From Fax to the Future: Do It Best Reinvents Its Supply Chain

From Fax to the Future:  Do It Best Reinvents Its Supply Chain

Aiming to keep pace with the rapidly expanding home improvement market, Do It Best—a member-owned hardware, lumber, and building materials buying cooperative—sought to replace its outdated manual processes with a streamlined, automated system. Since providing exceptional service to its members is crucial to the cooperative’s success, Do It Best partnered with Redwood Logistics to enhance its transportation management system (TMS).


THE CUSTOMER

Do It Best is a member-owned comprehensive and fully integrated hardware, lumber, and building materials buying cooperative based in Fort Wayne, Indiana. With more than $5 billion in annual sales, it serves thousands of locations across the United States and in more than 50 foreign countries.

THE PROVIDER

Redwood Logistics is a platform-based fourth-party logistics provider headquartered in Chicago. The company utilizes an open platform for digital logistics that allows shippers to mix-and-match any service, partner, or technology for maximum flexibility.


Established in 1945, Do It Best found many of its processes mired in the past. The company carried out routine tasks such as routing pickups and deliveries, compliance reviews, invoice audits, and approvals via phone, fax, or email.

“Although this system supported a significant volume of transactions, we knew there was untapped potential for greater productivity,” says Brad Weems, inbound operations manager at Do It Best.

Even data mining was labor-intensive for the cooperative, with employees having to manually enter every number and decimal into spreadsheets. “There was little room for deeper operational analysis,” Weems says.

Doing the Research

Fortunately, Do It Best knew just where to turn for advice. As a Gartner client, they leaned into the technological research and consulting firm’s expertise, specifically its Magic Quadrant series of market research reports concerning the transportation management software market.

This research led Do It Best to include Redwood Logistics in their vendor selection process and ultimately partner with them to implement a MercuryGate cloud-based TMS.

Hail the Underdog

Do It Best has long championed independent hardware, building materials, and lumber dealers. Initially known as Hardware Wholesalers Inc. (HWI), the organization was the brainchild of Arnold Gerberding, a hardware salesman who believed dealer-owned cooperatives were essential for keeping hardware stores competitive and independent. HWI members could get better volume pricing from vendors by buying together rather than on their own.

Eighty years later, the cooperative’s initial membership of approximately 75 independent business owners in four midwestern states has grown to include thousands of member-owned retailers across the United States and in 50-plus foreign countries.

Upon merging with another regional co-op in 1998, HWI changed its name to Do It Best Corporation to better tie together all members, the private brand program, its truck fleet, store designs, and advertising.

Do It Best retailers maintain a large measure of independence as the cooperative does not mandate store identities. Retail settings range in size from quintessential mom-and-pop shops to locations that mimic the scale of big-box operations. Member-owners have the option of displaying or not displaying the Do It Best brand name in their businesses.

While some stores bedeck both their interiors and exteriors with Do It Best’s brightly colored signage, others opt for a discreetly labeled floor mat or perhaps no branding at all.

A Complet Tool Kit

Wanting to maintain its position as the leading cooperative in the home improvement industry, Do It Best recognized it needed to become more efficient. In fall 2015, they determined fourth-party logistics (4PL) provider Redwood Logistics would be their preferred partner to implement a new TMS that would optimize daily operations.

Throughout, the cooperative and the 4PL have maintained a truly collaborative approach. Do It Best involves Redwood Logistics in every aspect of their supply chain process to ensure they make informed decisions.

“We worked with Do It Best in a slightly more tactical way for about one year, helping them move some truckload freight within their network,” says Brent Cavanaugh, Redwood’s executive vice president of sales.

It was a good way to start the ball rolling on the strategic technology and transformational initiative Do It Best had on its radar.

“Many of these types of conversations begin when we’re working with a customer in one aspect or service line and then different needs arise or they have other challenges and we’re able to respond accordingly,” Cavanaugh says.

In contrast to a 3PL that focuses on order fulfillment including warehousing, picking and packing orders, and shipping packages, a 4PL takes it one step further by managing the entire supply chain, including fulfillment, transportation, and technology.

As a modern 4PL, Redwood Logistics orchestrates customized end-to-end supply chain solutions. Its open platform allows customers to mix and match partners, technologies, and solutions to create a unique footprint—a plus in the hyper-fragmented logistics sector.

THE NITTY GRITTY

Do It Best retailers are free to shape their store identities, from mom-and-pop shops to expansive big-box formats. Member-owners can choose whether or not to showcase the Do It Best brand, highlighting their independence within the cooperative.

Redwood is proud of its ability to adapt to a customer’s day-to-day business realities. “A lot of our solution comes into play on the inbound side of Do It Best’s network,” says Cavanaugh. “The biggest challenge heading into the project was the fact they work with thousands of suppliers. That’s the nature of the hardware business.”

Redwood had to consider Do It Best’s business model, which involves the physical movement of goods from thousands of suppliers into the co-op’s eight regional distribution centers. The goods then require distribution to thousands of member stores.

The task involves a lot of planning, sourcing, optimization, freight management, allocation of costs, delivery network, settlement of invoices and reporting to chart the company’s trajectory.

It’s an ongoing process. “A lot of manual processes are still in place today and some remain sub-optimal,” says Cavanaugh, referring primarily to long-time mom-and-pop member stores that can be resistant to change. “But Do It Best knew this and it’s why they were looking for a solution.”

In fact, the first significant improvement Do It Best noticed once the new TMS was in place was its ability to catch errors in their inbound shipments—errors that often went undetected in the past. Issues such as bill of lading discrepancies, inaccurate National Motor Freight Classification class and item codes, and incorrect shipment weights were rarely caught manually, resulting in lost revenue.

After implementing the new TMS however, these kinds of errors are now consistently identified, enabling Do It Best to apply compliance fees and recover previously lost revenue. Before it implemented the TMS, Do It Best recovered about $10,000 monthly but post TMS the cooperative is seeing that number increase to approximately $50,000, representing a 400% boost.

The solution and integrated program Redwood put in place aims to eliminate the second-guessing Do It Best endured due to its manual processes and lack of visibility. The co-op was never 100% sure where shipments were, what was in them, and when they were going to arrive.

“That’s where a lot of the program’s value comes in,” says Cavanaugh. “Visibility into what’s going on and compliance within the supplier community leads to cost savings initiatives.”

Redwood’s solution also provides a significant boost in efficiency and scalability in regard to routing. In terms of shipments, it previously took Do It Best five minutes to run through a complete routing process. Now the cooperative optimizes and routes 200 shipments in less than one hour.

Routing loads had also been a manual, time-consuming process for the cooperative in the past, involving phone calls, faxes, emails, and data entry. “We could manage to route only 15 loads per hour,” says Weems.

Post-TMS implementation and courtesy of automated route optimization, Do It Best now routes 400 loads per hour, marking an astounding 2,500% increase in productivity.

On the accounts payable front, invoices that previously required manual audits, stamping, and initialing are now automatically audited through TMS algorithms with results seamlessly integrated into Do It Best’s financial payment systems. This eliminates paper, reduces costs, and ensures timely payments to Do It Best’s carriers.

Most important of all though is the comprehensive visibility the new TMS has afforded Do It Best into its own operations. “It allows us to focus on the business as a whole, rather than just individual tasks,” says Weems.

GAINS, PLANS, AND DREAMS

Since partnering with Redwood Logistics on the new TMS, Do It Best also leverages the 4PL’s expertise to assist with small parcel carrier rate negotiations. “Redwood’s support helps us secure better rates, which in turn allows our members to boost their sales on internet marketplaces,” says Weems.

Looking ahead, the co-op is currently in discussions with the 4PL about potential enhancements to further optimize the TMS.

Ultimately the collaborative approach Do It Best and Redwood maintained throughout the initial onboarding process proved effective and will likely do the same moving forward. Weems describes the new TMS as a transformative investment: “It improves staff efficiency, enhances productivity, controls expenses, and ultimately drives profitability,” he says.

Not bad for a cooperative whose goal is to help its members grow and achieve their dreams.


Casebook Study: Level Best

The Challenge

Do It Best, a member-owned hardware, lumber, and building materials buying cooperative, sought to replace its outdated manual processes with a streamlined, automated system in order to keep pace with the rapidly expanding home improvement market.

The Solution

Partner with platform-based 4PL provider Redwood Logistics to enhance its transportation management system (TMS). The 4PL utilizes an open platform for digital logistics that allows shippers to mix-and-match any service, partner, or technology for maximum flexibility.

The Results

By implementing a new TMS, Redwood enables Do It Best to automate critical processes, drastically reduce time-consuming manual efforts and associated costs while simultaneously boosting efficiency and accuracy.

Next Steps

The 80-year-old cooperative and the 4PL are currently discussing potential enhancements to further optimize the TMS as Do It Best continuously works on its goal of helping its members grow and achieve their dreams.