In the last issue of the brief, I reported on some key developments announced at NetSuite’s annual conference. I also commented on NetSuite’s culture, customers, and customizability, all of which really came into focus as I spoke to and listened to some of their customers at the event. Here are highlights from those discussions, with a particular emphasis on Wholesale Distribution.
Optimizing Distribution — Customer Discussions
I attended a very interesting panel discussion titled “Optimizing Your Distribution Company,” hosted by NetSuite’s Industry Marketing director, Ranga Bodla. There were three panelists at the session:
- Carl Cox, VP of Operations and CFO of Lightspeed
- Dadri Laine, Supply Chain Manager/Sr. Buyer, Surftech
- Matt Ryan, Manager of Customer Service and Sales, SIDI America
Each one had their story to tell that helps us understand small companies’ experience with NetSuite.
Lightspeed’s Transition to the Cloud
Lightspeed Technologies is a manufacturer of classroom audio systems. These are designed to improve learning by letting students hear the teacher more clearly over the noises often present in real-world classroom settings. Scientific controlled studies have shown these types of technologies improve learning outcomes by allowing the students to hear the teacher better. Lightspeed makes and sells both a ceiling mounted system (TOPCAT) and an all-in-one, ‘no installation required’ system (REDCAT).
As with a number of NetSuite’s customers, Lightspeed is a relatively small company, with less than 100 employees. However, they have embraced the cloud and SaaS1 in a big way. They don’t buy or manage servers anymore. They use Arena for PLM, Gmail for email, Google Docs for desktop tools, and of course NetSuite as the backbone ERP to run the company.
Founded in 1991, Lightspeed used to use Peachtree for accounting, and FileMaker for their customer database, but switched to NetSuite in 2005 when they started experiencing significant growth that these other systems couldn’t accommodate. According to Carl Cox, Lightspeed’s VP of Operations and CFO, switching to NetSuite took them from trying to understand ‘what is going on’ to understanding ‘why is it happening’ and did it in a way that was affordable and effective.
He also mentioned that using NetSuite has given them substantially better visibility than they had in the past, which in turn has helped them reduce inventory levels and implement lean concepts in their supply chain and operations. This is one illustration of how a SaaS system like NetSuite helps give emerging companies some measure of big company sophistication and capabilities.
Lightspeed has over 30 direct sales professionals. They also sell through resellers. The REDCAT product is different than Lightspeed’s other lines, because there is no installation required and therefore, no dealer required. They will ship direct to some countries and exclusively through distributors in other geographies.
For shipments into Europe, they used to use a very large third party logistics center in Europe. Integration with that 3PL was problematic, so every order was a challenge. They tried switching to a master distributor, but that was also difficult until they started using NetSuite. Then they were able to just give the distributor a NetSuite user seat (with appropriate level of security access, of course) and wrote some scripts to streamline the operations between them. This was a relatively quick project and now they finally have visibility into what is going on in that warehouse and what they are actually shipping, enabling them to directly invoice customers. They can see inventory levels and replenish stock to the right levels, rather than having to stock up to ‘just in case’ levels of inventory because of lack of visibility.
Flexibility is Key
Cox emphasized that SuiteScript2 was key to enabling Lightspeed to customize the system to work just the way they want and make all their process work more smoothly. He said “We hired two young IT professionals whose job is to find problems and fix them.” They have written over 250 scripts. For example, they developed approval forms for installations that help them track progress and get better visibility on those installs. Cox added “When we stop and spend a day or two to fix the problem and make things run better, we typically get a 10X return on that effort.”
Another example is tradeshow management functionality that Lightspeed developed for themselves in NetSuite. This allows them to give each region a budget for shows, track the use of that budget, plan the shows, do promotional email campaigns ahead of time to draw prospects to the booth, and measure the return on each campaign by tracking leads and deals that resulted from the show. Their goal is to better understand which shows and promotional approaches provide a good ROI. How many companies with less than 100 employees can do that? It shows off what can be done with these customization capabilities at a modest investment.
Sales Pipeline Tools
Lightspeed’s sales cycle is seasonal — sales tend to spike approaching the end of June, the date when school budgets need to be spent. Adding to the challenge, Lightspeed’s products have long lead times from their contract manufacturers — up to four months for some products. So doing a good job of managing the pipeline and forecasting sales is really critical. Some of the board members told the management team they should use salesforce.com. They had a lot of discussion and analysis, because their lifeline and survival depends on knowing where and when and how big their sales opportunities are. In the end, they decided that the best path was to use the customization capabilities of NetSuite.
They created a five-stage sales pipeline model, designing it so sales reps can view and manage an entire year’s opportunities on a single page. All stages — lead, quote, signed — are brought into a single weighted pipeline. The system handles situations such as when a customer asks for four different quotes for the same project, knowing they are only going to select one. The system can be told to count only one of those quotes to include in the opportunity pipeline total. The sales rep can overwrite the forecast for other reasons and do it all in that one page.
Cox said that there are no other tools like that and they could not do this without NetSuite’s core platform and customization capability. And it was relatively little work. Most important, by making the system easy to use, the salesforce are actually using it. That is the acid test for a salesforce system. Most salespeople by nature hate administrative paperwork (even more than the rest of us) and avoid it like the plague unless it is made easy and they get something out of it. Cox said, “As a result of these capabilities, Lightspeed is getting better sales and forecast data than we ever had before.”
Surftech is a highly respected manufacturer and distributor of surfing technology, including all varieties of boards (surf, skim, and stand up paddle), as well as surf wear and gear/accessories. They have about 50 employees and have been using NetSuite since 2006. Surftech’s products are built by contract manufacturers and sold primarily through smaller specialized dealers in the US andworldwide via international distributors. They do some small scale eCommerce on their website.3
Dadri Laine, Surftech’s Director of Operations, is responsible for demand planning and inventory management. She told us she was previously at a larger company that used SAP and so was initially hesitant about using NetSuite. After using the system, she is really happy with it and especially impressed by the range and capabilities of the add-ons available from partners.
Outsourcing the Complexity
As a small firm, Surftech relies on a third party logistics firm (3PL) to handle many of the complexities of doing business with their customers in Canada. For example, Surftech’s retailer customers often impose complex requirements for the shipments coming from Surftech, such as routing guides, specifications for labeling and documentation, and EDI requirements (ASNs, 945, etc.). Surftech sends these customer-specific requirements to their 3PL who is responsible for fulfilling the orders per customer spec. Any chargebacks as a result of non-compliance are charged to the 3PL, as they are responsible for that performance. Surftech’s use of NetSuite for all key business applications, including managing all of the data center and server issues for Surftech, is another example of their philosophy of ‘outsourcing the complexity’ to third parties.
Surftech has also created a number of scripts to customize NetSuite. For example, transfer orders used to be keyed in manually and required a large number of P.O. adjustments in the system. They wrote scripts that input the electronic packing slip from the vendor, automatically create a sales order from that, then convert the sales order into a transfer order, and delete the sales order. Writing, testing, and implementing the script took about two days and the result was a big improvement in accuracy. This is yet another example of how companies of any size are able to customize NetSuite to meet their specific needs and unique processes. For more on NetSuite’s customizability, see “NetSuite’s Path to Deeper Domain-specific Functionality — Customization is Core Capability.”
In Part Two of this article we explore what SIDI America is doing, along with some other NetSuite customer case studies, how NetSuite develops their roadmap, and then take a brief look at their Wholesale Distribution functionality, including partner solutions.
1 Software-as-a-Service — Return to article text above
3 A challenge with selling surfboards over the internet is the shipping costs. — Return to article text above
To view other articles from this issue of the brief, click here.