Automating the Mundane

Innovation in wholesale distribution doesn’t always require industry-leading strategy shifts. Sometimes, success just requires ongoing, incremental improvement to get better every day in every way.

I recently came across a neat case study about one distributor's productivity improvement in the most mundane of activities – document printing.

Why you should care about productivity

Productivity is fundamental to profit growth in wholesale distribution because employee compensation costs—salaries, commissions, and benefits—represent 60% to 70% of total operating expenses.

Over the years, I’ve seen the most reliable profit improvements come from using technology to improve the productivity of your people. As I note on page 5 of Facing the Forces of Change®: Lead the Way in the Supply Chain, the wholesale distribution industry has benefited from productivity-enhancing technology investments that substitute IT for repetitive activities such as order processing, billing, delivery route scheduling, or warehouse management.

Productivity-enhancing technology is an important hedging strategy against the negative demographic trends that I describe in Chapter 5 of Lead the Way. Wholesaler-distributors will soon face the retirement of their most knowledgeable and seasoned employees, while simultaneously being forced to compete more aggressively for the next generation of managers.

You can read more about the productivity of different industry segments within wholesale distribution in this article: Where Productivity is Growing in Wholesale Distribution.

The Benco Story

Benco Dental is a third-generation dental distributor with about 20,000 active accounts. Chuck Cohen, Benco’s President, also serves on the Board of the NAW Institute for Distribution Excellence, the non-profit foundation that sponsored the Facing the Forces of Change research.

Apparently, simply generating invoices, account statements, pick tickets, and the like was making Benco's computer system crawl. They put in a new “document management” system that sped up printing so much that the company virtually eliminated overtime costs!

Check out the full case study:
Growth Prompts Benco Dental to Scrap Old Document System

Curious, I called Rick Cohen, EVP at Benco Dental (and Chuck’s brother), to find out what customers thought about the new system. He told me that “customers didn't notice the transition because it basically duplicated the documents they've always received, only with less time and frustration.” Rick also told me that Benco extended the life of their mainframe system by 2 to 3 years. Cool!

Your story?

Successful companies realize that there is never a final, specific end point to strategy because the world is always changing. Make a commitment to improve your company in 2007 by automating an internal activity that adds costs to your business but does not deliver value to customers.

P.S. I have no relationship with any technology company mentioned in the article – I just thought it was a great story!