hands as quickly as possible. From a business perspective, this must be done promptly, efficiently, and with no error – and it must be done better than the competition.


To meet this goal and achieve a high level of customer satisfaction, you must have an efficient warehouse operation. A warehouse that has redundant processes, inventory and ordering inaccuracies, and outdated WMS software runs the risk of becoming noncompetitive and losing customers.


To overcome these challenges, you must choose the right warehouse management system solution that’s powerful and flexible enough to support the many, complex factors involved in warehousing, ranging from organization and movement to management and everything in between that’s necessary to keep your warehouse running smoothly.


What to Look for in a Warehouse Management System

When considering which warehouse management system is best for your business, look for one with proven performance and robust core capabilities. The following additional features will give your system more flexibility and added benefits:

  • Visual cues to accelerate warehouse tasks
  • Visual-on-voice technology
  • Collaboration with enterprise apps such as ERP and CRM
  • Bi-directional scalability to any business size and need
  • Intuitiveness and ease-of-use
  • Flexible workflows that can be modified by employees to fit the way they work
  • Expanded reach into supply chain functionality beyond the warehouse
  • Extended supply chain visibility beyond the warehouse
  • Secure access 24/7
  • On-premises and cloud deployment with quick onboarding options
  • Customer service and support


TECSYS’ Warehouse Management System Solutions are Revolutionary

Positioned within the “Visionary” quadrant of Gartner’s Magic Quadrant for Warehouse Management Systems for the last six consecutive reports, TECSYS has been at the forefront of developing and implementing some of the most innovative warehouse management system solutions for over thirty years.


No matter the industry, our robust solutions are designed to meet all the needs of our customers’ warehouses and employees as well as to help them meet customer expectations. All of this is done with core WMS capabilities as well as with advanced capabilities, unique features, and innovative technology that support warehouse complexities.


For our customers, this means they’ve chosen a powerful, proven WMS platform that delivers increased efficiencies and productivity, improved picking and order accuracy, reduced operating costs, and high levels of service that help them deliver on their promises to their customers.


Turn Your Warehouse into One of Your Most Valuable Assets. Contact TECSYS Today for More Information!

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Each year, Inbound Logistics researches the supply chain challenges of business logistics managers and measures those against the capabilities of technology providers across the industry to develop a list of the Top 100 Logistics IT Providers.


Inbound Logistics’ editors place value on choosing providers whose solutions are central to solving transportation, logistics, and supply chain challenges, and whose customer successes are well-documented.


TECSYS is honored to once again be included in this prestigious list, selected for its supply chain platform which is designed to flex to the demands of highly-regulated healthcare logistics ecosystems, omni-channel complex distribution landscapes, and tightly-run 3PL operations alike. As supply chains are gaining their foothold as strategic assets and competitive differentiators in increasingly globalized economies, we, as providers, should not underestimate how the data we synthesize is used to support informed decision-making that drives business performance objectives.


In a recent Inbound Logistics article on supply chain and logistics decision-making, the author noted that organizations sometimes “throttle their own strategies to fit their current systems. Once you have data, it’s easy to make the business case internally to make the strategic changes that are found in the data.


Modern supply chains are vastly intricate, relying on widgets and components manufactured all over the world, and distributing products to an equally complex network. This creates exposure to logistic disruptions at multiple inflection points — the more intricate the chain, the greater the risk of a kink. This means that to provide logistics solutions today, from planning to point-of-use, you cannot have a blind spot in your data-driven visibility.


In a shifting distribution management and warehouse management environment, we are proud to have been selected by Inbound Logistics for the ways we use data, our technology platform, and our integrated logistics and supply chain solutions.


See for the 2018 list.

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I recently wrote an article for Becker’s Hospital Review Health IT & CIO Report titled “Offloading IT Headaches to the Cloud is a Win for Healthcare”.


It is remarkable how far we have come in the last two years. If I would have written this article then, it might have been titled "Overcoming the Fear of Cloud in Healthcare", because not too long ago, the benefits enabled by cloud technology were also shrouded in fears over perceived security risks; concerns such as "Where’s my data?", "Can someone steal it?", "How do I know it is safe?". We have all heard and read the stories in the news. But clouds are secure (arguably even more secure than on-premise deployments) because they are deployed, monitored, and managed with security by design. And so, there has been a huge turnaround in acceptance and understanding of cloud technology, both with our customers and in the healthcare industry. Always cautious, the healthcare industry is now recognizing that cloud solutions are capable of meeting HIPAA compliancy and other regulatory parameters. To that end, TECSYS is working alongside healthcare professionals to usher in this adoption of cloud, and the benefits that come with it.


Cloud’s recent surge in adoption rates is a testament to this paradigm shift, the ushering-in of a new era of IT infrastructure. As cloud solutions continue to be adopted by healthcare, we will continue to see them evolve — from how records are stored to how imaging is shared, and everything in between. With better understanding and acceptance of cloud solutions comes the embracing of the impressive benefits of cloud, and in this Becker’s article, I take a look at how cloud helps healthcare professionals focus on healthcare matters!
Let me know your thoughts by posting in the comments below. Thank you!

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In the January-March 2018 issue of APICS magazine, APICS CEO Abe Eshkenazi contends that if supply chain leaders bring business success then that makes them business leaders. Mr. Eshkenazi goes on to state “organizations that consider their supply chains as strategic and competitive assets outperform the market”.


Indeed, superior supply chain performance does drive business success in very measurable ways.  How can supply chain justify and measure process improvement initiatives using a metric that finance can relate to?  As cash management is a top priority for finance, sharing the Cash Conversion Cycle (CCC) metric allows supply chain and finance to speak a common language when measuring business success.

The Metric That Finance and Supply Chain Can Agree On

Per Investopia, the CCC metric “measures how fast a company can convert cash on hand into inventory and accounts payable, through sales and accounts receivable, and then back into cash.”  Actually, the CCC is combined of three separate financial metrics:

  1. Days Inventory Outstanding (DIO); how long it takes to turn inventory into sales.
  2. Days Payable Outstanding (DPO); how long it takes to pay invoices from creditors, such as suppliers.
  3. Days Sales Outstanding (DSO); how long it takes to collect payment after a sale has been made.

All three metrics indicate how long an organization will be deprived of its cash – the lower the number of days, the better. So how can supply chain improve DIO, DPO and DSO?

Days Inventory Outstanding & Just-In-Time (JIT) Replenishment

JIT replenishment has the potential of releasing a ton of capital previously tied up in inventory because goods are received only when needed. With JIT, lead-time demand does not figure into your safety stock calculation (i.e. goods sold/consumed from the time the order is issued until the goods are received) because the system can project the rate of depletion, determine when safety thresholds would be impacted and then back date the replenishment order accordingly.


For example, a SKU with a 14 day lead time is projected to reach its safety threshold on May 10th therefore an order must be issued no later than April 26th.   Achieving JIT requires SKU level forecasting and inventory accuracy both of which fall under the domain of supply chain.

Days Payable Outstanding & the Perfect Purchase Order

Achieving the perfect purchase order at the lowest possible cost requires item data quality, automation, vendor engagement and efficient receiving. Quality item data will prevent costly errors – this includes up-to-date vendor pricing.  An automated procurement process allows for a continuous review of inventory levels to protect safety thresholds in support of JIT.  Furthermore the system should look for consolidation opportunities to reduce overall procurement costs.


With a truly integrated system, all the information relating to a vendor transaction is available in real-time to procurement, warehousing and finance. With the right tools, supply chain will transform this transactional data into performance metrics that help provide direction on potential optimization opportunities.

Days Sales Outstanding & the Perfect Customer Order

The fastest way to turn a sale into cash is to deliver in full and on time – error-free from start to finish. Again supply chain plays an important role by ensuring the right balance between monies invested in inventory and desired service levels.


Data accuracy plays an important role in shortening order cycle times. In fact, data errors are often the reason the wrong product/quantity was shipped.  Picking errors occur for a multitude of reasons; the wrong product in the right bin, a pack was picked instead of an each, the list goes on.

Aiming for the Same Goal

When you think about it, almost all supply chain processes affect either DIO, DPO or DSO in some way. At the end of the day, supply chain and finance both aim for business success – both can and should be considered business leaders.


I just read a blog post entitled How do you feel when someone mentions predictive analytics? Well, I feel like it’s a good thing. How about you?


One commenter replied that predictive analytics = forecasting and that it’s just a different label for the same thing. Well, true enough, given that the verb predict is synonymous with the verb forecast.


I submit to you two other synonyms: examine and analyze. An analysis of your historical demand will lead to a better understanding of the numbers. When one understands the elements that drove demand in the past then one can review these elements and assess their validity going forward. The result is a forecast achieved using both quantitative and qualitative methods. This is a very good thing!


That said, it is important to measure forecast accuracy both before and after human intervention. Measuring the impact of revisions allows the forecaster to spot bias. Bias exists when forecast accuracy is repeatedly and negatively affected by one or more individuals.


In practice, predictive analytics and forecasting should have the same meaning. Professional forecasters don’t blindly predict the future. Beyond looking for trends, they seek to understand the numbers. Nothing new here!  The big difference is that today’s forecaster is equipped with modern technology and fun stuff like graphical reporting. One thing I can tell you for sure is how forecasters feel about modern technology — pretty darn good thank you very much!

Seasonal variations in consumption occur for many reasons; summer, back to school, various holidays. In fact, most industries experience annually recurring spikes in demand — even healthcare as they prepare for the dreaded flu season. Furthermore, the duration of a season differs depending on geography and demographics.

Having recognized the existence of a seasonal pattern, one must anticipate its future effect on inventories. To understand seasonal differences in consumption, forecasters look at an item’s seasonal index. The calculation of an item’s seasonal index is quite simple. The first step is to calculate the average monthly demand for a given year. The second step is to divide the actual demand by the average demand. The result is the seasonal index.


A seasonal index of 1.2 indicates that 120% of average demand was consumed during that month. A seasonal index of .80 indicates that 80% of the average demand was consumed. Because seasons fluctuate, calculating the average seasonal index over a period of three years will provide a more accurate representation of a season’s impact on consumption.


The seasonal index helps buyers provide an uninterrupted flow of inventory without overbuying. Many buyers also temporarily adjust an item’s safety stock level as well to account for variations from one season to another. Sharing this information with suppliers allows them to maintain their service levels as well — nobody wants to be caught short during periods of peak demand.

There has been a lot of focus on optimizing the supply chain for order fulfillment.  The on-going efforts to perfect the ‘order to cash’ process have yielded great rewards.  But what about returns?  Automation has reduced the number of returns due to errors however the world must move from a linear to a more circular economy and this will impact the entire supply chain.


The notion of a circular economy is really quite wonderful.  Imagine an industry that produces no waste or pollution, and where products are designed for safe and non-intrusive disposal.  Imagine an industry where 100% of unconsumed or partly consumed products are returned for re-use.


Kudos to the Association of Battery Recyclers for their contribution to the circular economy.  From their website:  “The members of the association share a dedication to environmental and community responsibility.” Spent batteries are turned into lead metal, plastic and sodium sulfate, which are used to manufacture new lead batteries and other useful products.  Their website also states that lead batteries have a 99% recycle rate within most of North America – impressive!


With greater awareness and increasing environmental pressures from various stakeholders, more companies are incorporating green practices into their daily activities.  I believe distributors can play an important role in the circular economy by selecting products and suppliers that behave responsibly and by participating in the efforts to recycle and/or re-use the products that they sell.


Goods are coming down the supply chain – we’re pretty good at that.  Now it’s time to move stuff back up.  Distributors can take an active role in balancing the financial responsibility of making money with their responsibility to benefit society as a whole.   This must include their responsibility to preserving the environment by actively engaging management into environmental thinking.

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