Leapfrogging the Competition at M.J. Pipe & Supply

Armed with new performance management tools, a small distributor aims to take on the big guys


In addition to fill rates, the system allows Dooley to track his accounts receivable and days sales outstanding, and because the software can be accessed over the Web, he can check up on the business' operations even when he's out of town. "Within the first five minutes in the morning when my computers comes on, I am able to get a great snapshot of exactly what's happening in my business, right down to the customer level," he says.

The IPM implementation did result in some process changes at M.J. Pipe, specifically around the way that the company calculated its fill rates. This, again, is a result of the particular nature of the market into which M.J. Pipe sells. For example, a customer might place a master order for 90 fire hydrants, but a contractor would most likely not need all 90 at once. Instead, the customer might want 30 hydrants a month for three months. In the past, working off the master order, M.J. Pipe would ship the first 30 to the customer and put the remainder on backorder, which resulted in a very low fill rate being reported out of the inventory system, even though the company was meeting its customers demand at the time that the contractors needed the products.

A Competitive Edge

To correct the situation, Dooley says that he worked for much of the month of January last year redesigning the way that the company processes sales orders. M.J. Pipe now breaks each master down into separate shipments, with each release against the master being treated as a separate order, so that the process correctly reflects what customers really want when they want it. Ultimately, Dooley feels that it was worth the effort to change his company's process to conform to the requirements of the software. "I would prefer to change my process to more what's best-in-class than try to make the software fit with something that's below best-in-class," he says.

Looking ahead, M.J. Pipe sees two additional opportunities to leverage Silvon's solutions. On the one hand, the company was looking at the possibility of providing point-of-sale data back to its own suppliers, a practice not particularly common in this industry. On the other hand, Dooley is looking at the functionality within the Stratum solution's purchasing module to provide metrics that would allow M.J. Pipe to analyze vendors based on their performance.

As far as the return on M.J. Pipe's investment to date in the Silvon solutions, Dooley figures that the company saw a payback on the SPM module within the first year of using the tool, and that the IPM module paid for itself within just a few months, at the most, given the inventory reductions. But more importantly, Dooley feels that the new capabilities have given the company a competitive edge and allowed M.J. Pipe, in some ways, to get a jump on much larger competitors. "We've gone from grinding it out to really having a lot of fun and leapfrogging the pack, and we're really excited about that," he concludes.

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