How Chatsworth Manages Supply Chain Disruption

This webinar will give you insight into how the operations and IT teams at Chatsworth Products navigated the last six months of unprecedented change.

In this virtual conversation, SourceDay’s Sarah Moore speaks with Jonathan Peters and Spike McBride of Chatsworth Products to discuss learning not only how to avoid supply chain disruption but also how to improve their bottom line. They share specific examples of how they use SaaS technology to extend their ERP (Epicor) and collaborate with their suppliers in real time.

When IT’s Too Busy for Another Implementation

The Logistical Challenges of Overseas Suppliers in 2020

Why Digital Transformation Can’t Wait

How Chatsworth Manages Supply Chain Disruption

Meet Our Panel

Spike McBride

Chatsworth Products

Spike McBride is an accomplished and results focused Supply Chain, Procurement, and Operations executive currently working as the Senior Director of Materials and Logistics at Chatsworth Products. For more than 25 years, Spike has specialized in building world class supply chain and operations teams domestically and internationally. His experience includes leadership roles at Amazon Web Services, Epicor Software, Augmentix and Dell.

Jonathan Peters

Chatsworth Products

Jonathan Peters is the Director of IT at Chatsworth Products, and is responsible for enterprise-wide planning, organization, and execution of all IT functions. He has extensive expertise in software and supply chain processes. He’s also a proud EUG member. 

Sarah Moore


Sarah Moore is the CMO of SourceDay. Sarah brings 25 years of leadership experience at Software as a Service companies. She’s dedicated her career to helping companies adopt new technology to solve old problems in a variety of enterprise software categories, including supply chain, ecommerce, BPM, and SMMS. As the company’s lead marketer, Sarah is passionate about celebrating SourceDay customers’ success and encouraging others to learn what’s possible when they embrace change.

Read the Transcript

Sarah: Good morning, everyone. I'm Sarah Moore. I'll be your host today. Thank you so much for joining us. I'm so glad you're here for my conversation with IT and operations gurus from Chatsworth Products, an innovative and leading manufacturer of power management solutions. Let's get started. You may remember that we sent you a survey when you registered asking how you and your organization are managing through supply chain disruption our topic for today. And so, I thought I'd kick off with a summary of those results. 

We've been running these surveys and webinars throughout this year and I'll tell you these results are very similar to what we typically see. One of the first questions was, “How has COVID impacted your business?” And everyone said that they've been impacted. 90% of you said it's been manageable. 10% said you’ve had major disruptions. So how have you been managing that disruption, the changes, the back and forth with suppliers? The vast majority of you (89%) said you're doing it over email, and phone, and spreadsheets which is obviously super common, as this data suggests, and also super challenging. So, my heart goes out to all of you. I know it's been a tough year. What types of changes have most of you seen, and are you having to move product in because you might be working in a business where demand has spiked? Or are you having to push stuff out or cancel it because maybe demand has softened? Some of us have had stay at home orders that have caused us to shut down production facilities. 78% of you said it is kind of all of the above. And then the last question which is sort of part of all of this and has been exacerbated this year, is how many of your supplier purchase orders go unacknowledged? Obviously, if a PO is unacknowledged that means the supplier hasn't officially received the orders and said that they can meet your terms. 56% of you said they don't really know, which is not uncommon. And then 44% said greater than zero, that it happens, you know, as much as 50% of the time. So, I feel like this is great context. I wanted to share that all of you are not alone that if your organization is experiencing these challenges, you're right there with the rest of the audience and most of the world today. So, thank you for sharing that.

Now let me roll into our agenda for the day. We're going to start with introductions to my guests, then we'll cover a very high level of the Chatsworth case study and supply chain resilience. I'll give a very brief overview of SourceDay a quick demo of the product. And then the bulk of our time will be spent on a live conversation with Spike and JP. And then we'll finish off with live audience Q&A. So quick housekeeping reminder, for those of you that haven't done webinars recently, there's a little chat window in the GoToWebinar panel that you can use to post questions throughout our conversation. And as you do that, we have someone behind the scenes kind of gathering those and we'll be sure to save at least 5, 10 minutes at the end to cover those questions. Okay, so let's jump in. I am thrilled to introduce you all to our guests, Spike and JP. I am Sarah Moore, I head up marketing at SourceDay. I have spent the last 25 years of my career in early-stage technology companies helping large enterprises and mid-sized companies embrace technology to evolve their businesses and move things forward.


Spike: Good morning, Spike McBride, senior director of logistics and materials at Chatsworth. I began my career with IKEA in North America in the late "80s" and that really set the foundation for my logistics and supply chain background. From there, I went into wholesale distribution, manufacturing with Dell, and most recently, the past five years with Amazon Web Services, building out their hardware. That led me to this opportunity with Chatsworth. Three years working with JP updating our tools and processes so that we can scale the business with our hyper-growth.


Sarah: Awesome, JP.


Jonathan: JP, director of IT at Chatsworth Products in our New Bern, North Carolina office which you can probably hear in my accent. I've been in IT as a career since 1999 and with Chatsworth Products since 2003, where I actually came on board really entry-level in IT as a computer network support. But through that time, I've transitioned through several roles: web development, business analysis. And through those roles, I've been able to really see and participate in company process improvement from end to end.


Sarah: Awesome.


Jonathan: Well, Chatsworth Products...yeah, I'll take it away here. Chatsworth is a 100% employee-owned company. And it wasn't founded as such in 91 when a group of Harris Corporation employees actually used an Aesop to buy out the rack division of that company. So, since that time with it's kind of meager start in a small facility in Chatsworth, California, we've grown over 1,000% to now have four domestic manufacturing locations and a global presence. We serve customers with everything needed to power, store, secure, technology, and traditional data centers, hyper-scale data centers, on-premise data rooms, and outdoor spaces. So, our products range from racks and cable management and cable runway, cabinets, industrial enclosures, access, and power. So, we really are trying to meet the needs for all of those who were in those kinds of spaces.


Sarah: Super thank you, JP. So, when we started working together with you is about the time that Spike joined Chatsworth is coming up on three years ago, I believe. And we started working together to address some key challenges which all boil down to how you were managing the process to acquire parts and raw materials from your suppliers. Like our audience, it was all email, phone, fax-based, spreadsheets. And some of the key challenges that resulted in were lightning complete deliveries from suppliers. Spike is going to tell us more about what that was like when we get to the live conversation, rare but sometimes late shipments to customers, excess work in process inventory, because you know, you might have everything to build a particular order, but if one or two parts show up late or incomplete, that can cause things to back up and take longer to get things through production. And so, Chatsworth worked with SourceDay to replace the old way of doing business. Spike, the other day, you described it as chaos, with a digitally transformed and kind of more streamlined way of managing parts, you know, getting parts from your suppliers. And so, what has that resulted in? Well, over the last 10 quarters, late deliveries are down 70%. So, once we got fully live with, you know, our solution and integrated with your Epicor ERP, and all of your internal users and your suppliers enabled and trained, your late delivery percentage was above 35%. And when we look at the last six months, it's down, you know, to 10%, 11%, which is a remarkable feat if you consider what you know, Q1, Q2, Q3 of 2020 must have looked like. So, hats off to you guys.

And then, you know, not surprisingly the converse of that means on-time deliveries have gone up and now average 90%. And so, the fact that we've been able to maintain that over the last six months is pretty awesome. And one of the headlines, you know, in terms of the financial impact that that's had on Chatsworth, not only has it reduced stress on the team and improved, you know, your on-time delivery to customers, but work in process has been cut by 66%. Which to have accomplished that this year, is really amazing.

Something that as SourceDay-ers come to work every day this is the stuff that really fills our gas tanks. We get so excited about hearing customers that achieve this kind of success. So, before I roll into the SourceDay overview to share a little bit of context for the audience and how they accomplished that I don't know Spike, JP you had something you wanted to say about that?


Spike: The biggest challenge that we faced with that much WIP on the floor, you have the unintended consequences of, in this case, we had eight to nine days of WIP in any given time. So, you can have damages, you can have parts that could be used for a quarter that could ship sooner. So, by cleaning that up and having two to three days of WIP on the floor, we get more efficiencies. And you quite honestly, you're not stumbling over sub-assemblies on the floor. So just so many other benefits from that one metric alone.


Sarah: Yeah, and I bet your finance team is happy about the positive tax and inventory carrying cost.


Spike: Absolutely.


Sarah: That that affects right, especially as we finish out the year that should mean really good things for the balance sheet, right?


Spike: Absolutely. One of the other benefits is when you have that much WIP on the floor, you have to have that much more raw materials available. So, by really cleaning up the WIP, we now have more just-in-time. So, you had mentioned the tax benefits, but just the ability to have more manufacturing space. We've reclaimed about 90% of our previous warehousing space and converted that into manufacturing floor because of the way we've optimized our inbound materials.


Sarah: Wow, that's impressive. What did you say the other day a quote from one of your mentors? Nothing good...


Spike: Nothing good happens in a warehouse.


Sarah: Yeah, I love that. Okay, well, so let's quickly give the audience an overview if you're not familiar with SourceDay, how Spike and JP accomplished this incredible feat. I'll start with a quick picture, paint a scene that looks familiar to everyone on the phone. On the left of this image, you're the enterprise, in this case, it's Chatsworth, but it could be any type of manufacturer or distributor, retailer, direct-to-consumer, company that's trying to ship products to their customers. And there's the ERP in this case, Epicor, and all of the stakeholders that depend on Epicor to do their jobs every day. From the buyers to finance, IT, operations, supply chain, etc. On the right are the suppliers that provide all the parts and raw materials that you need to meet demand. And as orders come into the operation, Epicor does its job and determines when it's time to replenish inventory and order parts from suppliers on the right. And unfortunately, today, and for our audience, 89% of you are managing that process through...the process of getting the orders the purchase orders from Epicor or your ERP over to your suppliers. And so, your buyers are picking up PDFs, emailing them. And then every communication about that order will happen over email, phone, fax. Results in spreadsheets needing to be updated, manual updates to the Epicor ERP. And not only is that stressful and a lot of work, it takes time and it's bad for everyone, because unfortunately, inevitably it can lead to things falling through the cracks. If a PO is not acknowledged, then the team on the left is expecting parts to arrive that probably won't.

And in fact, as SourceDay looks at our thousands of organizations that we serve globally, we know, and we've learned, that over a third of PO lines are going to change. They'll have a change to price, order, or quantity over their lifecycle. Because just the fact that Epicor says you need 100 widgets on November 1st, doesn't mean that your supplier is going to be able to meet those terms. So, there's adjustments that happen in normal years that are over a third of the time. And since COVID hit we saw that number spike to 61%. So, this situation isn't good for anyone's status quo; everyone loses. So SourceDay exists to replace all of that chaos with a more streamlined approach that is a multi-tenant SaaS solution. Our software lives in the cloud and integrates with the ERP. In this case, we integrate with Epicor - although we're agnostic, we integrate with all major ERP systems. So that all of that back and forth that we described in email, phone, fax, spreadsheets is now happening on a digital platform that facilitates collaboration and captures lots of important information. Between the buyer, between the supplier, from the acknowledgment to all the changes all the way through receipt. One of our core products is our PO collaboration solution but we have other products as well that facilitate the whole lifecycle of the process of acquiring and managing your direct materials spend. So, what does that look like? Well, we have a supply chain performance software platform that as I said, has PO collaboration at its heart center. RFQ, AP automation, and quality, our other product modules that benefit from a collaboration platform that drives prescriptive workflow in action and helps ensure all the stakeholders are working on the most important changes first. We capture lots of great data that used to live in email and spreadsheets and couldn't be analyzed or assessed and make it available in a lot of different ways through our solution.

So, let's jump in quickly to the product itself and I'll paint a scene again. And I am Sarah, I'm a buyer at ‘Shrek Bikes,’ we're a bike manufacturer. And instead of starting my day in my inbox and the onslaught of emails back and forth with suppliers, I log into SourceDay. And what SourceDay has done is organize all the communications about my POs for me so that I can prioritize my day. What you see on screen here is a dashboard where SourceDay is telling me I have four updates from suppliers. These are updates to requested changes or POs or things that they need me to review and approve or reject. ‘Hot’ will be the PO lines that I have flagged either because I've got a typically problematic supplier I'm not sure I can count on, or it's a critical part, I want to keep a close eye on those. And then my pending tab, the 73 lines here are all of the orders that have not yet been acknowledged. So for those of you who aren't sure what percent of your PO lines are unacknowledged as we talked about in the survey SourceDay makes it really clear to the buyer that there's a lot of risk in this bucket of PO line. 73 parts that may or may not be arriving on time. In addition to giving us visibility to the number of POs and organizing it in this way, the dashboard also shows me the potential dollar impact. So those four ‘hot’ PO lines represent $153,000. And then another bucket that SourceDay helps me track is ‘late.’ In this case, over half a million in parts that are late, 103 different parts, this is obviously going to be a top priority for me as a buyer. I don't have to try to keep track of it in a spreadsheet, I don't have to be sifting through my inbox or status, all of that works for me automatically. So, what will I do next? Well, let's dive in. I want to see what updates my supplier has sent to me. And so, I'll click on the Updates tab and be taken to the inbox here. That shows me Chromax Metals has updated a bunch of different PO lines. On PO 4900, 5600, and 5700. It's also shown me and highlighted to make it super easy for me to see what the supplier has changed or asked to change. In this case, they're suggesting 150 instead of the 50 that I ordered, because we have a minimum order quantity on these bolts, which makes sense. This next line has got a date change, because of material shortages they can't get it to me until November 2nd. And then this last piece is a price change because raw material for resin has gone up.

And so, in each of these cases, none of those presenting major problems to me. So, I'm going to really quickly check all three, and then approve those changes. And what that will mean is Chromax Metals my supplier is updated automatically. I don't have to send three different emails on three different parts. And just, or more important, Epicor is updated automatically. I don't have to do any key data entry or change POs within Epicor SourceDay does that update for me instead. Now, this last request to change is pretty significant. We've got a much later date, increase in quantity, and price. And so, my supplier has told me also material shortages on this so restricting availability. And I'm going to open this up and tell them that price and quantity...if I can spell… changes, okay, but need these parts by 11/15. And so, I'm going to reject that change, so nothing will change in Epicor. My account exec or salesperson at Chromax is going to be notified that those requested changes are not okay. The next thing I'll do from here is check out my ‘hot’ parts, the things that I'm trying to keep a close eye on. There's four, as I said, one from Chromax Metals, one from Strings, and then two others that I flagged as ‘hot.’ I've already notified on these two, but I haven't yet on these two ‘hot’ parts. So, it's very simple for me to add a notification and request an update ASAP. So, any buyers out there, this is probably a message that you're pretty used to sending, especially this year. Again, no email, that's all sent via SourceDay, all the notifications happen automatically. And then the last piece for the buyer that I want to share really fast is the ‘All Open’ folder or tab. We like to sometimes describe SourceDay as a living breathing, ‘all open’ order report. Every business has one of these regardless of the industry that you're in. It's usually kept in a spreadsheet and almost immediately out-of-date as soon as it's updated because of all the change we just talked about. SourceDay monitors and tracks all of that.

So, the 105 PO lines in this tab are everything open at whatever status. And I can very easily go in and look at the history on a particular PO and see all the changes or communication that's happened on a PO line captured in one place. This creates an audit trail, it eliminates the ‘he said, she said, we said, they said’ that happens all too often and keeps everything organized. The other thing, really common scenario, is folks get uncomfortable with replacing the spreadsheet. Sometimes the spreadsheet is necessary to keep lots of people informed across the organization. Well, SourceDay it makes it super easy to download this in real-time via CSV or PDF so it can be shared, however, folks need it to be shared. And then the last piece I'm going to show trying to keep things restricted on time is our supplier interface. 

So, I'm taking my buyer hat off, and I'm going to put my supplier hat on. And imagine I'm an account executive or salesperson with Chromax metals. SourceDay has similarly kept me out of my inbox and the chaos that ensues there and organized everything that I need to do for my customers. I'm going to log into SourceDay instead of the inbox, I'm going to choose my Shrek Bikes customer. One important benefit for a supplier, and we have several that do this, is that they can use SourceDay for multiple customers. Once we've onboarded their teams, it's really helpful for them to be able to keep track of everything with more than one customer in the same place. But this example I told you, you know we're working through the Shrek Bikes scenario. So, I've now filtered down and I see I have 16 new orders from Shrek Bikes. I've got some PO changes that my customer has sent to me. I can review those really quickly, and either accept or reject those with just a couple clicks of the mouse. Or I can take a look at these new orders and acknowledge them. In this case, we're asking for some tires to be delivered. I'm already late on these parts, which I know. And I'm going to request that we deliver those December 1st instead. And I'm just going to very quickly make a date change, click the button, and now my buyer has been informed of this request to change. But then it's just as easy, almost easier, to confirm these new orders. If there are terms that I can easily meet, I just click a few times. Everything's organized, tracked in one place instead of email and spreadsheets. And what happens when I confirm these orders, is they go and flow automatically, that acknowledgment flows automatically, through to Epicor.

So, in the interest of time, I'm going to wrap up the demonstration. This was not meant to be a sales pitch, I just think it's important context for the audience to understand as we dive into Chatsworths story in more detail, how their teams have accomplished the results that we're going to talk about.

Great. So, let me remember how to stop sharing. There we go. And I'm going to throw it back to...there you are Spike and JP. Hey, guys.


Spike: We're back.


Sarah: You're back. How did I do? I always get a little nervous demoing the product to customers.


Spike: You did great.


Jonathan: Did great.


Spike: Did great - exactly how we're using it.


Sarah: Okay, cool. And I glossed over a lot of stuff. I glossed over scorecards, we have AP automation, we have quality module, as I said. So, anybody in the audience who's interested in learning more - obviously goes without saying - but my boss will be upset if I don't invite you to just reach out to us. We'd be happy to show you more of it in detail. Okay, let's jump in. The first area that I wanted to explore with you all is, just help the audience understand a little more about your business operations. Spike, can you share just kind of a little bit more detail than what JP gave on kind of how you...the team that you run globally?


Spike: Absolutely. So, we have a very diverse supply base. We manage everything from raw materials to sub-assemblies to finished goods and everything in between. We'll take a resin and we'll send it to an integrator, they'll then do injection molding, and then send that back to another sub-assembly supplier. So, with that comes a lot of diversity. We also have a very diverse customer base, we sell to distributors, we sell to integrators, and we sell to end-user customers, each wanting a different set of information from us. So, we have to be flexible and be all things to all people.


Sarah: Wow. And so, what does that mean to lead times?


Spike: Yeah, that’s a great question. Because we have lead times where we have positioned material forward meaning it's a day away. I can order it by 3 p.m. and it's on my dock the next morning at 5 a.m. And then we have others that are very complicated where we have a partner that takes 9 to 10 months from the time we order the product to the time it's delivered at my back dock. So, with that diversity, I have to treat each supplier partner very differently, as they do me. And I need different information at different times.


Sarah: Wow, talk about a moving target. You’ve got every variable in the equation that could be anywhere on the map. That sounds really tough.


Spike: It is.


Sarah: So, JP, tell us about the back office at Chatsworth?


Jonathan: Sure. Our main business transaction system is Epicor ERP. And specifically, we're on 10.2.400. When we went with Epicor, we pretty much bought the whole menu board that they came to us with. So, we have advanced material management, pretty much every other module that they sell. Additionally, we're integrated with a software as a service transportation management system as well as a new implementation.


Sarah: Okay, wow. And so, all of...that's a big investment and all of that is only as good as the data that it is running on correct?


Jonathan: That's right. Absolutely.


Sarah: Yeah, interesting. So, I'm having a little issue here with my screen sorry, crew. Well, in Gartner's recent Cool Vendor report they predicted that 80% of companies are going to scrutinize procurement technology going forward and scrutinize their investment by 2022 Oh boy, I'm getting a big echo. Is anybody else getting an echo?


Spike: No, it's gone away now. I think we're good.


Sarah: We're good, okay. So, tell us about the digital transformation journey that your team's been on for a while?


Spike: Yeah, we're really excited because the organization from the top all the way through all the folks on the floor have really embraced new technologies. So, we've spent a lot of time between JPs team and IT, my team in both supply chain and warehouse operations, where we've looked at new opportunities to embrace the technology. But, better yet, get real-time information all the way through the hands of planners down to the floor. So, as we look for opportunities to cut WIP times down, it's with the real-time information leveraging SourceDay.


Sarah: Okay, cool. And JP, what's been your experience with that?


Jonathan: Old habits die hard, right? We're consistently working with the business functions to kill off manual paper-based processes. That's the journey we continue to be on. As modern and as forward-thinking as we try to be, we still have to drag along certain groups to come up to speed. So, over the past few years in this journey, we've, of course, implemented SourceDay but also we've moved to Office 365, we've overhauled our MBS labor recording processes, and most recently implemented Salesforce.

So additionally, in that time, as a company, we've made some strategic acquisitions. So, the IT team is pulled in many directions in supporting digital transformation, as well as supporting executive strategic planning types of things, and strategic moves like acquisitions.


Sarah: Okay, wow. Well, let's shift gears now and talk about how you manage supplier collaboration and supply chain performance, that background is really helpful. Let's dig into the process, what it used to be like Chatsworth when you were in the same boat as most of our audience managing that process through email and spreadsheets. Can you share more about that, JP?


Jonathan: Sure. And I'll take you back a bit further back than our Epicor implementation. So, prior to 2011, before we went live with Epicor, our contract manufacturer process, which is those suppliers that drop-ship to our customers, those types of relationships, and those transactions were handled with just a little more than a handshake. With the Epicor implementation, we deployed Epicor's supplier portal product which, you know, started with the basic standards of PO acknowledgment and on-time delivery. A few years ago, however, Epicor announced that they are no longer going to support changes to the Epicor supplier portal product. So, we knew it's time for us to make a change with how we manage and the tools for supplier relationship management. So we went on a search, right, we were looking at Epicor's replacement product which was a Magento based Commerce Connect, I think is what they call it, and it just really wasn't the right fit. And thankfully, we met our SourceDay partners at an Epicor user group meeting and we saw the demo. And it wasn't much longer after we saw the demo that we were planning our implementation.

And I will make a comment that you know, even before the supplier portal was formally deprecated, it really wasn't an ideal kind of vehicle for supplier relationship management. It did not scale. Creating and setting up new suppliers was a very painful process, and it offered really no visibility of things that were going to be late or things that might put the supply chain at risk.


Sarah: So, spike, what was the bottom line for before we went live with y'all?


Spike: Yeah, still the previous tool was just a glorified email exchange, but most of the things still had to go through email. So, the challenge that we faced is we still had 25 to 30 different items putting this line down, which impact manufacturing, which impact our efficiencies, impact the supply chain folks because, you know, their lives were still chaos. So, the previous tool just didn't address the needs of the business.


Sarah: And so we talked about the WIP impact expedite fees, you said in some cases you have customers that had penalties if you were late. So how did you kind of addition to the awesome demo that I'm sure you received at the Epicor user group I bet there had to be other internal reasons that you guys kind of looked into when you've got 25 to 30 parts that are chronically late. You shared with me kind of how you diagnosed what was happening on those.


Spike: Yeah, absolutely. So, when we looked at the root cause for that, so every time we had a part shortage we do a root cause corrective action. And it really came back to the same thing: lack of visibility on what was coming inbound, and lack of visibility that in most cases, the partner didn't even acknowledge the original date that we requested. So, we're so far behind with no acknowledgment of the actual order date. And then too late to react to it once we realized that not only was it not on its way, but it wasn't even acknowledged. So, it continued to come back to the same root cause and the corrective action was pretty straightforward at that point.


Sarah: Sure. And so, has it lived up to the vision then? I mean, has there know, you described at the top, JP said 1,000%, growth.


Spike: So we've had hyper-growth. And previously, three years ago, we were living in chaos. Now, with the hyper-growth and with the new tool, I can't remember the last time we were short a part. So, we've gone from continually being short multiple parts having to rearrange manufacturing, to not remembering the last time we've been short a part. Which has not only optimized manufacturing, it's optimized planning, it's optimized buying decisions, it's reduced our warehousing footprint, and increased our manufacturing footprint. We have so many benefits just from getting out of that chaos and getting to the predictable world that we live in today.


Sarah: That's amazing. So, JP, in that fast-growing environment we hear all the time from prospects that "IT is too busy." And even IT when we talk to them, the last thing they want is another project, let alone a project that touches the ERP in any way. And so, they can be reluctant to take on those new projects. So, tell us about implementation process with SourceDay and whether or not that took a lot of effort from you and your team?


Jonathan: And to be honest, IT was too busy at that time for a new implementation. But thankfully, it really was a pretty simple process. So, I'll start with, it helps to have some internal rockstars. So, we've got, you know, two that I'll kind of talk about here. We've got a functional side and a technical side. And we had a buyer Allison, who on the functional side is a rock star, and then Jose on the technical side, really pulling the pieces together. So, we probably slowed down the process because we've been through this before, right? We've been through ERP integration, and we know that the devil is in the details, that's where you're going to be bitten. But that said, the implementation was pretty painless so for both a live and a test environment. We already had existing internet-facing servers that were used for hosting web services. So SourceDay was able to leverage that. SourceDay uses just a few SQL views for reading and uses Epicor's RESTful web services for read and write. So, Jose was able to develop a great working relationship with the SourceDay folks to get that connection up in just a matter of days. It was a very fast process to get the systems talking. It was probably me holding back and being the skeptic early on versus the real capability. On the application deployment portion, Allison took ownership of learning the ins and outs. You've got to have that functional lead really know the ins and outs. And she's the one who would go and evangelize to her peers. And then SourceDay took care of all the onboarding with the support of Allison on that. And then on the support side, so on the technical resources, you know, since then have continued to just be great. Where we might have to use resources and hours to consistently monitor connections, SourceDay actually looks and sees, hey, you know, we've not been able to talk to you for a little bit did something change on your side? We're not really actively managing that SourceDay is looking at that connection all the time. And we've been through some upgrades with Epicor as well and they've been with us with no disruption through those.


Sarah: Gosh, I love to hear that. You know it makes it easier for your organization to trust what they see in Epicor, right?


Jonathan: Exactly.


Sarah: Yeah, we really try to earn that partnership and ensure our customers are getting the most value they can out of their ERP investment, as well as SourceDay. Which is why our managed services piece is a massive investment and commitment for us. Because you know, the same way, you can only get as much value out of ERP as the data quality that it runs on, you can only get value out of SourceDay if people are using it.


Jonathan: Right. With our other integrations, we on a daily basis are monitoring those. And that's just not something we have to do with the SourceDay integration.


Sarah: Well, I'll take that back to the team. That'll make them proud. I love to hear that.


Spike: Yeah, one of the other benefits, if I could jump in from the tactical implementation side, is the amount of resource that the buying teams historically have to do to install a product like this is dramatic. Where they have to have their day job, and then they have to come in at night and do their night job just to get to square zero. And that didn't take place here. It was pretty painless on the tactical side. The buyers had a great support team over at SourceDay; they continued to do a lot of the heavy lifting. Sometimes you have a partner that just isn't willing to jump in and do their part. And SourceDay really led the charge in that area as well and brought those folks around. So, we had partners that were very apprehensive and kept us at arm's length and SourceDay really fixed that relationship where they understood the benefits. We've had partners tell us the benefit from their side where they have the single source of truth as well, where everything that they communicate with us is now documented for their own information as well has been invaluable to them on their side.


Sarah: Sure, because suppliers can prove I never got the order you never sent it to me. Or I did respond and tell you I couldn't meet that date, right? It's good for them too.


Spike: Absolutely, and we have some parts that are commodity items and it's almost a spot market buy. So, it allows us to both lock in the cost for that spot market buy. So, we get not only the confirmation that they received the order and that they're going to supply it but at what price did we strike that deal. So that's helped tremendously as well.


Sarah: Right. Which topic today isn't AP automation but has massive positive benefit to the finance team because the invoices match the final agreed PO everything's documented what folks agreed upon. Okay, let's, roll into discussion of this year and how COVID-19 has impacted your business overall. 


Spike: Yeah, I'll jump in, sure. Gosh, when we first addressed this, I think everybody had the same mentality. We have a lot of parts coming out of mainland China. And at first, there was a complete shutdown. But once we got past that...and we're very lucky, a lot of our partners were considered much like we are essential critical infrastructure for China, as we are for the states and actually globally. So, we didn't necessarily see an impact when it came to the manufacturing of the parts and the communication, because we continued to leverage the same tools. One thing that we really felt the benefit of is folks had the same, if not higher efficiency working remote, because of the nature of the product. It's web-based so we didn't see any drawback there. We felt more around the logistics challenges where they had assets and drivers getting quarantined than we did on the material flow or the communication flow that seemed to go extremely well in the middle of a pandemic.


Sarah: Yeah, if you can't get the product from one location to another that's another type of...nice that you had the bandwidth, you know, and the time to focus on that part, right? 


Spike: Totally. We went away from all this email back and forth to everything was systemic. So as long as we weren't getting the alerts that were out of kilter because they had already acknowledged and reacknowledged and everything through the tools, we were able to spend the time then focusing in on areas that became a challenge like logistics. Historically, we would have never gotten there. We would have never gotten to the logistics part because we spent so much time on emails and phone calls.


Sarah: Yeah, great. And what's this year looks like for you, JP in IT any war stories?


Jonathan: 2020. If you would have told me that everyone was going to be parked at home for six months, you know, at the beginning of the year, there's no way I would have believed you. So, I think I can probably pin it down to the week of March 15th; it's burned into my brain. We went from ‘there's something going on’ to us converting 100 traditional office workers to remote employees in one week. And if there's anybody who's watching the webinar who's in IT, you know what that scramble looked like. We were going to Staples and Best Buy and Walmart and pretty much buying out any headsets we could buy. So, a fair amount of those workers were being phone agents. So, you know, with travel being halted, we've got a lot more dependence on video conferencing tools, but thankfully, we've made some investments there over the past few years that really supported that. So thankfully, also, our buyers are already portable, right. So, they're using SourceDay, and they're able to work remotely with, you know, little to minimal disruption.


Sarah: And similarly, for your suppliers in regions that were also sent home, it's not just the buyers that were able to work remotely, but your suppliers as well, right?


Jonathan: Right, exactly.


Spike: Absolutely. When we compare that to where we were historically with H1N1, or the floods in Japan, or Korea, or other natural disasters that had caused us to be remote, it pales in comparison. There were still heavy, heavy phone calls; some people didn't even have access to their emails. And you look at this time around where if they could get a Wi-Fi connection, they could get connected to the system and do all the updates. So, you can't even compare where we were and where we are today.


Sarah: Yeah, for sure. And so, has there been any impact to your customer, your on-time delivery with customers this year?


Spike: We saw a slight dip right around then just because of the unknown. But once we worked through the challenges of pulling all the personnel out of the plants so that we could keep them as pristine as possible, we've actually seen an increase in on-time delivery because we're not seeing the impacts to the bubble, if you will. We've created little bubbles at each of our plants where only the essential personnel are coming in and out. We've separated our shifts, we've put breaks in between, so we don't have any cross-pollination between teams. And all that can only take place with JP and his team allowing us to be remote and leveraging your tool.


Sarah: Yeah, awesome.


Jonathan: My favorite example is that our receptionist is even working from home.


Sarah: That's great. And, you know, it's just how everyone is having to live. But the fact that you've, you know, in this incredible time of change and managing the unknown, that you both have been able to deliver a more efficient business that's performing financially better, while also maintaining all of your customer commitments and keeping your employees safe and healthy at the same time. Hats off to you. That's something to really be proud of. I hope you both are. So, let's talk about the lessons that all of this has taught us this year. As you look back on 2020, what are the things that you think you've learned from all of these challenges that you'll apply to the road ahead?


Spike: What I'm most hopeful about is the way our executive team and JP and all the other peer group have adopted technology. It's really brought us to the point where we're going to double down and now we're going to go even further into the technologies. Expand the use of your tool, expand the number of suppliers, expand the number of buyers. So, we're going to take it and then just use this as the new normal, the new ground zero, and we have to expand upon it.


Sarah: Awesome.


Jonathan: So, I would add to that, just in the midst of the day to day trying to look two steps ahead. Like I said before, we never would have pictured ourselves here, but we were able to make this quick pivot because of some brave investments; be bold enough to make the investments that will support a business situation that you really can't plan for. Also developing relationships with change agents like Spike's team, Spike and his team, and others in the organization. Digital transformation does not happen by an act of IT alone. We can support it, but it really happens through change agents like Spike.


Sarah: Yeah, that is so true that you know, the takes a village to drive change. You know, it's almost like the technology installation is the easy part of the work, right? We need it to be easy, so I don't want to minimize that. But that should be, has to be the easy part because getting people to change how they manage a very stressful job it's a lot to ask of them, right? So, it's important to have business partners, that can be, you know, your partners in crime and helping an organization move forward. We hear a lot, especially this year, especially companies that are growing, but really across the board where they say, you know, "We'll get to this down the road, like, we're just going to try to ride it out." "We don't know what's coming this has been a crazy year and, you know, call us next year or call us in six months." But it sounds like JP, your takeaway is, you're really glad you didn't wait.


Jonathan: Yeah, that's right.


Spike: I don't think we could have...we definitely wouldn't have grown the business. We most likely would have contracted our business if we had waited and we didn't have these types of toolsets. You know, many companies implement a tool, but they don't adopt the tool. And from JP's team all the way through the executive team down to the buying team, they've adopted it, they've ingrained it, it's become part of their new DNA. Where you can't think back to a time where you didn't have it, and you think, why would we ever not have it again? So, it's really changed our culture entirely.


Sarah: Yeah, it's very true. Shelfware is such a common problem that it gives software companies like us a bad name, you know because we're full of promises all of us, but not everyone can deliver. And it takes the partnership that you both have to really help us deliver on those promises. So, thank you for that.


Spike: Actually, a lot of times you get this software package, we almost call it vaporware, where it sounded great but when you actually go to get it installed, it's not that. And with SourceDay, you did so much of the heavy lifting and you brought this product to life so quickly for us. It just allowed us to double-down and spend resources growing our business versus trying to get a software package installed.


Sarah: Yeah, love to hear that. That's really good news. Okay, let's think about the road ahead. So, as you look at 2020 and beyond 2021 hard to say, it will be here before we know it! As you look at that road ahead and think about supply chain excellence, operational excellence, the business, what are you both anticipating?


Jonathan: So, we're definitely expanding our SourceDay footprint. We're moving to the unlimited supplier model, enabling more suppliers and bringing on more buyers internally. Another thing we want to do is to sort of take these wins that have happened with the core company and apply them to our new strategic acquisition. So we’ll be taking the SourceDay product to these folks as well and hoping to really leverage on these wins we have.


Sarah: Awesome. Spike do you...


Spike: Yeah, just to dovetail what JP was saying. Just made interactions with these companies that we've acquired. The amount of manual effort the buying teams are having to do, we discussed this tool, and they're salivating. They cannot wait to install it. So, they see the benefits and we've already realized they can't wait to install it. When you have smaller-scale companies, you have to embrace tools like this. So, to their credit, they're all on board now. It's just a matter of us rolling it out in a timely manner.


Sarh: Yeah, that's great. We'll be there with you every step of the way. So now it's time for us to roll our audience questions. I'm going to start with the one we got over the survey which was, let me make sure I get this right. I guess this is probably for you, JP. When you first began working with SourceDay, how long did it take to get your data cleaned up in a good communication channel working with your top suppliers?


Jonathan: Okay, so we were in a pretty good shape as far as data cleanup goes. We were, you know, already leveraging the supplier price list baked into Epicor. And SourceDay is integrated into the PO module and managing the data that way. So, from a data cleanup perspective, we were ready to rock and roll. We started slow like I said before, and that was more our own choosing and just being kind of natural skeptics about software implementation. So, we started with a trusted supplier and it wasn't long before we were onboarding our next one and next one after that. So, we certainly said, ‘let's get it right with a trusted supplier that we're comfortable with who embraces technology, learn some lessons there, and then just take it forward.’ So that was our approach on that.


Sarah: Yeah, for Epicor organizations, our typical time to implement - elapsed time, not hours but it's about 30 days, can be shorter - two weeks, for an organization that's really ready to jump in with us. The steps you described earlier are pretty straightforward. It's just getting time kind of fit into the broader schedule. So that's common. And then most organizations do exactly what you said: start with the target suppliers. Our focus is to get 80% of your spend flowing through SourceDay as fast as possible. And our internal metric to do that is in the first 30 days. You know, that can be more or less realistic depending on the situation as you described. But because of the good people that we have behind the scenes at SourceDay, we've got all kinds of training and tools and kind of best practices. And we take that responsibility really seriously. So. I'm glad to hear that part of the process was easy.

And cleaning up the ERP data is another thing that we have a lot of expertise with, especially for Epicor customers. It's not a heavy lift. Great question. So, the next question was, which modules are you guys using within SourceDay? I mentioned that SourceDay has four core products, the PO Collaboration piece that I demoed, and also RFQ, AP, and quality. So that was the question.


Jonathan: Okay, so I know that we're using RFQ in the PO Management, I don't believe we're using quality and we're also not using the AP module.


Sarah: Yeah, a lot of companies that use more sophisticated ERPs will manage quality within their ERP. So, I don't know if you guys are doing that with Epicor’s capabilities. But for some of our smaller organizations that don't have that or have just decided not to make that investment, quality can be such an important part of the overall...solving that fundamental problem, do you have the parts you need to ship on time? That's why SourceDay offers some capability there as well. What about supplier score carding? I actually should have asked this in our prep. I don't know, do you guys use source...I think you said you use a different scorecard and capability tool.


Spike: We do. But one of our desires moving forward is to leverage SourceDay for more of the data to feed into our quarterly business reviews where we discuss our scorecards. The nice thing there is you can almost send...our desire is to send progress reports. So, we should never get to a QBR and then surprise somebody. So just by leveraging SourceDay out of the box, we want to give them their progress reports on how well they're doing. So that they can real-time correct it so we're not waiting for the QBRs every quarter for them to correct it.


Sarah: Right, yeah, everyone hates surprises, right? And it erodes...we've talked about trusting, you know, the data that's in the ERP, but trust is such a huge part of the relationship with your vendors and your suppliers. You know, transparency, visibility, that this provides, and the fact that it's just the facts, right, it's not opinions, you're not dependent on memory. Takes a lot of the emotion out of that conversation, right because every little communication about every line of every order is tracked in one place. So, you know, it is common for companies to decide to embrace that, you know, down the road a little bit. Other companies will come to us saying the opposite, you know, we're having some massive problems and we need to get out of he said, she said land, we need a data-driven approach. You know, as they think about supply chain performance and the road ahead, they want to manage supplier performance more proactively. And so that's where SourceDay supplier scorecard comes in. And I didn't have time to show it today but it's a piece that gets configured to every business, so we'll be able to work with your teams to figure out how you want to grade or score people and share the data you're looking for your QBRs. So that's great. Next question was, are you able to leverage SourceDay with PO change suggestions? So, I walked through this scenario a little bit at the demo, but I maybe went too fast, so I'll ask you guys to answer that question.


Jonathan: That's actually a good question for our functional team. So specifically, I guess with Epicor PO suggestion PO changes...I don't think I can answer that one.


Sarah: Okay, that's fine. We'll ask that individual who asked that question to just follow up with us we'll get you an answer. Because on the SourceDay side, and within the platform that I showed, whether it's a buyer-initiated change, you know, we need to move a date out because the orders that we were going to get these parts for have gone away. Or our production lines have shut down and we can't use those parts right now. That's one type of PO suggestion that's going to the supplier, and vice versa. I showed a suggested change to dates and things, but we obviously complement the ERP functionality that already exists. It's never our intention to replace something that you're already using. Our focus is to get on-time deliveries above 90%. We want to give Spike's team everything they need to run a tight shop and get orders out the door to customers as efficiently as possible. So, let's see, I have one more question that I wanted to ask before we wrap. So final call for questions to the audience. I'm looking for it. Oh, you guys have a really awesome culture around just innovation. And when we first met each other, Spike and JP, you've talked about this a little bit. But just like the cultural belief, and this is informed a little bit by your history, I think Spike, that digital transformation is not an optional, you know, thing. That the way to scale and support your organization is to embrace technology. It's not hiring more people, you know, building more factories, but to kind of embrace that. And so, I just wanted you to share your points of view with the audience before we close.


Spike: Yeah, absolutely. So, because we're 100% employee-owned, we probably have that more than anyone else. We all come back to the same thing: how do I do more for our company and gain more efficiencies and gain more time in my day? And what we've seen is just these little wins that we continue to find that everybody, whether it's the shop floor getting automation and digitization into the machine, so it knows exactly where we are in the process, whether we're stamping or welding. By getting that real-time data, everybody is doubling down on that new culture. So, buying teams, leveraging tools like this, expanding it out. One thing I didn't touch on is, we have a partner that provides thousands of parts and they have a spreadsheet. And your team is working very closely with us because we're thinking how do we update that type of thing? We're working together to ingest their spreadsheet as is so that we can make all these changes. So instead of trying to reinvent the wheel for a process that's been working, we're now going to just map the template and import the data from the template because they have teams to manage these things. So that's a huge win by itself.


Sarah: Yeah. And JP, this is also a little bit how you're wired too, right?


Jonathan: Right. I mean, I came into this culture, but if you think about starting the company, it's very entrepreneurial and it stayed that way. So, each of the business divisions, I mean, that's what we are, we're entrepreneurs, and we know that we cannot stay static. A lot of times we are in touch with technology when the business comes to us. Sometimes we can have the attitude of we may have the best ideas, but that's not the case. You know, we need to understand the business case. So, we are always on the lookout for opportunities to take a step forward in digital transformation.


Spike: I think that's been such a great fit with your organization because you have that same culture. So, when you come up with ideas or we have problems or suggestions, you guys are so inclusive, and there to solve them with us.


Sarah: That's awesome. So, in the last minute here, John Myers has a question about suppliers. He says that a lot of their suppliers are not EDI capable. We see you talked about a supplier that you're getting thousands of parts, and you put a business process in place or on a spreadsheet to kind of support that. As you said, we're going to try to accommodate that so the amount of change we require is as low as possible. A lot of our customers will...and we're doing this more and more, figuring out how do we streamline the integration with the supplier systems and business processes. John Myers, you're not alone. Many of our customers wish their suppliers could do EDI, but can't. And so, I just wanted to share that that's a really common scenario. Similar to the spreadsheet that Spike talked about, we also want to compliment EDI. The challenge with EDI is its sort of a one-way message it doesn't facilitate the collaboration the way that we showed in the demo. But we understand there's massive investments there. And, as you said, you don't always get to dictate how your suppliers collaborate with you. But most of the time, most of the suppliers find that SourceDay is a much better way. And just like you guys, 90% of your spend is flowing through SourceDay; that's what we see across the board. So, with that, gentlemen, you've been awesome, I really appreciate it. I've loved getting to know you better. And I really appreciate how generous you've been with your time and your insights, so thank you for that. For the audience, we've recorded this whole session so we will be doing a little bit of post-production to get that video ready and we'll be sending that out to all of you as soon as it is ready. So, you can look for that. And then we'll also be sharing the slides for those who would like to see them. So, thank you both have a great day.


Spike: Thank you very much.


Sarah: Stay healthy, stay well.


Jonathan: All right. Take care.