June 2003 | Case Studies | I.T. Toolkit

Zedent: A CLASS Act

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Zedent's ERP system aims to help distributors win top grades for customer service.

In a distribution business, every function you perform should serve the customer, says Jim Zapapas, president of Zedent Systems, Centennial, Colo. And every function of the software that helps run the business should aim toward that same goal. Purchasing, logistics, accounting, billing—all the modules in an enterprise resource planning (ERP) system should work closely to deliver the products and services customers require.

The point is "not just the best of breed in one area. It's tying all those best of breeds together into one cohesive customer assistance system," says Zapapas.

Distributors of building, electronic, medical, and office supplies use Zedent's Distribution CLASS enterprise management software to serve customers through a suite of integrated transactions.

Zedent's Distribution CLASS has its roots in technology developed by an earlier firm that Zapapas helped found 13 years ago. Zedent bought the rights to that technology when the new company was formed in 2000. In 2001, it introduced a web-enabled version of the system.

The developers' goal was to provide small- and medium-sized hardgoods distributors with a new kind of enterprise software. In the past, ERP systems for this market were built around accounting functions. "Our goal was to put together a complete ERP system that kept the customer, as opposed to the accounting, at the forefront of the focus," Zapapas says.

One-Click Credit

For example, using a traditional system, if a customer with a credit balance calls to request a check, the customer service representative must ask the accounting department to issue a debit memo, then ask accounts payable to create a voucher.

"With Zedent, you just click a button that says 'Return Credit Balance.' From that point the system makes all the accounting entries and creates a payables voucher automatically," Zapapas says.

In Distribution CLASS, accounting and other non-customer facing transactions are "driven by behind-the- scenes tables," Zapapas says. "That's true from everything that happens in the yard or warehouse, to order entry processes and purchasing."

With these functions working together in the background, the system is designed to conduct transactions quickly and accurately. If a customer places an order that requires a drop shipment, for example, Distribution CLASS automatically creates a purchase requisition. Because it applies the customer's order number and identification to the purchase order that the distributor sends to the supplier, no one in the purchasing department needs to re-enter the data.

When the supplier ships the goods, "the system already knows that it was ordered for the customer, so the receiving or crossdocking happens automatically," Zapapas says. If the receiver is using radio frequency identification (RFID) technology, as soon as he scans the item's bar code the system tells him the product is scheduled for delivery and should not be put away.

Tight integration of this sort is important at Metro Foundation Supply, which, back in the mid-1990s, became the first customer to implement Distribution CLASS.

"Total supply chain management is awesome in this system," says Gabe Seib, vice president of operations at Metro Foundation Supply, a distributor of structural steel.

Metro Foundation Supply provides rebar, beams, window frames, and other steel products to homebuilders and their subcontractors in the Denver area. The company receives these products from regional suppliers, cuts them to size, and stores them in its warehouse and yard in Aurora, Colo. A private fleet of 15 trucks delivers the products to customers, usually on the same day the order is placed.

A builder preparing to pour a foundation needs the necessary structural steel on hand. That makes quick delivery a top priority for Metro Foundation Supply. But in the days before the company implemented Distribution CLASS, its paper-based systems sometimes got in the way of its customer service goals. Workers who needed to load orders for delivery "didn't know what to put on the trucks until we'd get those orders typed up," which delayed the entire process, Seib says.

Now, when a customer places an order, "we put them in the computer less than five minutes after we hang up," says Seib, and the information is instantly available to everyone who needs it.

The acronym CLASS refers to five realms of activity in which Zedent's system helps distributors.

'C' stands for customer interaction. "This says any contact you have with your customer is important to us," explains Zapapas. "Whether it's purchasing, accounting, order management, inventory, or any other department in your system, we want to make sure it all comes together with a single click."

'L' stands for logistics, including inventory and warehouse management, shipping and receiving. One point where the logistics functions integrate with customer service is during order entry, when an operator might pre-select an item for a particular customer. A warehouse worker scanning the bar code on that product "can see immediately whether it has been allocated for a customer," Zapapas says.

Using the inventory control functions at Metro Foundation Supply, "we can check anything we want at any time," Seib says. "It will show us how many items we have on hand, how many we have committed, how many we have on the truck right now, or that are committed but not yet loaded."

While Distribution CLASS doesn't include a complete transportation management system, it allows users to load rate tables for contract carriers, to assist in carrier selection. Zedent has also built the rate structure and zone system for UPS into the system.

'A' stands for the full range of accounting and finance functions, including receivables, payables, purchasing, cash management, job costing and general ledger. Distribution CLASS includes onscreen "dashboards" for logistics and financial information, Zapapas says. Each of these provides a one-screen interface that a manager can use to pull information on that realm of activity from multiple parts of the system.

The first 'S' stands for supply chain collaboration, a set of functions allowing a company to share data with suppliers and customers. In the current release of Distribution CLASS, specific events trigger automatic e-mail alerts to announce that certain actions have taken place.

For instance, the system might generate an e-mail listing the items the distributor has just picked to fill an order, Zapapas says. The customer replies to the e-mail with a confirmation or corrections.

In a future release of the system, this sort of transaction could happen automatically. "We're putting together an XML component that, through its table-driven nature, will allow us, without user intervention, to collaborate with external user systems," Zapapas says.

In that future release, the e-mail transmitted after an order is picked would include a copy of the customer's order form.

"When the customer opens the e-mail message, the system opens the order form, asking the question, 'Is this what you ordered?' When the customer says yes, the system will automatically interact with our database, sending back a reply indicating confirmation," he says.

The final 'S' stands for service and support. These components of the system track customer inquiries and complaints and the distributor's responses. If the distributor repairs the products it sells, Distribution CLASS can manage the service operation, as well as maintain customer histories tied not only to the billing address, but to the locations where the goods were used.

For Metro Foundation Supply, that means maintaining records about construction sites that incorporate its products. For instance, Seib says, a contractor might call to ask the size of a beam his company used in a house three years ago, so he can order the same beam again for a similar project.

"I can look up the address of that old house and tell them exactly what I shipped," he says. "If I were doing that with paper, it would take a lot longer to find the information."

Metro Foundation Supply switched from the original version of Distribution CLASS to the web-enabled version about two years ago. A company can host the system on its own server, giving access via browser to in-house users and, optionally, customers. Zedent can also serve as an application service provider (ASP), hosting the system for the customer.

To demonstrate the benefits of the integrated system, Zedent's representatives often ask potential clients to call a meeting for employees who play a broad variety of roles within the firm.

"It's not often that a company takes the opportunity to get everybody, from all different facets of their business, into one room to talk about how they should interact with each other," Zapapas observes. "People are busy putting out fires in their own little worlds. Sometimes they forget the bigger picture: taking care of the customer."

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