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.
The Right Advisor Makes All the Difference
Similar to many organizations, Diamondback Tactical had bad experiences working with systems integrators: Its business objectives were always overlooked in favor of a rapid technology deployment. As a result of this, Diamondback Tactical was hesitant to work with another consultant, since a previous ERP implementation was impeding its ability to successfully grow the business and work effectively across the organization.
"As a supplier of a diverse and expanding array of products and services in a high-growth market, our future competitive advantage will be closely linked to how effectively we can scale the business," said Sheets. "As our ERP solution is a central ingredient underpinning our ability to grow, partnering with a trusted advisor that can work with us on a strategic business level as well as at the application and technology level is essential."
In early 2006 Diamondback Tactical partnered with GreenBeacon Solutions, a provider of strategy, consulting and implementation services for ERP, customer relationship management (CRM), business intelligence and marketing automation technologies. As a Gold Certified Microsoft Partner, Green Beacon Solutions' knowledge and expertise working with the Dynamics AX family of products was what piqued Diamondback Tactical's interest. Beginning solely as a consultant to ensure the ERP upgrade went smoothly, Green Beacon proved itself to be a strategic advisor that met the technical and organizational needs of the business.
Formulating a twofold approach to the implementation, Green Beacon Solutions first established a communications plan for all parts of the organization impacted by the system. The team recognized that communication was essential to make the implementation a success. Additionally, Green Beacon Solutions took on the role of project manager by training the internal staff on their roles and responsibilities with the ERP solution. This allowed employees to feel empowered with the new technology and to understand how it helped them achieve their individual and company-wide business goals.
Achieving Painless Growth
In January 2007 Diamondback Tactical successfully went live on Microsoft Dynamics AX 4.0 SP1 and received its approval for business refinancing.
According to Sheets: "Green Beacon Solutions was essential in the upgrade process. They assisted us in clearly outlining our business requirements prior to the implementation of new technology, which has resulted in a smooth upgrade that achieves our business objectives."
With the upgraded ERP solution now live, Green Beacon Solutions is continuing to provide support and assistance to Diamondback Tactical's end users with further process documentation and job aids, as well as continuing to assist senior management at a strategic level. Additionally, the companies are working together to develop a strategy for the solution, which is closely aligned to its business objectives involving radio frequency identification (RFID), production modules, accurate cost tracking, the integration of its Web site to Dynamics AX 4.0 SP1, and the development of an enterprise portal. The roadmap will allow Diamond back to refine its business processes and continue to evolve the solution to support these objectives.
"This upgrade has allowed us to achieve our core business objectives," said Sheets. "As one of the first companies to undertake a Dynamics AX 4.0 SP1 upgrade, this deployment is exciting for both us and Green Beacon Solutions, showing how technology can truly provide real business benefits when implemented correctly."