Reengineering The Distributor In The 21st Century” by Eugene Roman
Reveiwed By Bob Boyles, Principal
Smarter Distribution

ISBN 0-9649974-0-1

Eugene Roman is the founder and CEO of Systems Design, Inc. of South Holland, Illinois. He has written a concise and strait forward book on how wholesale distributors should be using technology. The book is organized around the paper work flow within a typical distributors warehouse.

Chapter One – “Why I Wrote This Book”
Gives credit to authors Hammer and Champy that wrote “Reengineering The Corporation” for inspiring his work focused on distributor specifics.

Chapter Two – “What is Reengineering All About?”
Explains the term reengineering and how it should be applied to distribution operations to eliminate paper work. This chapter alone makes this book worthwhile. Every distributor needs to re-think their internal processes and evaluate them on how their paperwork flow contributes or detracts from the company’s ultimate mission.

Chapter Three – “The Procurement Process”
The discussion here about assessing your vendors is excellent. The discussion about pooling products to achieve inventory-ranking needs to include some thoughts about the role hits play in ranking. The rest of the inventory theory is the same as Gordon Graham with the names changed.

Demand becomes AMU (average monthly usage)
Order Point becomes ROP (re-order point)
Order Cycle becomes VRT (Vendor Review Time)
Line Point becomes ROP (Enhanced re-order point)
EOQ is the same EOQ
GMROI is the same GMROI
Surplus Point becomes the Excess Point

Chapter Four – “The Warehousing Process”
Here Roman recommends that companies abandon cycle counting in favor of using RF Bar-Code guns. I will agree with this recommendation. Cycle counting really only fixes the counts and does not address the real problem. Why are your counts off to begin with?

Chapter Five – “Receiving”
In this chapter Roman reviews in detail the way distributors should use bar-code equipment to receive material into their warehouses. Down to the level of describing what the screens should look like on the bar code gun. The only recommendation I’ll take issue with is that distributors should set aside backordered material in the receiving area to be picked and shipped back out to customers. In practice I have seen where the best recommendation is to keep only non-stock items in the receiving area for cross docking and putting all of the stock material on the shelf. Often times putting stock material aside in the receiving area will no be picked when the warehouseman goes to the shelf to pick the stock item. This results in a huge problem in the receiving area. The common sense solution are directions on the printed picker or bar-code gun directing the picker to the correct location to pick the material weather it’s on the normal shelf or in the receiving area, some systems do that and some do not.

Chapter Six – “Stocking”

Chapter Seven – “Picking”

Chapter Eight – “Packing & Shipping”
In these chapters Roman reviews in detail the way distributors should use bar-code equipment to put away material, pick it and ship it, down to the level of describing what the screens should look like on the bar code gun. Roman recommends that distributors use a paperless system. Although I have not seen many distributors achieve that level of sophistication I will agree that it is a desirable goal and indeed where the industry should be heading.

Chapter Nine – “Centralized Warehousing & Auto Branch Replenishment”
The author offers some common sense advice on when central warehousing applies and the benefits that it can offer.

Chapter Ten – “The Selling Process”
This chapter starts with some experienced based advice on how to structure a sales distributor organization. The discussions on commissions and customer options are informative as are the thoughts on velocity pricing and combinability.

Chapter Eleven – “EDI”
This short chapter gives a brief explanation of what EDI is. Those of you involved in the EDI arena will find this chapter more suited to the novice.

Chapter Thirteen – “The Credit Function – Customer Ranking”
Roman advocates automation for the credit function within a distributorship. This is an area that most software companies have avoided thinking about and to see someone offering advice on how software can help is refreshing.

Chapter Fourteen – “Business Intelligence & Data Warehousing”
The catch phrase here is, “He Who Has The Information Wins”. Data warehousing is a tool that most distributors have not caught on to yet. They are comfortable doing the same old thing the same old way and are not looking for a computer to offer advice on everything from stocking to selling decisions. Some day distributors will catch on this tool and hopefully it won’t be your competitor.

Chapter Fifteen – “E-CRM”
I was never a very big fan of customer relationship management until I saw it in action and the power it can provide the organization. Imagine a place in your software where everything related to a customer comes together. You’re on the phone with that customer and you have intimate knowledge of every conversation that has happened between your organization and his over the past two years! When he complains about a late shipment, you drill down into the order and see the driver’s notes on how the site gate was locked, etc. This is a sea change for an organization. The idea that everyone in the company is responsible for the relationship with a customer is a powerful tool!

Chapter Sixteen – “Mobile Commerce”
I believe that this is one of the areas where technology is most going to effect how distributors do business over the next 10 years. I do not have a crystal ball and cannot tell you what those changes are going to be and Roman takes the high road here too and offers no pie in the sky scenarios just advice that this is an area distributors should be focusing on.

Chapter Seventeen – “People Power”
After running a software company for 25 years you see a lot of companies that succeed and some that don’t and the traits they have in common. Roman shares his experience with us in his usual no frills approach.

Summary:
When you talk to most distribution companies about how to improve margin most will look outside and discuss selling tactics, etc. The basic premise of this book is that companies should look inside also and how their internal processes contribute to the bottom line.

This book is a quick read and is refreshingly missing the Gordon Graham phrases that seems to have infected the writing style of most authors in the wholesale distribution arena. I would recommend this book to anyone that works for a distribution company or a distribution related software company.

About Bob Boyles and Smarter Distribution:

Bob Boyles started his strategic consulting business in 2001 and has focused on the change that technology is forcing in the supply chain and how independent distributors can not only respond to that change but also maximize the return they are seeing on their investment. Bob has spent a significant amount of time as an Installation Consultant for several of the big name software companies in the distribution market. Working with hundreds of distributors across the country on installing, upgrading and utilizing their software.  Bob also worked as Corporate Systems Manager for one of the largest electrical wholesalers in the country as that company moved from a completely manual operation to an on-line real-time system. 

Bob is a graduate of Appalachian State University (BS - 1981)and University of North Carolina at Greensboro Graduate School of Business (MBA - 1985).

© Copyright 2002, Robert S Boyles, Jr. All rights reserved. This article cannot be reprinted or reproduced in whole or in part, without the express written permission of Robert S Boyles, Jr.