Salient Case Study - We Drive Business Performance

CS_Odom_2012_r3Salient Management Company 203 Colonial Drive, Horseheads, NY 14845 USA phone 607.739.4511 / 800.447.1868 fax 607.739.4045 www.salient.com

Major Multi-Line Beverage Wholesaler Gets Better with ‘Age’

Inventory Management Goals:• Optimizeinventorylevelswithout

negativelyimpactingout-of-stocks

• Reduceexpiredproductlosses

• Reduceamountofproductsoldatorbelowcostincloseouts

• Maintaininventoryturnsat8-15peryr.

• Maintaintargetdaysofsupplyformajorsuppliersat21days

• Gainvisibilityofinventorydowntoitemlevel

Solution: ImplementedSalient’sMarginMinder®andSalient’saddedvalueconsultingservicestooptimizeinventory,improveperformance,andtracktheeffectsinkeysalesmeasures.IntegratedagingdatafromOdom’sWarehouseManagementSystem,withinventory,purchasing,forecastingfromSystem21package.

WhenMiltOdombegansellingbourbon,liquor,coffee,tea,meatsandcandyinAnchoragein1933,heprobablydidn’tevenimaginethatthecompanyhecreated—thatstillbears

hisname—wouldonedaybethepremierbeveragewholesalerinthePacificNorthwestandoneofthelargestprivatelyheldcompaniesinthearea.Today,Bellevue,WA-basedOdomCorporationstocks9,800SKUsfrom480suppliersacross7majorwarehouses.Throughanaggressivepursuitofacquisitions,coupledwithorganicgrowth,Odomnowoffersitscustomerssomeofthemostpopularbeer,wine,spirits,softdrinkandliquorbrandsavailableinitsmarketsofAlaska,Washington,Oregon,Idaho,Montana,UtahandWyoming.

NorcouldhaveMr.Odomlikelyhaveimaginedtheinventorymanagementandsupplychainplanningissuesthathiscompany’sprolificgrowthwouldcreateforhislegacycompanynowrunbyhisthreesonsandcurrentowners—John,JimandBill—since1988.

Several Strategic Objectives

Atthebeginningof2010,Odom’smanagementteamestablishedseveralstrategicobjectivesdesignedtoimprovetheefficiencyofitssalesplanningandoperationsgroups.Firstandforemost,itwantedtooptimizeinventorylevelswithoutnegativelyimpactingout-of-stocks,andatthesametimereduceexpiredproductlossesaswellastheamountofproductsoldatorbelowcostincloseouts.Anothergoalwastomaintaininventoryturnsat8-15turnsperyear,dependingonproducttype.Andfinally,thecompanysetitssightsonachievingandmaintainingtargetdaysofsupplyforcertainmajorsuppliersat21.

Complete Visibility of Inventory

Tooptimizeinventorylevelsandreduceout-of-datesandexpiredproductlosses,managementknewithadtohavecompletevisibilityofinventory,attheitem-level,ateachofitslocations.Odom’sVPof

Results within 6 months:

• Reduceddays-on-handinventoryfrom54.5to47.9

• Loweredinventorycarryingcostsby$4Million

• Improvedcashflowbyfreeingupidleinventorydollars

• Reducedagedinventoryofbeerover365daysfrom$354,000to$71,000

• Addedseveralnewsuppliers

• Impactedbottomlineby$750,000

CS_Odom_2012_r3Salient Management Company 203 Colonial Drive, Horseheads, NY 14845 USA phone 607.739.4511 / 800.447.1868 fax 607.739.4045 www.salient.com

PlanningandAnalysis,DennisAngrisani,explained,“Wealsohavetoseeboththeinventoryageoftheproductaswellashowmuchtimewehavetotakeactionbeforethatproductgoesoutofdate.”

OdomselectedSalientManagementCompanybasedinHorseheads,NYtohelpprovidethishighlevelofvisibilitybyintegratingandeasilypresentingallofthecompany’sdata.Withthehelpofafast,easy-to-usetool—Salient’sMarginMinder®—Odomcouldimproveinventoryperformance,analyzeinventorytrendsovertimeandgrasptherelationshipsamongkeysalesmeasures.

TheSalientsolutionintegratestheagingdatafromOdom’sWarehouseManagementSystem(WMS)withtheinventory,purchasingandforecastingdatafromitsSystem21package.“Salientbroughtitalltogetherinonecohesiveviewconsistentwiththewaywerunthebusiness,”notesAngrisani.“Ourpriorinventoryreportsdidnothavedrilldowncapabilitytotheheartoftheseissues.Withtheadventofthisagedinventorycubewecannowlookatdays-on-handbyproduct,supplier,brandorSKUinconjunctionwithoursalesitemforecasting.Everymorning,Ihavedrillableinformationaboutdays-on-hand.”That’sagiantleapforwardfromthedaysofspreadsheetreportswithdetailsonlydowntolevel1productdimensionality:thegeneraltypeofproduct(beer,soda,wine,spirits,etc.).

Full Drill Down Capabilities

“Wedidn’thavetheabilitytoaskquestionsaboutthesupplier,thebrand,theSKU,thepackage,”Angrisanicontinues.“The[Salient]inventorycubenotonlyhasinformationacrossallofourdimensionsofproductandallpartsofourorganization,includingthestockroomandsalescenter,wecanalsofocusonexactlywherewearelongorshort.Wecanlookacrossourinventoryagingsjustlikeourreceivablesagings.Wehavefulldrilldowncapabilities.”

Major Multi-Line Beverage Wholesaler Gets Better with ‘Age’ Case Study

Used across the enterprise:• BrandManagers

• FinancialDepartment

• PurchasingTeam

• WarehouseOperations

“Everybody is singing from the same hymn book—it’s the old adage of ‘one version of the truth’”

“Salient brought it all together in one cohesive view consistent with the way we run the business.”

Odomloweredinventorycarryingcostsby$4million.

TheSalientsolutionhas“fullvisibilityandfullsupportthroughouttheorganization,”saysAngrisani.

CS_Odom_2012_r3Salient Management Company 203 Colonial Drive, Horseheads, NY 14845 USA phone 607.739.4511 / 800.447.1868 fax 607.739.4045 www.salient.com

Lowered Inventory Carrying Costs by $4 Million

InthesixmonthsfollowingtheimplementationoftheSalientinventorycube,Odomreducedthedays-on-handinventoryinitswineandliquorbusinessfrom54.5daysto47.9,loweringitsinventorycarryingcostsby$4million.“Theoverallgoalofthisprojectwastomakesurewehavetherightinventoryattherighttime.That’snotalwaysdoableinthefinewinebusiness,whenyouaredealingwithaboutiquewinefromaboutiquewineryandhavetopurchasetheirentireannualproduction,”saysAngrisani.“Butthelion’sshareofourportfolioisnotfinewineanditcanbepurchasedmorejust-in-time,andthat’swhatwe’reseeinginthisinventoryreduction.”

Initsbeerbusiness,wheremarqueelabelsincludeMiller,CoorsandHeineken,Odomhasreducedtheagedinventoryover365daysfrom$354,000to$71,000.“Whatgoodisbeerthatyou’vehadforayear?Thisstuffisperishable.WiththeSalientcubewecanseewhatwe’vehadformorethan365days,+272,+181,+90days.We’reabletoseetheagingofourinventory,whichheadsoffoutdatedproduct.Weareusingthisnotonlytomanageourdays-on-hand,buttheageoftheinventoryaswell.”ThisnewfounddatavisibilityalsoenablesOdommanagerstoquicklyidentifyandcorrectdatacaptureerrorsaffectingaging,andbringevenmoreprecisiontotheSalientinventorymanagementsolution.

“Everybody is Singing From the Same Hymn Book”

TheSalientinventorymanagementtoolisusedprimarilybyOdom’sBrandManagersinconjunctionwiththefinance,warehouseoperationsandpurchasingteams.WithSalient,“Everybodyissingingfromthesamehymnbook—it’stheoldadageof‘oneversionofthetruth,’”Angrisanipointsout.Butthe“brandguysarereallythepuppeteersofourbusiness.”TheyalsousetheSalientsalescubeso“theyhavethebestofbothworlds.Onceamonthwehavealeadershipmeetingwithseniormanagementtotalkabouttheprogress,sothisprocesshasfullvisibilityandfullsupportthroughouttheorganization.”

Major Multi-Line Beverage Wholesaler Gets Better with ‘Age’ Case Study

“Physically, this aged inventory cube and related reduction of inventory has created space availability for expansion”

“The [Salient] inventory cube not only has information across all of our dimensions of product and all parts of our organization, including the stockroom and sales center, we can also focus on exactly where we are long or short. We can look across our inventory agings just like our receivables agings. We have full drill down capabilities.”

Dennis Angrisani VPofPlanningandAnalysis,Odom

Odom Corporation:• CreatedinAnchorage,AK1933;

nowbasedinBellevue,WA

• PremierPacificNorthwestbeveragewholesaler

• 9,800SKUs;480suppliers

• 7warehouses

• Beer,wine,spirits,liquor,softdrinks

• TerritoryincludesAK,WA,OR,ID,MT,UT,WY

CS_Odom_2012_r3Salient Management Company 203 Colonial Drive, Horseheads, NY 14845 USA phone 607.739.4511 / 800.447.1868 fax 607.739.4045 www.salient.com

New Space for Expansion

DespitethesluggisheconomyOdomhasaddedseveralnewsuppliersoverthelastfourmonths,allmajorbrandsandindustryleaders,withoutaddinganywarehousespace—anaccomplishmentdueinnosmallparttotheSalientsolution.“Withoutthisinventorycubewewouldnothavehadroominsomeofoursevenmajorwarehousestotakeonthesenewsuppliers,”saysAngrisani.“Sophysically,thisagedinventorycubeandrelatedreductionofinventoryhascreatedspaceavailabilityforexpansionthatwecouldotherwisenothaveaccommodated.Weprobablyhada$750,000impactinsixmonthsonourbottomline,nottomentionthecashflowimpactoffreeingupidleinventorydollars.Ifyoucanconvertidleinventorytocashyouhaveahugebenefit.”

ThelogicalprogressionfortheinventorymanagementsystemisSKUrationalization,whichAngrisanihasinhiscrosshairsfor2012.“Nowwecanlookateveryoneofour9,800SKUs,butwithouttheabilitytospinandaggregatethedata,SKUrationalizationwouldbeunmanageable,”hesays.“TheissuesexistattheSKUlevel;theydonotexistatthesupplierlevel.Anditworksbothways:wehavetoomuch;wedon’thaveenough.Nowwehaveanearlywarningsignforthelatter.Ifwe’reforecastingtosell500casesofaparticularSKUthismonthandweonlyhave125instock–weknowourpurchasingdepartmenthasgottogettowork.It’snotalwaysaboutreduction.Someofitisheadingoffissuesofoutofstocks.”

“Salient Made it Happen for Odom”

AccordingtoAngrisani,Salientcametothetablewithmanygreatconcepts,butwherethesolutionreallyexcelled“wasconvertingtheconceptsintoausabletool.Idon’tthinkwecouldhavedonethatwithoutSalient’sconsultingservice.Theyalsohelpedusfindsourcedata.It’sgreattohaveaconcept,buttherealwinissourcingthedatafromourlegacysystemsandidentifyingthewaythedataisgoingtoworkwitheachother.SalientmadeithappenforOdom.”

Major Multi-Line Beverage Wholesaler Gets Better with ‘Age’

Odomstocks9,800SKUsfrom480suppliersacross7majorwarehouses.