Case Study

PICC

Integrated Financials, Supply Chain Management, and Web Self-Service For The Mid-Market Help To Power
Cost-Effective Growth. By Mark Roberts, Vice President, Potash Import and Chemical Corporation

A Reality for the SME Market Doesn't Have To Cost Thousands. The Internet bubble may have burst, but the fact is, the Web and e-commerce are here to stay. Thousands of e-commerce sites out there are doing exactly what they said they were going to do - provide services quickly, easily, and affordably. In fact, by 2004, eMarketer (www.emarketer.com), an e-business statistics provider, estimates that 87 percent of all e-commerce will be business-to- business (B2B). (6/21/2002)

The key to not only surviving, but thriving, in an e-commerce environment is to have a Web site that is not only adaptable, but integrated with the financials. With tight integration, a business can maintain all its data centrally. Then, as changes are made to back-office data, the Web store and supply-chain are automatically updated. Integration leads to adaptability as well, enabling companies to extend and evolve their businesses into e-businesses without having to reengineer the practices that have been refined and serving well.

But when companies think integrated supply-chain management (SCM) and Web-based self-service, they expect to invest hundreds of thousands of dollars in infrastructure and thousands more in integration and implementation fees - an option not available to the mid-market. Yet the fact is, this integration can cost less than imagined and pays off with a greater lifetime value from individual customers. As numerous industry studies show, it costs seven to 10 times more to win a new customer than to keep an existing one. A properly integrated supply-chain management system, coupled with Web self-service, provides your entire company with the tools necessary to deliver on the promise of extreme customer service. And because it can help generate revenue, improve customer satisfaction and reduce operating costs, SCM and the Internet infrastructure become a value center and not just a cost center.

The Benefits of Customer Self-Service

A self-service Web site is an adjunct to a company Web site and either runs on a company server or is hosted by an ISP. The benefits of a Web-based customer service system cuts across many industries, but positively impact mid-market companies even more than much larger organizations that have fewer staffing restrictions and more flexibility to handle spikes in business. Smaller companies that run very lean on staffing need to rely on technology to allow for business spikes, as well as general growth. In addition, with Web self-service, customers can order any time, 24-hours a day, from anywhere via an Internet browser, and at their convenience.

Because it adheres to common processes with little deviation, Web self-service is ideal for repetitive interactions such as repeat orders, balance inquiries, or address changes. Without Web self-service, customer interactions would have a much higher price per inquiry than self-service. An effective self-service program can help companies reduce operating costs for customer-service staff, training, and equipment.

Web Self-Service Optimized For the Mid-Market

Potash Import and Chemical Corporation (PICC) has headquarters in New York City and 16 warehouses around the country. The warehouses in Boston, Massachusetts, Carteret, New Jersey, and Baltimore, Maryland, provide magnesium chloride - a high-performance de-icer -- to national distributors. As this product is used to melt ice and snow, the sales window is naturally a narrow one. Typically in North America, the majority of business is done over the three worst winter months of December, January, and February.

After a big snowstorm, wholesale distributors generally call PICC headquarters and place orders for truckloads of magnesium chloride. Internally, PICC office staff would create a sales order within their financial management program, ACCPAC Pro Series 6.5, then fax it to the warehouse to trigger delivery and to the customer for confirmation.

What's the bottom line? On peak days, especially after storms, order volume became overwhelming. In fact, during the winter of 1999/2000, PICC processed more than 700 orders.

Under these conditions, the company was barely servicing its existing accounts and didn't have the capability to grow the business unless it changed the infrastructure or added staff. Simplifying the order-entry process seemed like a logical starting place. The company decided to look into Web self-service to handle the magnesium chloride orders and to optimize the ordering process. This appeared to be an effective way to help retain customers, increase the profitability of those relationships, trim customer-service costs, and allow the company to expand its capacity to serve new customers.

Minimizing The Cost of Growth While Improving Service

PICC is a wholly owned subsidiary of K+S Kali, GmbH, headquartered in Germany. Because financial data is shared between the subsidiary and its parent, K+S urged PICC to consider upgrading to SAP Financials and SCM software so that the two companies could share data online in real-time and customers could utilize self-service Web features. However, PICC was happy with its ACCPAC Pro Series product, did not want to lose all of its historical account data or have to re-key data to create a new chart of accounts in SAP. Additionally, SAP was more expensive and robust than a company of PICC's size could justify.

PICC turned to MicroStrategies, a New Jersey-based software provider and systems integrator, for a solution. MicroStrategies suggested that PICC first address its supply-chain problems. The answer to this was a Web self-service package called Elevator ELFtp that integrated right into the company's financial package, ACCPAC Pro Series. ELFtp acts as a "robot," moving data between the Web site and PICC's Pro Series accounting system, which functions as the gatekeeper for the entire magnesium chloride supply-chain.

Customers now could go online and directly enter orders for magnesium chloride. The simple Web site asked customers for either a PO or customer number, the quantity of magnesium chloride needed, and the warehouse location from which they wanted to pull product. Once the customer entered the data, ELFtp sent the information to a PICC workstation running ACCPAC Pro Series. The ACCPAC software would then generate a sales order and automatically e-mail it simultaneously to the warehouse and to the customer.

Initially, PICC was concerned that customers would perceive the change as a reduction in customer service, because they would in essence be doing for themselves what PICC used to do for them. However, the response was overwhelmingly positive. The new system dramatically sped up the ordering process, handling twice as many orders the following winter with no increase in staff and doubling the revenues for this product line. At the core of the solution, their familiar ACCPAC Pro Series accounting system proved to be easily adaptable to the new business realities saving PICC both time and cost.

The ultimate test of a Web-based customer self-service initiative is whether it provides users with the tools to be as effective online as offline. In this case, the answer is a resounding "yes" with an adaptable back end financial system and flexible order management. However, this doesn't mean a company can rest on its laurels. Web sites that integrate with financials and manage the supply-chain require continuous enhancements and additions. This means that the ecommerce platform must be open and flexible, evolve as the business changes and grows, and support a broad range of knowledge-based and transaction-based interactions and applications.

Editor's Note: Mark Roberts has been with PICC for 10 years, serving as vice president of sales. Since coming to PICC he has worked to increase the magnesium chloride product line's sales by more than 700%. Prior to PICC, Roberts worked for Ashland Chemical, where he served as a corporate account representative.