Our new ERP system gives us tools to reduce transaction costs, improve inventory management and help ensure that we buy the right amount of the right products. For every automated purchasing cycle (from order to receipt to payment), we save $50. For every error avoided, we can double that amount. Much of our savings results from using the vendor-managed inventory module. Each night we send vendors a record of what we sold. Their systems create purchase orders, tell us when a product is shipping, then follow up with an electronic invoice. Our labor cost is reduced to physical receipt and payment approval. Our new system has made purchasing a frictionless activity.

Calculating what and how much to buy is more accurate with the new system as well. While we won't see major results for a few months, distributors like us have reduced inventory levels by 15% or more through statistical trending.

Improving our stocking levels also reduces customer back orders and lost sales. Having a product in stock prevents customers' electrical crews from waiting around idly for a reel of wire. Preventing stock excess is also important. It's a fool's bargain to have crews lose $100 an hour while we save 3 cents a foot on stock-carrying charges for 14-gauge wire.