Video: How Lawson Products Transformed Their Supply Chain with GAINS | Customer Success Story

Sarah Barnes-Humphrey (00:03):

Hey everyone, Sarah Barnes-Humphrey here of Let’s Talk Supply Chain here at the GAINS Summit with Andre. Thanks for joining me. How are you?

Andre (00:11):

Thanks for having me. Glad to be here at the GAINS Summit again this year.

Sarah Barnes-Humphrey (00:13):

Yeah. So you’ve been coming for quite a while. What’s your favorite thing that brings you back every single year?

Andre (00:21):

It’s really about learning what new types of processes or new options that are available that usually come out in GAINS every year. A lot of times we don’t take advantage of them at this time, but I think we always go back to the office, talk with executive management and provide them information of what’s new and hot going on at GAINS. And we’ve gone through different iterations of the versions of GAINS and we’re in the testing of going to X right now in the cloud. So again, a lot of stuff that is very informative and stuff that we hopefully eventually like to roll out into our organization.

Sarah Barnes-Humphrey (01:03):

Well, and you can take back the data. You can take back the options.

Andre (01:06):

Exactly.

Sarah Barnes-Humphrey (01:07):

And present them, and then it can start sort of filling the gaps in the roadmap.

Andre (01:13):

Exactly

Sarah Barnes-Humphrey (01:13):

Right?

Andre (01:13):

Yep.

Sarah Barnes-Humphrey (01:14):

Awesome. Well, why don’t you tell everybody who you are, what you do, a little bit about Lawson Products.

Andre (01:19):

Sure. I’m Andre Goodreau. I’m the senior manager of, we call vendor management. Vendor management encompasses everything that goes along with managing the vendor. Place of Pos, on-time performance, rebates, contracts, all the things of that nature while managing all the important things. So we also manage five, six distribution centers throughout the United States and Canada. We have distribution centers in McCook, Illinois here. We have one in Reno, Nevada, Suwanee, Georgia, Dallas, Texas, and then we have two Canadian distribution centers in Alberta and in Mississauga.

Sarah Barnes-Humphrey (02:01):

Wow. And you said it right? Not a lot of people get Mississauga, right. I’m Canadian and I live close to there

Andre (02:09):

I grew up in Detroit, so I’m close enough to the Canadian border that I know most of how to say everything. But again, we manage 70,000 SKUs and in the GAINS world, that’s 70,000 SKUs times six locations. So we’re, do the math. That’s a lot of SKULs that we’re trying to manage at any given time. We manage a hub and spoke type of distribution network, so everything, not everything, 90% of everything that we buy is brought directly into our McCook distribution center and then we parse it out as it is needed.

Sarah Barnes-Humphrey (02:41):

Right, okay. Well that’s a big job. Yes. You said 70,000, correct.

Andre (02:46):

Yes.

Sarah Barnes-Humphrey (02:47):

I can’t even do the math., but that is big

Andre (02:49):

It sounds like. Yeah, right.

Sarah Barnes-Humphrey (02:51):

Alright, so talk to me about your background. You’ve seen a lot of change at Lawson, correct? Because there’s been some acquisitions and mergers, I believe. How has your experience navigating through those integrations shaped your approach really to managing operations, inventory, vendor relationships? What does that look like?

Andre (03:12):

Yeah, so I’ve been with Lawson Products for a little over 10 years now. When I first started with them, I came on as a senior buyer. I came from a company where I managed a thousand SKUs, and I remember the first day of the job 10 years ago, here you go, here’s 25,000 SKUs, and you’re like, oh, whoa. So progressed through the organization. Right about the time we brought on GAINS eight, nine years ago, I became the demand planning manager. So did that for a couple years, then moved into purchasing manager role, sourcing, back to purchasing, back to sourcing. So it’s been a nice journey because you get to see all of the parts of supply chain. The only part I haven’t worked in is logistics, but have a decent understanding of that. But

Sarah Barnes-Humphrey (03:58):

You’re missing a lot

Andre (04:00):

Right?

Sarah Barnes-Humphrey (04:00):

Being part of logistics. I mean, that’s my background. I can say that it’s maybe the most fun

Andre (04:06):

The most glamorous

Andre (04:08):

But to your point, integrations, we’ve gone through a lot of integrations over the past five years. Not everybody we integrate into our ERP system. We still have some companies that we leave this standalone, but everybody that we try to integrate into our SAP environment. What we find challenging is getting good data, good data comes in, you can produce much better demand plan going forward, crap data, honestly. Right? It’s a challenge. And the last one that we integrated last August, as we were pulling all the data out of their system, their old ERP system, we found challenges that a lot of unit measures weren’t correct, SKUs, multiple SKUs, cross-reference together, carrying double inventories in multiple distribution centers. So it’s been a challenge, but as we work through our product management teams and those in the distribution centers, again, it is really about getting good data. The data is what really drives our business. And if we have poor data, we’re going to execute poorly. And what we have put an emphasis on the companies that we’ve acquired this year is getting that really good data. And I think the organization rally now is looking at it before they make the move to acquire that there is good data there because we have found out in past, as I mentioned, that it’s taken us multiple years to get through to understand is the data finally good?

Sarah Barnes-Humphrey (05:38):

Yeah. Well and in acquisitions you don’t want it to take that long

Andre (05:41):

No, well exactly, because again, we’re at that point we sell lots and nothing bolts. A quarter inch screw we had in two different SKU locations under two different SKUs, and they’re the same exact part. So really trying to understand upfront, get that cross surfacing done first so that we’re not carrying multiple SKUs with the same actual, same physical item across multiple looking

Sarah Barnes-Humphrey (06:08):

And occupying a lot of people’s time

Andre (06:11):

And space

Sarah Barnes-Humphrey (06:12):

To do that. Right. But you also have to all be on the same language,

Andre (06:16):

Correct.

Sarah Barnes-Humphrey (06:17):

As well. You have to name something the same thing across the board.

 

Andre:

Exactly.

 

Sarah Barnes-Humphrey:

And I’m sure you’ve found that as well,

Andre (06:22):

Very challenging,

Sarah Barnes-Humphrey (06:24):

Even with nuts and bolts. But one company might name it this, you might name it this or maybe the name before the size.

Andre (06:32):

And there’s a lot that goes into the integration if you do seem to want to go that route is again, there’s a lot of, I think our product management team spent months in the cross-referencing phase and understanding. And for us, again, in nuts and bolts, there has to be traceability. So if you’re putting in commingling stock and there wasn’t a traceability on the old stock, then you’ve got some bad inventory that you really can’t put into the market.

Sarah Barnes-Humphrey (07:00):

Well, that’s a really big point on traceability because customs is really cracking down on understanding where your products are coming from when they’re coming into the country

Andre (07:11):

Or bringing it back into the country

Sarah Barnes-Humphrey (07:14):

And what that actually looks like. So traceability is a huge component. And if that’s going to take you months to years,

Andre (07:20):

Correct,

Sarah Barnes-Humphrey (07:21):

That’s going to be hard. You’re going to get rejected at the border.

Andre (07:23):

Exactly.

Sarah Barnes-Humphrey (07:24):

Wow. Okay. So now Lawson was one of GAINS’s early adopters, correct. Then moved away from the platform. So what drove the decision to bring GAINS back in and what were your initial expectations?

Andre (07:38):

I think really, again, part of that conversation that I remember yesterday is sometimes IT forces that stuff down your throat. And that was the case with us. It happened before I got there. I know they were on Lawson Products, was on GAINS two or three years prior to myself joining. And then a year before they switched back to SAP, and I think they were going with an upgrade and SAP can do everything. And we quickly found out that was not the case in the world that we live in, again, 70,000 SKUs. We really rely on an accurate forecast. We want the right product at the right place at the right time. And what we noticed was the way that we were forecasting on SAP was it’s not advantageous to us. We were putting too much product in a location, not enough product in other locations. And it really led to poor service to our customers in that aspect. But again, right about the time that I became the demand planning manager, we were forecasting, we moved out SAP, we moved into Excel spreadsheets.

Sarah Barnes-Humphrey (08:42):

No!

Andre (08:46):

And we have a lot of seasonal product.

Sarah Barnes-Humphrey (08:48):

I can see the stress on your face

Andre (08:49):

Oh, it was. Our forecast accuracy actually increased a couple of percentage points by moving out SAP into Excel. But again, with the sheer volume of SKUs that we’re trying to forecast, it’s impossible. You couldn’t do well. So we brought GAINS back on, and again, we had an executive team that had seen it before. It was a much easier sell this time around to bring it back. But I think there’s a lot of things that GAINS provided to us in an inventory optimization, specifically compared to SAP. But our forecast accuracy jump 30, 40 points after moving into SAP or moving into GAINS, I’m sorry. And we’ve seen multiple iterations of, again, how do we use inventory sharings, the dynamic calculations of our service stocks, things like that, that really helped us allow us to optimize and put the right amount of product in the distribution centers. And we’ve been running ever since.

Andre (09:53):

And there’s no looking back at this, I hope, I mean I don’t make those decisions, but everybody on our team loves using it the way that it’s set up, the simplicity of being able to create footers and understanding what our year to date sales are while we’re buying and forecasting. And really, it’s a very intuitive tool. I mean, SAP was so rigid and in everything that you have to do, there’s one way to get to from start to finish where GAINS, we feel like there’s a lot more options available to us to be able to do our job

Sarah Barnes-Humphrey (10:24):

Well, it sounds like it because I think you’re using more than 30 different forecast models with GAINS. So talk to us about how that’s changed the way you manage that stock and the inventory.

Andre (10:38):

Sure. So again, pre-GAINS, we use a weighted moving average utilizing to last two or three months being the most heavily weighted on producing our future forecasts. Again, that doesn’t work in a seasonal product, but moving to GAINS, it really, again, it allows us to utilize the data more encompassing data where we’re looking at 36 months of history where we were utilizing the last six months.

Sarah Barnes-Humphrey (11:09):

So then how is GAINS helping you to manage those vendor relationships?

Andre (11:15):

Yeah, I think what allows us to be successful in our role is using the data that GAINS provides to us and providing that information to our suppliers. We like to over communicate with our suppliers so that there are no surprises in the future. Generally for, again, we use the 80/20 rule, the top 80 suppliers in our organization encompass top hundred suppliers are company encompass probably 95% of our spend.

Sarah Barnes-Humphrey (11:48):

Okay.

Andre (11:49):

Those companies those suppliers of ours every month we try, we don’t try, we do send them forecasts so that they understand what our needs are. In the short term, in the long term, there are no surprises. Again, we try to overshare that information with them so that they’re prepared for what our need is. They can start procuring products on their end, our raw materials on their end to ensure that our delivery dates are adhered to

Sarah Barnes-Humphrey (12:14):

Well. And that’s what we need. I think we found over the last couple of years over communication is better than none. And that’s how we collaborate and we create partnerships and

Andre (12:24):

Correct.

Sarah Barnes-Humphrey (12:25):

That’s what we need. It’s not a push-pull relationship, it’s got to be that we’re working together.

Andre (12:30):

Exactly. And again, we went from a buying purchasing team to more vendor management team to start to utilize and create those more strategic partnerships with suppliers that again, for them, we may be a transactional customer to ours, but they’re a very large supplier of ours. And we want to again, share that overshare that information, get on monthly calls, bimonthly calls, just what’s the state of the business. And we are able to utilize that information out of GAINS. And what we’ve seen is service levels have improved from certain suppliers that have made been poor performers in the past now have raised the ranks that they’re in the top 25% of on-time performance. And for us, the amount of SKUs that we sell or stock in all locations, it is crucial for on-time performance. If we’re late, if a supplier is late to our dock door by 10 days, we’re late to all the distributions and replenishing their stock by at least 10 days. So again,

Sarah Barnes-Humphrey (13:28):

Domino effect.

Andre (13:29):

It is, it really is. And for our business, once you’re out of stock in a certain location, it starts a snowball effect until you receive the new product in and distribute it back out to the distribution center

Sarah Barnes-Humphrey (13:42):

Absolutely. Now, earlier you talked about forecast accuracy and how GAINS has given you 35 to 45%, I believe, right?

 

Andre:

Correct.

Sarah Barnes-Humphrey:

Increase.

Andre (13:52):

Yep.

Sarah Barnes-Humphrey (13:55):

What has that, How has that sort of impacted the organization as a whole? I mean, we all know for supply chain that’s a big win.

Andre (14:01):

It is.

Sarah Barnes-Humphrey (14:02):

But for an organization as a whole, because when we invest in technology, it’s got to be a buy-in from the whole organization. And to be able to have that win for one department would also translate into the rest of the organization. I’m just interested to know how

Andre (14:17):

Again, in all respect, it’s the amount of inventory you’re carrying

Sarah Barnes-Humphrey (14:26):

Capital costs with that.

Andre (14:27):

Right. And we’re big into working capital. So while we don’t, while our sales reps would like us to carry a hundred million dollars worth of inventory, I probably wouldn’t be sitting in this chair if we were, right.

Andre (14:40):

So again, it’s understanding the trade-offs of not having product in the right place at the right time. We’re in an organization, an MRO distribution company. Our value proposition is more of the vendor manage inventory as opposed to a Grainger or Fastenal who has storefronts. Somebody could walk in there real quick to grab something. Look, if we don’t have the product, that’s where our customers are going to go for it. And we pride ourselves on maintaining good forecast accuracy because if we do, we know we’re putting the right product in the right place at the right time. And that is kind of a motto we live by.

Andre (15:18):

The other one is we aspire to be our customer’s first choice. And having that inventory at the time of their need, it’s driven off of a sales forecast or sales history. And as long as we can maintain and understand historical outliers, I know that’s a big function we use in the demand planning space is understanding we sell a hundred a month, a hundred a month, and an order comes in for 10,000. We can drill in and understand what sales order that is for, what sales rep is responsible for that, and reach out to them, understand, is this a one-time sale? Can we smooth back down that demand? Is this an ongoing customer?

Andre (15:54):

If we don’t catch up to that, we’re never going to have the proper stock in place for that customer to continue to come back and order. So again, allowing us to drill a lot deeper into sales orders, find the reps who are responsible for those large increases and really understand and work with sales reps. And again, we utilize a couple other tools, a forecast request form, if a new customer comes on, they provide that information to us. We get the incremental demand loaded, prepare for that. And that’s what we try to stress a lot is, well, we’re not as complex as a lot of the other organizations here in S&OP and IBF and stuff like that. We really try to work with our sales reps to get the information out there. They’re the ones that are on the streets, they’re the ones that are selling the product, working with them and have a two-way communication with our sales reps, really helps us be successful in our job and allows us to have the sales reps sell the product when they need it.

Sarah Barnes-Humphrey (16:49):

Well, and it’s kind of gold because sometimes sales reps feel like we kind of leave them out to dry.

Andre (16:56):

Correct.

Sarah Barnes-Humphrey (16:58):

And so if you’re able to work with them directly, I’m sure they’re feeling like part of the team and

Andre (17:03):

Yes

Sarah Barnes-Humphrey (17:04):

That it’s a collaborative.

Andre (17:04):

Yes. They feel more included

Sarah Barnes-Humphrey (17:05):

Environment. Yeah, yeah, and that they are confident in going and speaking to a new potential client or a new client offering and what they’re speaking to. They can be confident that

Andre (17:17):

We have product in stock. They’ll get it in two days, whatever it may be. Again, I think it is really a two-way street when it comes to that because there’s a lot of times where a sales rep will say, we need 15,000 of these. We go and buy the inventory and it sits on the shelf for a couple of years. So then you lose some trust. But also, again, if reps are providing us that information and it really does come to fruition, it allows us to trust them a lot more than we have in the past. And vice versa, it’s a two-way street lease.

Sarah Barnes-Humphrey (17:47):

Right. But also, if you have the right data, you can make those decisions a lot more quickly than you used to before where you would bring in the inventory and hope.

Andre (17:55):

Exactly.

Sarah Barnes-Humphrey (17:56):

And now you don’t have to do that

Andre (17:57):

Exactly.

Sarah Barnes-Humphrey (17:57):

Alright. How important is simulation and scenario testing?

Andre (18:02):

Good. It is. We, earlier this year, our task at Lawson was really how do we drive out large chunks of inventory? We were sitting pretty heavy. Again, a lot of it still COVID- led. We bought a bunch of inventory a couple of years ago and how do we not replenish that stock? How do we utilize excess stock in other locations to bring it back to delay some buying? But part of what my boss, senior director came to Ben Sproat and others at GAINS was how do we run a simulation to help utilize the inputs and gain that drive out inventories? How about a lowering service level that you’re trying to maintain on C and D items? Again, a D item, we’re not going to stock all the time.

Andre (18:50):

It’s a D item for a reason. Same with C items. So lowering service levels on things like that allow us to inventories drain a little bit before we start to reorder or even letting it go out of stock knowing full well that supplier has a two day lead time. We know we can turn around product rather quickly. But I think it provides, you know we were just out there with Beau explaining the simulations is really, it allows you to understand and look at different data points and say, this might not be the right decision, this one might, but it allows you to have more information at your fingertips to make those informed types of decisions.

Sarah Barnes-Humphrey (19:28):

I think it’s fun

Andre (19:29):

It is. It’s cool to see how you can tweak something and see the effects of the downstream effects. And again, we utilize a lot of the data to correspond with our operation teams in the distribution center. Hey, here’s what you look to receive over the next six weeks. Labor needs to be brought in or can be reduced. Things of that nature allow you to be more proactive in advance of something.

Sarah Barnes-Humphrey (19:53):

That’s the gamer that came out at me. I was listening to you, I was like, there’s some gamification in there. And that sounds like a lot of fun. So now you’ve undergone a few acquisitions, I think at Lawson. It’s really has been in the past kind of difficult to bring everybody together, all the data, all of that kind of stuff. How has GAINS supported you in bringing everybody together in collaboration and making it a lot easier for you to do that?

Andre (20:22):

Again, it’s having the data at our fingertips is really, we’re going through another one right now and it’s trying to identify synergies as well right. So we just acquired a MRO distribution company up in Canada. Yes, right. Oh, Canada. So how do we pull the data and say, here’s what we, again, what we’re forecasting, we utilize same suppliers. How do we utilize the data that we have in GAINS to provide to our future partner to try to create synergies in buying power?

 

Sarah Barnes-Humphrey:

That’s important.

 

Andre:
It is, right? So again, think of two organizations buying something at a different cost each buying a million units a year. Well, if you can combine buying power in a 2 million a year

Sarah Barnes-Humphrey (21:14):

Discount.

Andre (21:15):

Exactly right. So I think a lot of the stuff that we have is readily available. Again, we can pull that data, we can use the query builders, we use the mass uploads, we use a lot of the functionalities in GAINS that, again, when somebody asks, we can get that data out of GAINS in minutes, seconds.

Sarah Barnes-Humphrey (21:35):

Sounds amazing. So looking ahead, what technologies, what innovations are you excited about implementing into your operation?

Andre (21:44):

I think the one that we’ve learned about yesterday really was the dyn, excuse me, the dynamic lead time calculations. Again, we use static calculations and depending on a supplier, those may change whether for the better or for the worse. We generally don’t find out until a product shows up 30 days early or 90 days late. So again, part of the vendor management that we utilize in having the conversation with the vendors is always constantly kind of checking up on lead times. I think the lead time, the dynamic lead time calculation part of that would be super beneficial to us because again, if our system says it’s 90 days and suppliers routinely delivering in 75 and they don’t provide us that information, the system will start to utilize that information and drive your buying patterns for you as opposed to, Hey, our lead times have increased from 90 to 120.

 

Sarah Barnes-Humphrey:

Well maybe they don’t even know.

 

Andre:

And that’s, again, we don’t usually find out until we’re using a supplier scorecard and understanding. But the aspect I like of this is it really does it dynamically for you and

Andre (22:53):

In real time it sees you issued this at 90 days, it’s actually showing up at 60, so on and so forth. It’ll adjust it. And again, if we’re buying it 90 days and it’s really 60, we’re buying 30 days of initial product every time we order. And as we try to get leaner with our inventories, this is something that I think helps drive us in the right direction. The other things is the AI, obviously in the world today, AI is a big thing and machine learning, and again, for the sheer amount of SKUs that we sell, forecast, purchase, stuff like AI and ML seem like the right option for us. Let the system utilize all the information behind the scenes to make calculated and informed decisions for you, allows people to spend more time doing strategic type things as opposed to a lot of the tactical work that we do now. So it’s, again, it’s how do we go back to our office and sell this to everybody there is the biggest challenge that we face after coming here for the last seven, eight years. But I know it always stays on top of their heads. We work routinely with our GAINS guy, Jack, and he’s always kind of saying, Hey, what do you guys think about this? Should we do this? And really as we continue to grow, I think it makes a lot more sense for us to get into these types of things.

Sarah Barnes-Humphrey (24:17):

Well, and I think about the conversation around with the vendors right and I think how much better you feel going into the conversation with a vendor when you can say to them, your lead time is 90 days, but you’ve actually been delivering to us in 60 to 75, which is amazing

Andre (24:37):

Yes. And it depended on your supplier. If it’s buying $10 million worth of product, that extra 30 days could be a lot of money. If you’re buying pennies worth of products, it may be a couple thousand dollars worth of product. But again, ultimately our goal is how do we maintain a proper level of inventory to service our customer at 98% same day order line fill. How do we get to a level two? Again, there’s diminishing returns of putting too much inventory in, but also

Sarah Barnes-Humphrey (25:10):

Well, what it means to them too.

Andre (25:12):

Exactly.

Sarah Barnes-Humphrey (25:12):

Because they can now go to their other customers and say, well actually

Andre (25:17):

A lot more people will be happy if you can reduce your lead times by 30 days by the system. Seeing and recognizing that type of stuff. I think that’s fascinating.

Sarah Barnes-Humphrey (25:28):

Amazing, amazing. Alright, so last question. As you continue to innovate and grow, what advice would you give to other organizations, companies, supply chain leaders to optimize their supply chain?

Andre (25:41):

Look, when we first brought it on, I didn’t, it’s just another tool, right? And we’ve really seen the fruits of the labor. I mean, you sometimes expect a rollout and implementation from somebody, a software company, and six weeks later they’re gone. It is cost you money to talk to somebody. I can get Ben on the phone and he’ll call me back if he doesn’t answer, he is calling me back in two hours. Jack, same thing. The level of customer service that GAINS provides to us is top notch.

Andre (26:16):

But also, again, it’s all about the inputs that you utilize in GAINS. Inventory carrying costs, service levels. You’re the one that physically determines what you want to put in the system. And again, utilizing simulations, you can understand what types of inventory you’re going to carry. Honestly, there’s so much that we utilize GAINS for that you’re missing out if you don’t. You really are. And to see, again, coming here for the last eight years, eight years ago there was no talk of AI, ML, dynamic lead times. Really to see every year how much they roll out and try to bring to the market for their customers. It’s exciting, it’s awesome. It is really cool to see that, again, they’re a company that doesn’t want to stop learning. They want, how do they continue to be the best of the best and get to the level that, let’s see their customer base grow by double, triple, quadruple, whatever it may be.

Sarah Barnes-Humphrey (27:12):

Well, and don’t forget, simulation is just fun.

Andre (27:15):

Yes, it is,

Sarah Barnes-Humphrey (27:16):

Right. It brings fun to our everyday. Absolutely. Well Andre, thank you so much for joining me here at the GAINS Summit.

Andre (27:21):

Awesome. Thank you for having me.