Why Hein Electric Supply Invested in a New ERP System

Everyone is talking about digitalization, the need to automate functions to streamline business processes and support personnel shortages in some areas, and the desire for “information transparency.” It all takes time and money and, at the core of it for many distributors is their ERP system as, essentially, it is their business nerve center.

ERPs are used in quotation, order capture, order fulfillment and order servicing roles. They are the data repository that drives accounting, billing and more. And they are critical to eCommerce as they contain pricing, inventory and order transit information.

Essentially, a business’ nerve system.

But, while essential, many essentially want to ignore them. Why? Because it can be very disruptive to “unplug” what staff is used to using and training on a new system. Plus the thought of data transfer, thinking about new processes, and more … let alone the cost.

And part of the cost is Fear. Fear of making the wrong decision because of the costliness of the decision.

For some companies, this is why they tread tenderly into an ERP change … a change that they know that they need to move their company forward.

A change that is needed to modernize a company, to capitalize on solving inefficiencies, to take advantage of tools that will enable a company to become more digital and to “unleash” data so that information can be monetized / become actionable.

In other words, an “old” system pulls a company down and hinders profitable growth.

Some companies use consultants to help them through the process.

And some go it alone.

Hein Electric Supply Takes the ERP Plunge

Recently I spoke with Ron Kohlenberg, CEO of Hein Electric Supply. Ron shared that the company went through an ERP conversation late last year after deciding that they needed to invest in a new system to support the next generation of the company.

Chris Stoming, President of Hein, shared feedback on Hein Electric Supply’s journey:

1. Please share some insights about Hein Electric Supply. Hein Electric Supply Company is a full-line Independent Electrical Distributor headquartered in Southeast Wisconsin with 9 locations and 80 full-time associates in the greater Milwaukee area and servicing a major portion of the entire state.  Hein Electric Supply has a rich 75+ year history of distributing high quality products with tremendous service levels that our customers have grown accustomed to over the years.  Hein Electric Supply is also a member of the Affiliated Distributors marketing group.
2. Hein Electric Supply has been successful for many years. Why invest in a new ERP system? As technology continues to evolve, we as an organization know the importance of these tools and if implemented and managed can be a strategic advantage.  The importance of a scalable ERP system has been a need of ours for the last several years. Further, while we had numerous system constraint issues, senior leadership viewed this major investment in the new system to allow for continued growth and service offerings for our customers. As part of our third-generation strategic planning, we feel this change will set the company up for future continued success for years to come.
3. What were your top 5 criteria in considering a new system? The key criteria we used in deciding which ERP platform to go to were:
   1. Day-to-day ease of functionality.
   2. Ability to on-board new associates, teach and train in the system.
   3. Trackable process flow.
   4. Scalability to be able to add bolt-on products, such as E-Commerce and BI software tools easily.
   5. Tightly managed procedures throughout each functional area within the system to understand and fix operational challenges that can occur in all facets of the business
4. Describe your buying journey? Our timeframe was tight due to constraints with our previous ERP supplier. This made for an “all hands-on deck” approach that was rewarding and challenging at the same time. We knew we wanted to make a change and had numerous internal discussions about what we wanted in a new system. Key relationships with other distributors helped streamline the process. We went so far as to spend three days learning from a distributor before we viewed a demo from Epicor-Eclipse so we were at least somewhat familiar with the capabilities to be able to ask intelligible questions.
5. How long did the process take? It was very fast.  From contract signature to go-live weekend was 7 months.
6. What were the steps? Numerous if done properly.  After contract and due diligence analysis, on-boarding, and training of champions for each software area discipline, along with data conversion are of utmost importance that lend to a successful conversion/implementation.
7. What types of companies / individuals did you engage with? Certainly, part of our due diligence was networking and benchmarking with others in our industry.  As mentioned, we were fortunate enough to work with a distributor who was generous enough to host several meetings with multiple functioning areas to demo the software prior to our training database being up and running, allowing us to get a jump-start as to understanding how the software functions. This gave us tremendous insight into the strength and power of the software and what we had been missing.  These activities validated to our team that we made the right decision.  Having the “Buy-In” from associates is of utmost importance when considering an endeavor such as this. Plus, our middle management team has been great and accepting of the challenge. Their buy-in was critical as they had to evaluate a system, accelerate the transition, and run parallel systems (Test and Live), all while we’re having supply chain issues and record growth.
8. Many use the term “digital transformation”. How do you feel that your conversion will help you “transform”? What is your digital vision? For companies similar to us, digital transformation and vision are important to how we work and deal with our customers daily, but can be difficult to get there due to a number of constraints, such as cost, ability to offer the suite of services based on limited IT or resource ability, challenges with fully-attributed data management etc.  With our partnership with Epicor, our ability to offer tools to enhance our relationship with our customers has been at the forefront as to why we decided to partner with them.  Seamless integration from our B2B E-Commerce website into our system, our ability to utilize mobile technology for service offerings such as VMI and Job-Site management, automated POD and Driver Routing software in real-time fashion just to name a few have set our company up for future and continued growth for years to come.
9. What have been the benefits so far: 
   • We’re now about 6 months into the implementation. We changed about 25% of your processes to accommodate the ERP system’s methodology and it has made us more efficient. I estimate that we’re a minimum of 30% more efficient than before, which is more than we expected.
   • Additionally, we’re now doing EDI with more suppliers and doing more transaction sets with the suppliers we had on EDI before. We’re getting ready to implement Advanced Ship Notices. The EDI adoption is pretty simple since all the mapping is already done. This makes us more efficient with our suppliers, and more profitable for them.
   • Customers are benefiting as we’re able to serve them faster than ever before. From looking up material to processing an order and printing out invoices at the counter. Additionally, we’re launching a storeroom management app to support bin management, integration with our eCommerce platform is better, dispatching of trucks is more efficient so deliveries are better, and our project management team is able to track projects better for our customers.

Takeaway

First, Chris, thank you for sharing your experience. Your feedback is awesome and hopefully others find much to take away.

From a third-party perspective, some takeaways to consider:

• Investing in a modern ERP system, either through an upgrade, converting versions or changing platforms, is an investment in the future. Distributors committing this level of time, human capital, and financial resources know they will generate a long-term ROI as it helps improve processes, improve productivity, and enable them to utilize tools that they’ve heard of but couldn’t utilize.
• It’s also a message to your staff about being a “player”, hence ensuring their future.
• It’s a message to customers that you are investing and will be able to bring “new” capabilities to them.
• It’s a message to your suppliers that you are ensuring today’s profitability, building for tomorrow, and investing so that you can cost-effectively support them.

In a world that is digitizing, as Chris shared, “if implemented and managed well, an investment in an ERP system can be a strategic advantage.”