BPM Solution Helps Wholesale Distributor Elevate Service Levels

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By Lana Gates

Maintaining service levels is of utmost importance to wholesale distributor Hy Cite Corp., based in Madison, Wisconsin. The company, which distributes the Royal Prestige line of kitchenware and provides financing to consumers who choose to apply for credit, found that automating its business processes was the easiest way to keep its distributors happy, and thus keep customers happy.

Before BPM

A decade ago, Hy Cite was manually processing 2,000 to 4,000 orders a week for its numerous distributors across North America, through paper-based business processes. But orders kept stacking up and the company found there was no visibility into where orders were. "Every time we received documents for an order, they were put into a manila folder, labeled and built up on people's desks," explains Arin Brost, Hy Cite's senior vice president of operations. "They got shuffled from one department to another." This resulted in long lead times with several weeks between orders and order fulfillments, and an inability to meet the service levels distributors were demanding.

Because Hy Cite, which was growing, only books a sale when a distributor makes a sale, the problem was worsening. So, in 1996 the company decided to look into automating its order processes – including consumer order processing, returns, and external product financing – with the goal of elevating its service levels. Hy Cite turned to a document imaging and workflow solution, the predecessor to a business process management suite, from Global 360.

Global 360 Provides the Solution

Currently called Process360 by the BPM firm, the software converts Hy Cite's documents to electronic images, collects data, defines rules and routes information to the right people. Anticipating growth, the company knew it needed a scalable solution. "That type of enterprise application could help us maintain productivity and efficiency as we grew," Brost says.

And grow Hy Cite did. The company now counts 2,300 distributors across North America with approximately 200,000 customers.

The strategy, Brost continues, was that BPM would be the cornerstone for keeping the organization focused on process and reengineering opportunities by combining processes, people and technology. "We look at our BPM system like a framework," he adds. "It's our fabric layer. It delivers the right information to the right people at the right time."

Transition Pains

When Hy Cite embarked on this project, it didn't do so lightly. The company knew this would be a huge investment, especially since it had no computers at the time. "We knew going into this that formulating return on investment was going to be very tricky," Brost points out. "At the time, we had no idea what to expect." It was for that reason that Hy Cite chose to focus on service levels and productivity measures as the benchmarks for how the project was meeting its objectives.

It took six months to completely install the product and to make refinements. That initial period proved to be extremely difficult as the organization struggled to get people to adapt to the new technology. The distributors hated the BPM suite in the beginning because they didn't know how to interface with it, so there was a definite learning curve. The employees weren't too thrilled with it either.

BPM ROI

Hy Cite relied on internal communications to promote the value and promise of the new system. "Throughout the process, we emphasized the BPM technology's ability to help us meet the strict service level requirements we had set for our company. And as larger distributor partners began to realize the value of the new system, our employees began to adapt more quickly," Brost notes.

Hy Cite believes it achieved payback on its initial investment after about nine months, Brost says. Since that time, order processing time has been reduced to 48 hours from a period of up to two weeks. Product return processing time has been reduced by 60 percent. Revenues have increased four times since implementing the BPM suite. The number of orders received per week has more than tripled. Productivity, based on total revenues per full-time equivalent, has more than doubled. Distribution outlets have increased four times. "We're doing more work with fewer people," Brost points out, "and we've grown."

The company has found the BPM suite to be open in its architecture and accessible. Consequently, it has been able to interface and integrate the BPM suite into other core systems, more than 200 custom and pre-packaged applications, to be specific. "It's flexible enough that we seem to be able to wrap it around whatever processes we've chosen to engage in automation," Brost explains. Hy Cite has integrated the BPM system with its enterprise ERP system, its large extranet website for distributors, its Vertex suite of products for sales tax, and online with credit retrieval and reporting through Web services.

Deciding What to Automate

That flexibility plays a significant role in Hy Cite's BPM use as well. The company opened a distribution center in Mexico five years ago. "That required flexibility in how we do things," Brost admits. Since then, the company has entered arrangements with other companies where Hy Cite does financing for them. "We've been able to leverage our BPM application to provide services to partners as well as distributors," he adds, thanks to the BPM suite's ability to enable Hy Cite to meet its service level requirements. "Through the system and extranet site, we're able to provide our partners and distributors with real-time information on the status of their orders, reducing lead times and enabling them to make more accurate business decisions," Brost says.

Hy Cite is in the process of opening a distribution and operations center in Buenos Aires, Argentina as well, where it will employ 120 new workers.

When Hy Cite began its BPM endeavor, it, like other companies, simply automated its processes, whether good or bad. It wasn't until later that the company scrutinized each process to optimize its system. As the organization and its BPM solution matured, BPM became more about the processes themselves. The software "became empowered to help optimize processes, do modeling, and simulation," Brost explains.

Hy Cite believes it has mastered the automation of obvious process issues through management collaboration and employee input. Today, when smaller processes need to be automated, process owners tend to be the ones who bring it to upper management's attention. Then the group evaluates the particular issue. "Hy Cite is really committed to productivity, so it's very important that process improvements come from those individuals who are ‘on the ground' each day," Brost says.

Staying up with Service Level Commitments

The latest trend with BPM suites is end-to-end orchestration and tracking from an overall process result. "Really, as an organization you have to stay focused on whether or not you're meeting your service levels," Brost says. "As we've shared functional steps across borders, you have to still be aware overall of how service levels are being affected while you have all this complexity and change in play." It's about not only having individual measurements, but tracking how they contribute to the end results as well. "Our BPM tool gives us the ability to track and measure that," Brost concludes.

Useful Links

Royal Prestige/Hy Cite
http://www.royalprestige.com/

Global 360
http://www.global360.com/

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