By Ben Holtz
Diamondback Tactical has seen impressive growth over the past five years. Started as a one-man operation in 2001, the company has become one of the largest providers of tactical equipment and accessories to both the United States military as well as federal, state and local law enforcement special operations personnel.
Operating in the high-growth military equipment industry, revenues nearly doubled from approximately $20 million to $40 million from 2005 to 2006. In 2007, the company anticipates its revenues to reach $100 million. To continue to grow, Diamondback Tactical needed to secure refinancing. But that refinancing required that Diamondback upgrade to a new enterprise resource planning (ERP) system that would provide the foundation for this rapid growth. It was the perfect time for Diamondback Tactical to streamline its business processes with the ERP technology it required.
"Upgrading our ERP system was critical to the growth and performance of our business and was a prerequisite for refinancing," says Tom Sheets, CEO of Diamondback Tactical.
In mid-2005, Diamondback Tactical implemented its first ERP solution, Microsoft Dynamics AX 3.0 SP3. Providing the company with more than just the standard Dynamics AX functionality due to added multi-channel retail features, such as custom credit card modules and custom screens for ordering, the implementation was highly customized and resulted in technical and organizational issues. By having complex customizations, rather than straightforward out-of-the-box functionality, it was difficult for the IT team to make changes to the system as the company grew and its objectives evolved.
As the company continued to see double-digit revenue growth, it became imperative to map the business goals to the technology.
Facing the Challenge of Double-Digit Growth
A major element of Diamondback Tactical's growth plan was securing business refinancing. But closing that financing hinged upon an upgrade to Microsoft Dynamics AX 4.0 Service Pack 1 (SP1). By upgrading to this solution, Diamondback Tactical became one of the first manufacturing companies to upgrade to the product from Dynamics AX 3.0 and a leading example of how the latest Microsoft Dynamics AX technologies provide business value. But the update needed to be completed by January 2007 to close on its financing.
The challenges that the company faced to achieve this goal were significant. They included:
- Internal resource constraints — With limited IT resources responsible for tasks ranging from infrastructure and general IT support to the ERP project manager, the internal IT team was not properly equipped to help grow the business because it was stretched too thin.
- Lack of communication between departments — As a result of rapid growth, the organization was focused on day-to day-operations rather than forecasting for long-term growth. Better communication between departments such as Finance, Operations and Sales needed to be established in order for the company to work efficiently.
- Poor documentation of business processes — Diamondback Tactical had minimal documentation for end-to-end business processes prior to Dynamics AX 4.0 SP1. The organization was relying primarily on manual processes such as spreadsheets for inventory tracking, which were not an effective use of the company's resources and hindered its ability to track customer information and generate reports.
- Inability to reconcile costs of product manufacturing with outsourced manufacturing suppliers — In certain cases Diamondback Tactical serves as the middleman, purchasing raw materials it outsources for production that are then shipped back to Diamondback Tactical for distribution. As a result of receiving invoices based on labor and not product, Diamondback Tactical could not easily calculate the cost of production for products to ensure it had established profitable margins on these items.