OUTWATER PLASTICS INDUSTRIES, INC.
Chip Kessler knows plastics. As president of Outwater Plastics Industries, Inc., Wood Ridge, N.J., he has witnessed his family-owned company expand from one room to a 200,000 square foot warehouse and industrial distributorship.
Servicing 400 orders every day, with 70,000 active customers in the company's data base, Outwater Plastics is one of the most innovative and successful plastic distributors in the Northeast region of the United States.
Carrying an eclectic mix of merchandise, Kessler and his father, Moe, Outwater's founder, have specialized in supplying large quantities of small orders of plastic goods to a diverse assortment of customers for more than 22 years. Selling primarily to small Original Equipment Manufacturers (OEM's), Outwater has built its business on dependability.
Display materials, decorative moldings, price tags, plastic clips, promotional items -- if it's plastic, it's listed in Outwater's 600-page catalogue. If it's not listed, Outwater can usually find it. One day turnaround is the norm. Successful inventory control is the key to their business.
"Our business is based on a full-catalogue inventory," Kessler explained. "It's our winning formula. We operate differently than other distributors because we prefer to be fully stocked. Our philosophy is rooted in the belief that the business with stock gets the order. We may not be the cheapest, but we always have stock. Even in difficult economic times customers don't want to wait."
TIMING, TURNAROUND AND TURNOVER
As much as Chip Kessler knows plastics, until recently what he didn't know was computers. Enter Munics Information Systems, Inc. With an expanding business, high volume sales, the need to carry a high level of catalogue inventory, rapid turnover, and a need to have a customer's credit history readily available at the point of sale, Kessler knew he had to learn fast. "Munics brought a "can do" attitude to our business," Kessler explained. "We liked our paperwork system. We didn't want to adjust to a different way of doing business. Munics adapted its software and systems to our business instead of having to adapt our business to their software and systems."
"Munics listened to our needs and was flexible," Kessler continued. "They helped turn Outwater from a small family-owned business into an efficient, successful innovator in the plastics distribution industry. Munics has played a large role in our growth."
An earlier attempt at computerization had proven less successful. Because Outwater's function, like many other wholesale distributors, had changed dramatically from moving merchandise to being the principle conduit for the exchange of information between its customers and manufacturers, the ability to respond quickly, accurately and efficiently to widely diverse customers with multiple information needs was essential.
Outwater's inability to adapt to its rapid growth almost caused its demise. The business was growing so rapidly that monthly invoices were often delayed for weeks. Orders and shipping backed up and had to be processed by hand. Merchandise often sat on shelves. New goods remained uncatalogued. The company lacked an integrated customer data base, so sales information had to be written up by hand with each order. And, with a lack of immediate credit information, Outwater often found itself shipping goods to customers whose accounts were overdue or unpaid.
Something had to change.
Kessler had initially believed that streamlining the accounting functions would solve the paperwork problem. Over the next three years, as the computerization progressed, every function of the business would come on line. NEXT GENERATION Software for Distributors not only made the Business more efficient, the system became the business.
* The ability to check a customer's credit history as an order was placed, thus enabling the company to assign or divert merchandise to customers with good credit histories.
* The development of a customer data base which allowed recording of past orders as well as personalized preferences for goods or suppliers.
* Instantaneous inventory control because of the "every catalogue item in stock" strategy.
The ultimate goal - as in any business - was a desire to maximize cash flow. "We adapted our paperwork in stages," Kessler explained. "Accounting first, sales second, and purchasing third. NEXT GENERATION Software for Distributors became a sort of "mission control" for managing the exceptionally diverse transactions handled by Outwater on a daily basis. From his desk in a cluttered office in the middle of the bustling warehouse, Kessler can monitor every aspect of Outwater's business at any given moment. The system is updated instantly.
For Outwater, NEXT GENERATION's technology and its unique ability to price goods down to the "per each" item, for each customer, was essential. Manufacturers providing goods to Outwater have wide variations in the way goods are priced. Thus, one of the key features of the Munics software most critical to Outwater was the "switch settings" built into the software which enable the system to instantaneously and continuously, update all prices and records as changes occur. (i.e. real time accounting and seamless integration of data.)
With all the information available, and updated instantaneously and continuously, Ouwater's customer service staff rarely utter the words, "I'll call you back." More efficient, automated business procedures have lowered overhead and increased productivity and profitability. Better inventory management and higher fill rates means more responsive customer service. Better information management has also resulted in more responsive customer service. Ultimately, the result has been a higher return on investment for the company.
A SEAMLESS FLOW OF INFORMATION
Kessler credited his sales department with developing the order entry /customer service aspect of the business. Prior to making the NEXT GENERATION commitment for the sales department there had been no personal connection with the customers. Outwater would send out a new catalogue, wait for customers to call and its 25 person central sales force would record the orders as they were called in. There was no customer base, with calls forwarded into a central pool. Whomever was free would take the call, with information recorded anew each time an order was placed.
As often as not the order would be scratched out on a bit of paper, given to a clerk who would type the order, and a four part shipping ticket would be distributed to four independent units-- order entry, bookkeeping, warehouse and shipping. Each time a customer called, the information was recorded anew.
NEXT GENERATION changed the sales department from order takers into an integrated marketing team. A customer data base was created initially with routine demographic data including the name of company, address, telephone numbers, and the name of the buyer. A record of orders and credit history soon became part of each file. A "notes" field was added so that sales reps could enter buying preferences or specialized needs. The streamlined sales department became the information hub of the business. Linked to both accounting and shipping, any customer order could be checked instantly. In addition, with Outwater becoming a supply line for manufacturers with overruns or excess products, customers with a history of purchasing those products could be informed of any availability.
"We work both sides of the distribution spectrum now," Kessler said. "It's to our advantage to be able to move merchandise quickly. When a manufacturer contacts us to help sell their goods, we simply list it in our catalogue, or we call up our data base to see who might need it. Everyone benefits because of our efficiencies." FLATTENED HIERARCHY Outwater's adaptation of Munics' NEXT GENERATION software and systems in its warehouse and "back office" operations yielded an unexpected benefit for the company: enhanced employee involvement in the business which in turn translated into lower turnover and increased staff loyalty.
Kessler explained that the warehouse is divided into five separate shipping departments: freight -size merchandise, decorative molding, extrusion, injection molded parts and miscellaneous hardware. These groups are then sub-divided into products. The result is a large degree of autonomy within the groups. Employees on the docks who load the goods, process the shipping information directly into the computer. When an order is outputted from the computer, all the information is converted to bar codes. By the time it is transmitted to the warehouse, the shipping clerk reads the order, pulls, packages and loads the merchandise, inputs the order into the system, scans the bar code for delivering information, and within a few hours the goods are on their way to the customer. "I was initially concerned that our warehouse employees would resist adapting to a sophisticated computer system," Kessler said. "This part of our staff generally consists of high school graduates and others whose educations are limited. We discovered that you don't have to be an Einstein to use the system."
Virtually every component of Outwater Plastics is linked.
The entire employee base is computer literate, from the management team to the shipping clerks. Eighty terminals are scattered through the operation from the executive offices to the warehouse, sales department and the shipping platform. At any given moment, anyone in the operation can call up any information to check an order, service a customer and keep the inventory coming in and moving out.
Chip Kessler estimates that his business has grown roughly 12% for the past three years. "We could not have grown as rapidly and as efficiently without Munics," said Kessler. Cash flow is everything. We know our customer's credit standing the minute they call in an order. We know our inventory. At any given moment, we know what is coming in and what is going out. Munics' technology allowed us to streamline our business to meet our specific needs so that our customers can meet theirs.
"Quite simply, Munics helped us build our business."