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How Napoleon Protects Cash and Revenue
Webinar: July 23, 2020

Sarah Moore: Okay, great. Well, again, thank you for joining us. Looks like we have a big crowd today. Welcome, Louise, I'm thrilled to be talking with you again today, excited to share your story.

Louise Mayer: Glad to be here.

Sarah: And so, as we kick-off, I thought it would be nice and refreshing for us rather than kind of kick-off about us, let's start with our audience. About 20% of you answered our survey this week, where we asked you to share a few things about your business.

I think you'll like seeing that none of you are alone. You're all sort of in the same boat. The first question was, “How much has COVID disrupted your business?” First of all, everyone's been impacted, that's not surprising. 90% of you say it's been manageable, 10% say it has had a massive or major impact.

The second question was, “How do you manage supplier changes?” My heart went out to all of you with this response, because almost 90% of you are managing all the disruption that we just talked about through email and phone, which is no small feat. So, hats off to each and every one of you and your teams. That's a hard way to manage all the change that almost every business we speak to has experienced.

And then the next question was, “What kinds of supplier changes?” So, it's across the board, move-ins, move-outs, cancellations. Even if they're manageable, you're managing them through email, phone and fax. 78% of you are having to deal with these types of changes from suppliers.

And along those lines, and something that we'll talk about with Louise and more in the presentation today, is that a good number of everyone's supplier POs go unacknowledged. And more than half of you aren't even sure at what rate. But that this is another sort of indicative challenge as we build more resilient businesses that everybody has to deal with.

So, the good news is you're in good company. I have brought an operations guru, a really smart lady, to the table to share a case study and show how everyone can be managing all of that change in a way that creates less stress for everyone, but more importantly saves the business that you're in a lot of money, both at the top line and the bottom line.

[2:09] Here's our agenda. I'm going to let my guest introduce herself, and then she'll take us through a case study in supply chain resilience at Napoleon. Just so that everybody has an image in their mind of the stuff that Louise talks about, I'll give a very brief overview on SourceDay. And then we're going to have a live conversation where Louise dives into more of the details. And at the end, there'll be audience Q&A.

So, a couple of common housekeeping topics. You can be posting your questions throughout the webinar today. There's a little questions box in the GoToWebinar panel that you'll find. And we will also be sending the recording to everyone just as soon as it's ready later this week, it takes some time to get it produced. But we'll email that out to everyone.

[3:16] All right. So, with that, as I said at the top, I’m Sarah Moore, CMO at SourceDay. I have spent over 25 years working with enterprise companies, helping them embrace new technologies to find better ways to run their businesses. So that's me. And now Louise, will you please introduce yourself and tell everyone about you and your role at Napoleon?

Louise: Absolutely. So, thanks for joining, everybody. I'm Louise Mayer, the ERP Improvement Manager at Napoleon. I've got over 16 years of supply chain background, and about three years ago I moved into this ERP improvement role, just wait and find a need for that kind of thing to look at how we're using our ERP system and how we should be using it, and kind of bridging those gaps. So that's my background, again, mostly purchasing and production control.

One of my tasks was to look at solutions, like I said, bridging the gaps between how we are using our ERP system and how we should be. And SourceDay was one of those gaps that we identified, we needed something to help us with this process. So that's all I've got.

Sarah: Yeah, because that... ERP is the heartbeat of most manufacturing businesses, but it still can't do everything.

[4:35] Louise: Definitely. So, a little bit about Napoleon. For those of you who don't know us, we're based in Barrie, Ontario, Canada. We are manufacturers of hearth products, so fireplaces, grills and HVAC furnaces, air conditioners, and also condo packs. So, you can see on the slide there, all the red dots represent anywhere we have manufacturing or distribution centers. So, we are worldwide now, in more than 30 countries easily, if not, you know, 40 or 50.

So, we're growing very quickly. A few years ago we achieved our goal, which was to double the size of the company within five years. And our goal is to do that again. Of course, we've had a little bit of a hiccup with COVID, but we should get back on track, and I'll talk a little bit more about that in a bit.

[5:26] So, some of our challenges, like I mentioned, we identified that we needed something to help with our whole purchasing process. And that's where we went looking for a vendor portal, or some kind of solution like that, and that's where we were introduced to SourceDay.

So, a few things increased, purchase prices, and you know, not catching those changes ahead of time, late deliveries, incomplete deliveries, just not knowing what we were going to be receiving. The whole process was very manual and very inefficient, all through email and spreadsheets.

So, no visibility if somebody was off, there's no backup. So that was a big problem for us. And all of that led to late customer shipments, which ultimately is, you know, the effect of all this, and so we want to minimize that.

[6:28] So, a few of the improvements we saw, once we started using SourceDay, so we had a 15% improvement to on-time deliveries. 75% of our POs were auto-acknowledged, and that's a really big thing. Whereas before all the buyers would be looking at every single appeal that came through, 75% of them now are auto-acknowledged, they don't need to look at them again once they create them and the vendor is notified about them. That's a huge, huge number for us.

We had a 95% reduction in supplier invoice discrepancies. And that's mostly around pricing. So, where the supplier would have come back and maybe given a different price or something that wasn't caught. So, we went from having 10 to 12 pricing discrepancies every day to having 1 or 2 per week. So that's a huge reduction, and that's something that I hadn't even really thought of when we started into the project. It kind of came as a byproduct now once we were talking to our AP department about the AP module. So, another, you know, a whole other department that's saving time and money and effort through all of this.

Move-ins, move-outs, cancellations, now we can all manage those proactively rather than sitting and waiting and seeing what we might get, and not really being sure maybe when we're getting them. That was you know definitely you want to be proactive on that, not reactive.

Sarah: And yet so many people, I know that's kind of standard operating procedures, wait and see what shows up, and ask the inevitable “Where are my parts?”

Louise: Exactly. And then having production come standing waiting and expediting, and it just...it's crazy.

Sarah: Yeah, and that worst-case scenario doesn't have to happen very often for it to cost a lot of money to business so that we're able to deliver on time.

Louise: Absolutely. And it can be a very small part, it doesn't have to be any, you know, it doesn't have to be a big, main, critical item, it could be a screw.

Sarah: That cost a million-dollar order.

Louise: Right.

Sarah: And that's like a classic scenario that everybody experiences, yeah.

Louise: Right, exactly.

Sarah: Yeah.

[8:37] Louise: So, maybe you want to give a little bit of a description what these next metrics are, the revenue protected.

Sarah: Sure, yeah. So, we've...we're going to show the solution a little bit to kind of close the loop for the audience. But one of the things because we've worked with Napoleon in what, over a couple years now, probably, right?

Louise: Yes.

Sarah: And because we've moved your team out of spreadsheets and email and into a system that allows both buyers and suppliers to collaborate in real-time, we're capturing a lot of data. And what we're seeing here is the trend of move-ins. So, this is the scenario where your buyers or your procurement team based on demand, customer demand has said, "Hey, we need these parts faster than we originally ordered." So, they go out to the suppliers and say, “Can we move these orders in?”

We know that every dollar you spend on a part, on a screw or steel or whatever, relates to at least a dollar in revenue, right? So, in this scenario, it's millions of dollars a quarter in inventory and parts that you're moving in with suppliers. And if that doesn't happen, you know, to the point you just made, if just one of those peel lines doesn't show up on time, a whole order, and the revenue associated with it can be jeopardized.

Louise: Right. And so, you can see here, obviously Q1, Q2 this year we had less move-ins than we did last year in any quarter. We did have to slow down a little bit with COVID, which slowed down our production and kind of ramp up quickly. So, we saw some effects on that definitely.

Sarah: And your supplier base was probably also grateful for that, because you know...

Louise: Absolutely.

Sarah: Because you know, as we learn about the impact across the supply chain, it's not just, you know, it's the manufacturers and then all the companies that serve them as well. So that's been good for you and I imagine good for your relationships with suppliers to not be needing things faster than they're able to produce.

[10:35] Louise: Yes, definitely. And it's great how quickly the communication happens and how automatically.

Sarah: Yep, yep. So similar but different scenario. You know, and in this scenario what's really interesting is on the last chart it's a buyer-initiated change. So, the machine to machine transactions happen, the ERP and Napoleon have said, hey we need to order parts. And the suppliers, you know, in our scenario acknowledge and said yes. But there was a change, the buyer said we need to move those parts in. The scenario we're looking at now is different, and this is where your supplier has said, hey, we need to cancel this order, we can't meet it.

So, these are supplier-initiated cancellations, which is another form of a surprise that can cause you to not have the parts you need to fulfill orders.

Louise: Right.

Sarah: Right.

Louise: That's a known yes.

Sarah: So, these were parts that were at risk. I'm happy to see this is a much smaller dollar figure, obviously. But in the grand scheme, you know, this whole theme that we just talked about is, it only takes one change to slip through the cracks, one cancellation to not be received by your buyer, input into your ERP system to cause massive production impacts?

Louise: Correct.

[11:48] Sarah: And then...and it's probably also worth noting, it's nice to see in the first half of this year that your suppliers, you know, you stay in sync with your suppliers, and they weren't having to cancel. We've heard horror stories in other industries where companies are typically able to fulfill but they just don't have the raw materials they need to meet customer demand. And that didn't happen for Napoleon.

Louise: Right, yeah. And we did, I think we'll talk a little bit in a bit the whole effect with COVID and all that. But definitely having real-time visibility to these orders when they were canceled or when they did need to be addressed with the vendor was definitely a huge advantage for us.

Sarah: For sure. So, then the last scenario that we've talked about is a move-out. And this is, you know, across our customer base, a very common scenario in normal times, because the dynamic nature of demand is such that it's always changing, and businesses are trying to, you know, keep their inventories as tight as possible. So, they're...you're not wanting to purchase parts that you don't need right now. So, a move-out will be again a buyer-initiated change based on the business need shifting.

And the bars that you see here, the grey section are orders that moved out a week, a few weeks, a month, within the quarter. And then the green bars are orders that moved out beyond the quarter. But in both cases, we're helping Napoleon optimize cash flow.

Louise: Absolutely.

Sarah: Not wasting money on inventory you don't need in that moment, planning for the business in the time that it needs it.

Louise: Right. Yeah, and again you can see Q1, Q2 this year with COVID hitting you know kind of in Q1. Like I said, we had to slow down some production for a little bit. So definitely I had to push some orders out, and then we're trying to fine-tune once we did start production back up, trying to fine-tune to run only what we absolutely had to at first and then really just trying to keep up with backorders until we were able to get production back up and running completely.

Sarah: Same scenario, it's beneficial to you and to your supplier to have this in real-time and not be doing it over spreadsheet, email, phone, and fax.

Louise: Exactly. Exactly. Especially with everybody working from home, it's really no interruption to that process at all.

Sarah: So, there's always a little bit of an eye roll, I think, that happens in the market when a vendor like SourceDay comes out and makes this big statement, hey, SourceDay helped with...see how Napoleon saved millions of dollars. It's been a pretty thrilling exercise for our team to be able to look at the data this way and feel really proud that we can back up that claim, that we're not just making it up, that you know, from a cash flow perspective, from, you know, in that sense, sort of a bottom-line issue, but also top-line in revenue. We help ensure that you're fulfilling customer orders on time and being able to recognize revenue with no surprises. 

Louise: Definitely. It has been a very much great experience for us too... It’s been good to have a solution in place through all of this.

[12:44] Sarah: Well, we come to work every day hoping to hear that from our customers. So, thank you. Okay, so now I'm going to shift gears, and as I said at the top, this will be really brief overview of the SourceDay solution. It's intended just to give everybody a little bit clearer picture of how the solution works so the rest of our conversation makes even more sense to you.

I'm going to start with a picture that you guys have already shared in your survey responses, which is very familiar, so I won't spend too much time on it. But on the left side of this picture, we have your enterprise and your ERP. The first point I want to make is, we integrate with all ERP systems. We're agnostic to that. As we said with Louise, ERPs perform really crucial functions, but they aren't everything, and they can't do everything for business.

And so it's important that our solutions be able to integrate to that and read the machine signals of customer demand. That's what an ERP is really good at, is taking customer orders in, running the calculations to ensure the business has the parts that it needs to fulfill orders. And so as that process happens, POs are spit out to the buyers on the left side, and then those buyers deliver the POs today via email to suppliers on the right.

And most of our customers will have hundreds if not thousands of suppliers, thousands of PO lines, hundreds of PO lines a month that are all being communicated about through email. Starting with the PO acknowledgment, you all have said more than half of you aren't sure how many of your POs are acknowledged. That's a really typical scenario.

And because of the state of affairs, the chaos in this picture, it's really hard to tell what you know...and yet all the stakeholders in the business on the left from operations to supply chain, from IT and even finance like Louise talked about will assume that the POs that are issued from the ERP are correct. When in fact when we look across the SourceDay customer base, we know that more than a third of PO lines are going to change. Because you'll issue an order to your supplier and say I need 100 widgets on this date at that price, and they may or may not be able to meet those terms.

When we look across our supplier base, we see more than a third of those PO lines changing price, quantity or delivery date. And since COVID, that pace of change has almost doubled to 61%. So more than half of the stuff that's being generated from the demand planning engine in the ERP is incorrect. And that means the business is flying blind on the left. It also means that the suppliers are having to suffer because it only takes one miss as we've talked about for suppliers to have to expedite, for them to have to incur more charges, for them to have the concern of not being able to fulfill their customer on time. And then that ripple effects through the business that we've already spent a lot of time talking about.

So, this is the state of affairs for most of you. And SourceDay's whole mission is to replace that chaos with software that's modern, easy to use, and lightweight. So we have a cloud-based solution that sits in between the suppliers on the right and the ERP system on the left, and keeps both sides of this equation automatically in sync in real-time, starting with the purchase order at the acknowledgment stage, and all the way through that change in the lifecycle that I spoke about through fulfillment.

When we take customers live, it's really common. There's an example with Dell. When we took them live, their largest distributor discovered six purchase orders on day one, first log in that they had no idea existed. I share that with the audience just to reassure you that you're not alone. But that's exactly the type of thing that SourceDay exists to address.

How does the product work? I'm going to show it to you in just a sec. The core of our solution, is a collaboration platform that is the green disk in this picture. And it helps the business take that machine demand, do all the calculations, and through prescriptive workflow surface the most important exceptions for both sides to work on. So that's our core PO product.

We also have an RFQ solution, a quality solution, and most recently, our AP solution. And Louise, Napoleon uses both PO and AP, right?

Louise: Yes, correct. Yeah, we do have both sides of it.

Sarah: The fact that we have now replaced emails, spreadsheets, and fax means we're capturing a lot of really valuable data that can then be reported on in really rich and interesting ways. The blue disk on the bottom here is our insights and analytics layer. And that's what the layer that allows us to do the calculations and the analysis that we just shared on move-ins, move-outs, and cancellations because we're able to gather data up and present it back to the business in ways that are useful and very actionable.

Okay, so with that, I'm going to shift to show you the product. And the scenario I'm going to share is, I'm a buyer at a bike manufacturer. So we're not talking grills, we're talking about bicycles. And rather than start my day with my coffee and my email inbox, shipping a bunch of PDFs and reading emails and trying to update all my spreadsheets, I just log in to SourceDay, and SourceDay has got it all organized for me.

What you're seeing here is the buyer dashboard, which is designed to be a really quick bird's eye view for this buyer, and what she needs to be focused on. We see 105 total POs, 79 of them are pending. That means that's about 80% of my POs are waiting for the supplier to acknowledge them. They are either brand new overnight or they've been lingering and maybe not seen by my supplier. Very common scenario. The next category here is my Hot Bucket. These are the PO lines that I have flagged as a buyer because they're either critical parts or something happened and I need extra attention to be paid to them by my buyer and my supplier.

And then the last bucket here is Updates. Those are the changes that my suppliers have sent me overnight. So I don't have to, as Louise said, go touch every single PO line and check and confirm, reconfirm everything. SourceDay surfaced all the stuff that I need to pay attention to. And not only that, but tied it to the dollar amounts that are at risk if these issues don't get resolved.

If I don't get all of these 79 PO lines resolved, there's over 430... No, I made the wrong connection there. There's no dollar amount there, this is radar. These are actually POs that my buying team has said beyond hot, these are parts that are critical, and I want to pay a little closer attention to them. There's over $400,000 in inventory that could be at risk if these PO lines don't get resolved, that I have over 143,000 that are late, and then 153,000 that are fallen in that hot category. So, a significant amount of spend that is at risk, and I've got a really easy way to address that.

I'll start in this scenario by logging into my Updates tab, and this is the workbench now that gives me a more detailed view of those PO lines and what needs to change with them. The scenario here, SourceDay highlights for me in red, the changes that my supplier has proposed, I have a note from the supplier that says supply shortages on this part I can only get you half next month, pretty typical scenario that we see. So, they have not only moved out the date, but they've also changed the quantity.

And so, in order to respond to that, I don't need to send any emails, I can simply hit my Accept and Reject. And let's say in this scenario I have enough safety stock, not a big deal, I can go ahead and accept that change. And when I do that, now SourceDay automatically updates my ERP. So, the planning and scheduling team that was expecting to see those parts later this month now knows they're not coming until next month, and they can plan accordingly.

Similarly, the supplier knows that I saw that change and that we're cool, no massive impact, we can handle that, we're all on the same page. This next scenario is a little bit different. It's, these are bike tires, and it's also a moved out part. I only needed 35 here, so I am going to say that's fine as well.

And then this last example. The supplier is trying to raise my price, and I know I have a contracted price on this part. But because I'm trying to expedite them, they've tried to increase my price. And I'm going to say, I'm sorry, but no. I can add a note that says, "No, we have a contracted price." So, this is that scenario that Louise alluded to earlier, where the supplier has requested a change to price, but we haven't agreed to it. So, there's no change to the ERP, you have it on record now that you have rejected that price change. So, if and when the invoice comes in, this is an example of a pricing discrepancy that's not going to happen. Or if it does, Napoleon has everything they need to kind of automatically address that and not need anyone in finance or procurement to go dig into it.

I've now handled three big changes that would have been three different emails back and forth, I would have had to wait for my buyer to respond, I would have had to update my ERP system. Now in a matter of a minute or two, I've handled all three of them.

The next thing I'm going to do is go to my Hot tab. This is those POs that I said I know are crucial and important. I was hoping to see updates from my suppliers on this, but I didn't. So really quickly, I'm just going to automatically notify them with a little comment here that says, "Need an update on these ASAP." I hit Notify, and now SourceDay takes care of sending those messages and also logging that they happened in the history on each one of these PO lines. So, we are always capturing an audit trail and keeping track of that.

A couple more things I'll note on the buyer view before moving on to the supplier section is, I have an all open order report at my fingertips at all times. And we know the practical reality of many businesses is we're not going to replace every spreadsheet or every need for a report. On all open report, we have customers during COVID that have used this to run their war rooms. But rather than have to run it out of the ERP or bug a busy IT team for it, all they do is come into SourceDay and export CSV or PDF. And now they can have at the ready an accurate, up to date, open order report that the sales team, operations team, supply chain can all triage together. And the buyers can use the SourceDay workbench here to keep everything and whatever changes, move-ins, move-outs they need addressed right here in real-time.

And then the last piece of the supplier review, because we're capturing all these transactions as I said, we can create through our insights and analytics layer, a data-driven supplier scorecard. Some industries mandate this, it's generally a best practice. And historically, this is something that buyers have had to do kind of manually, bubblegum baling wire, there's been a lot of emotional he said-she said on scorecards.

But since we've captured all this back and forth electronically, we have a data-driven, real-time analysis of performance that includes on-time delivery, responsiveness, this particular supplier is pretty poor in these two areas, price variance, though in quality they're pretty great. So, their average score is a C, but the buyer now because they're not having to touch every single PO line can spend more time working with the supplier or deciding to strategically source from another supplier. And if they want to see the detail that drove these grades, it's all captured right here. So that's the scorecard.

Now I'm going to shift quickly over to the supplier view, just so that you can see how easy it is for them to interact with the solution. One of the core areas of skepticism that we run into is suppliers are never going to use this, supplier portals have come and gone. And they never work because suppliers find them too hard to use. Well, SourceDay is fully committed to changing that, and we guarantee supplier adoption. We'll get into Napoleon's experience here with Louise in a second.

But we're able to do that because we have a product team, a managed services team that is ready to stand behind our promise that we can get at least 80% of your spend processing through SourceDay. Our aspiration is to get all of it. But we know the value to our customers like Louise is dependent on suppliers using the product, so it's sort of table stakes in our mind.

So, as a supplier now, I've got a different cup of coffee, on a different desk, in a different location somewhere around the world. And I log into SourceDay and have a very simple task list that has prioritized for me, confirming new orders, any PO changes, and a bunch of other things. And in this scenario, my customer is requesting you know 175,000 parts at this price. I can very quickly take a look at that and know, geez, I'm not going to be able to meet that. So, I'm going to recommend or request a change to quantity, and I'm going to try to move my date out a long way because I'm really struggling with this particular part. "Supply disruption, need more time to get you these parts."

And that is an example of how easy it is for a supplier to recommend or request a change on an order. Similarly, I can look at all of the requests from my customer and see all the changes and through a click of a button confirm this, confirmed change, now goes back through SourceDay into my customer's ERP system, the buyer knows that we're on the same page, the planning, scheduling, production teams all are operating off with accurate data, and we're good to go.

So, a few more clicks of the mouse, and I've confirmed all of these changes. And in this scenario, I'm told, oh, the customer rejected a change for me. I'm going to have to go back to the drawing board to figure out how I meet these. This is that scenario we just walked through from the buyer side, that PO.

[30:38] So that's all I wanted to share with you today. Just to give you a sense for what we're talking about as we roll into the rest of our conversation with Louise. I'm going to stop showing my screen now and start with some of our prepared questions. And then I do see, just so everybody knows, those are some great questions rolling in. And I will get to those, I promise, before we break at the bottom of the hour.

So, Louise, thank you for sitting through all of that.

Louise: No problem.

Sarah: It always makes me nervous to demo in front of a customer, because... I hope I did...

Louise: You did very well.

Sarah: And let's jump in more though, and you told us a little bit about your business, fast-growing, global business, more than doubled in five years, going to double again. Tell us more about your supply chain, your supplier base, your customers, what does that look like globally?

[31:23] Louise: Sure. So, just a little bit more about the company. We're a family-run business. Our owner Wolfgang started it basically in his garage making fireplaces, wood fireplaces for friends and family. And it's grown to this huge worldwide company. So, we've grown to over 1,500 employees worldwide. And like I mentioned, we've got manufacturing and distribution in Kentucky, Barrie, Ontario, distribution in Montreal, we have distribution throughout Europe. We have manufacturing and distribution in China as well. So, we're kind of all over the place.

Just give you an idea, we've got approximately 300 vendors at our direct spend that we're using SourceDay with. On the customer side, we deal with anybody from dealers, distributors, big box. And then for service items, warranty parts, that kind of thing we deal directly with the consumers quite often. And that we're looking in the last couple of years we've had over 3,000 active customers, so we've got a lot going on.

Sarah: Wow, yeah. And your supplier base is global too, right?

Louise: Yes.

Sarah: They're not all in...yeah.

Louise: Correct.

Sarah: And tell us like...there's a lot of variety that you talked about in terms of lead times related to that.

[32:42] Louise: Yeah. So, we have, you know, some vendors who are very close to Barrie, who are even in the U.S. And so, we're just talking a day or two or even three or four days. Other vendors we have like in Mexico or China and we're looking, you know, 90 to 120 days, so there's definitely a very wide range of lead times on that.

Sarah: Which has a kind of a material effect on that move-in, move-out scenario that we talked about in our presentation, right?

Louise: It does definitely.

Sarah: People will proactively move an order out from a Chinese supplier, you gotta be really on that, you know, you can't wait too long.

Louise: Absolutely. And that's where you know, and using all the metrics that we're seeing in SourceDay now, and that automatic communication with the vendors is really helping us be proactive with all that. The sooner we know about something that we need to expedite or push out, when it's on 90 to 120 days out, the sooner the better, definitely.

Sarah: Yeah, yeah. And on the order of, I hate to harp on this, but like millions of dollars a quarter, that's a lot of cash flow that business needs right now.

Louise: Yes, it is.

Sarah: Working capital.

Louise: Definitely.

Sarah: And then tell us about your back office. So what have you got running behind the scenes?

[33:49] Louise: So we use Infor's Visual ERP system currently. So, we are multi-entity, multi-site for those...of the attendees who are familiar with Visual, we do use MRP to generate all of our planned orders, and that's how we decide what we're going to order or turn into work orders or purchase orders. We also use the concurrent scheduler within Visuals to help schedule work orders into all these specific resources, because there's a lot of them. So yeah, so the better the data that we have, the better we can plan and schedule our production lines definitely.

Sarah: Sure. And every IT team, over 25 years in the business is always slammed with projects. And typically, the last thing they need is another one. And also typical when that project has anything to do with the ERP there's an immediate emotional reaction for an IT person. Because you live in that world, can you share what it was like to work with SourceDay and how hard it was to get our product up and running?

[34:55] Louise: Definitely. Even being we were one of the first adapters I think with Visual for SourceDay, and even with that it was really the effort required on the polling site was very lightweight. Very little involvement from the IT side other than to, you know, maybe coordinate a little bit for the API and which tables to connect to, and some of the custom things that we wanted. You know, we got a little bit involved in that stuff. But definitely SourceDay did the majority of the work, so it was a very easy project for our IT department.

Sarah: And what about your favorite part of it, the user training and the supplier onboarding, and you know, you've got hundreds of users, it sounds like, have you guys had to spend any time on that?

Louise: Not really. And that is my favorite part. Yeah, so having SourceDay look after all the training for our buyers and for our vendors, really took a big load off of us. We don't have again, like I said, we're a family-owned business, we still wear many hats. And so, we don't have formal trainers or anything like that.

So anytime we bring in a new buyer or a new vendor, or if we're having trouble with a vendor on how they're using SourceDay, you know, SourceDay reaches out to them, and sometimes even before we request that, before we're even aware that there's a problem, they're reaching out to the vendors. It's really...that's a big load off of us that we don't have to worry about that.

Sarah: Yeah. And we have, I was looking last night, more than 80% of your direct spend runs through SourceDay today. That is the exact figure.

Louise: Yeah, it's up closer to 90% actually.

Sarah: Oh, wow.

Louise: Of our direct spend. So that's a lot, you know, and I think that represents 65% of those 300 vendors that I mentioned. But again, that's 90% of our spend, so that's a, you know, the majority of it is in there. The ones that aren't there are ones that we order from maybe once a year, and it just doesn't make sense, right?

Sarah: Right, right. And that's really typical for all of our customers too, we really follow your lead on that, and we get every single one of the ones that you need us to up and running.

Louise: Right, right, definitely.

Sarah: So, tell me a little bit more about the executive vision for SourceDay. We're going to jump into the before and after here in a sec, but like, what was the reason that you guys decided to ditch the spreadsheets and email?

[37:20] Louise: Like I said, we're, you know, fast-growing, and with that growth, you know, it just gets to be too much to handle it on spreadsheets and emails and trying to track everything. And like I said, if something's off, you don't have access to their email, you're not sure maybe where things left off, where's this PO? Did the vendor acknowledge it? Did they not?

So, it left a lot of questions open. And so, we really wanted to solidify that whole process for one and really allow the buyers and planners to do more strategic work, right, and work more on the exceptions and to improve those relationships with the suppliers, and to have the time to do that. When they're having to touch every single PO at least once, if not twice, or three times, you know, that doesn't leave much time in the day to do anything else.

Sarah: Right, right. And so we tackle the PO process that you just described first, and then you alluded to this in the presentation but let's dig into the financial visibility and the improvements that we saw there...well, the visibility to prepare the finance team, how we have also helped them save Napoleon lots of money and time with AP.

[38:25] Louise: Yeah, definitely. So, the AP side, like I said, so, one just reducing the number of discrepancies that we had was huge, right, a great side effect that we learn about afterwards, after go-live. And then implementing the AP module now is saving them even more time, because as soon as something matches that matches the receipt, the PO and the invoice, all three match, it automatically vouchers or creates the voucher within ERP system within Visual. So then all they have to do is review all those vouchers and post the ones that they want to pay.

So it's definitely a huge savings, even, you even say it's a green effort because now we're using up less space with filing cabinets and less paper, tons less paper, you know, keeping all those invoices electronically rather than installing cabinets.

Sarah: And not to mention the fact that because we're in the cloud, I know your team had a significant period of time that you had to work from home like all of us.

Louise: Yes.

Sarah: You weren't having as the IT person to figure out how to VPN, your finance team and the... And we do have customers who still write paper checks. So that was a pretty seamless transition, not just for your finance team, but also your buyers I imagine.

Louise: Definitely it was. And we actually do still have most of our office staff working from home, those who can are working from home still, so that was just an easy solution, where we did have to scramble as well for you know, because our ERP system is not cloud-based and some of our other systems are not. We did have to worry about you know right away getting people set up to work from home and licensing VPN, Citrix, all of that stuff, right?

But at least with SourceDay, we knew it's all online, you can just use your regular connection and jump in wherever you are, whether you're at home, the cottage or at the office, right?

Sarah: Right. And it's important to know it's still secure, still, you know...

Louise: Absolutely.

Sarah: There's no worries there, we handle all of that as well, but no business interruption through that transition. And less work for you as the person who has to get all those users productive again in unprecedented times.

Okay, well, so it sounds like you feel that overall, and I don't mean to lead the witness here, but we've talked about this before, that Napoleon's made a massive investment in Visual ERP you know, over the years. It's SourceDay layering on top of that and creating a more modern way to interface with your buyers has helped you get more value out of your Visual investment.

[40:57] Louise: Definitely. Definitely it has. Like I said, you're looking at more of strategic things, even just reviewing lead times, safety stocks, planning information within the system, making sure that's all accurate. Again, the better that data is, the better decisions that we can make, and less chance that we're going to, you know, shut production down or let our customers down. So, maybe we doubled in size in five years, we're on track to do that again. And we haven't had to add any headcount as far as buyers go for the day to day planning.

Sarah: On growth, yeah, yeah, it hasn’t weighed you down.

Louise: Right. So, it's allowed us really to focus on what we really need to focus on, on the exceptions and not just handling the day to day admin stuff.

Sarah: And so, through COVID, we're almost done with my prepared questions, and we'll shift to you audience in a minute. So, make sure you've got your questions published in. How has the COVID disruption and everything we just talked about affected your ability to ship to Napoleon customers the last three, four months?

[42:00] Louise: So like I said, we did have to slow down production quite a bit and then ramp up very quickly. Again, most of our office staff are still working from home. So, without having something like SourceDay, I mean all the communication that had to go on with our vendors as far as you know, we're pushing up production on these items, but we need these ones expedited. And then when we were ramping up to try and move everything back in very quickly, having to do that manually or all through phone calls or emails would have been a nightmare to try and track everything.

So, having SourceDay kind of kept everything central at one spot, and then we didn't have to worry about who was working from where or if they had access to something that they needed or not because it was all there. You know, vendors and buyers, everybody is on the same page. And that's huge, I think during something like that, something like COVID, communication is key, right? Without that communication then you're lost.

So, it was definitely, it was good to know it was there, it's reliable, and we know we can use it from anywhere and that everybody's going to have the right communication.

Sarah: That's great. Because it's hard to imagine what life would be like if you were doing it in email, huh?

Louise: Oh, yeah, I wouldn't want to think about that.

Sarah: Well, we've got questions rolling in as I said. The first one we've talked about a little bit, but I want to circle back to it. And that is the issue with supplier adoption. It sounds like our audience might be a little incredulous with your answer, having a hard time believing it.

The question specifically was, you know, did you use a carrot or a stick or both to get your suppliers to use SourceDay?

[43:44] Louise: Yeah, and at first, you know, there's always going to be suppliers who are hesitant to learn, to do something new or to jump into something that they're not familiar with. So, we had a little bit of that, but it was really you know, "We work with SourceDay," we gave them a list, "Here's our vendor base that we want in there. Here are the ones strategically that we want to do first, right?” The higher volume ones or the ones we know we have communication issues with or just regular issues with recently, you know, specific projects that really need to be...have a lot of attention on them.

So, we started out with those. I think we started with 20 vendors, went to 30, added another 50, added another 50 until we got to where we're at now. We went live at the end of April in 2018. And I think by June we had pretty much all the vendors that we have on now other than the new ones that have come on since then. But you know, we ramped up within a couple of months, we had most of our vendors on there. So, it was pretty good. They see the value to it too, because they're getting the right communication, they know where to go to get the right, you know, it's "Oh, I looked at an email that was two weeks old as opposed to the most recent one that had these changes on it." So, they know that the information is there that they need. So, it helped them a lot too.

Sarah: And it's you know, in some cases easier, we strive to make it easier than their inbox to manage.

Louise: Absolutely.

Sarah: Like not too foreign, not too, you know, wildly different than their standard...your standard process of communication and collaboration. It's a word we use a lot at SourceDay. But yeah, thank you for sharing that experience. It's fair for people to be doubtful, but it really is something that we're very proud of. And our current situation for Visual accounts, I know we have some audience members who are Visuals, from start to go-live is on average 30 days. And that is largely driven by the IT team's availability, it's not a heavyweight API that we need.

As we said, it's more a matter of sort of field mapping, QA process, testing, like that takes the time. And then the onboarding, your experiences, you know, right in line, we strive to have suppliers live. I think our record to get to 80% is like 2 weeks. But I think that was a smaller business, but 30 to 60 days at the outside, because we care about time to value a lot.

Louise: For sure, yep. And yeah, and then the sooner we can get them on there, the sooner we get to see those benefits as well. So, it was interesting to kind of stay on that. We didn't really have to...I think as far as we got involved, we sent a vendor out to, or an email out to all the vendors letting them know that this was coming on board, you know, I'm giving them a heads up, "Hey, you're going to get an email, you're going to get a call from SourceDay, here's what it's about. And you know, here's the value in it for you, here's the value for us. And together it's going to help us, the whole supply chain improve."

So, yeah, so we haven't really had to go back and you know, kind of, say, tell vendors you're using this or you're out, kind of thing. I don't think it's going to come to that, because most of them are very willing to be on there.

Sarah: So, we have another question about the users at Napoleon. So, we've talked about the supplier users are typically your account managers, right, the salespeople and the account managers?

Louise: Right.

Sarah: Because they're using SourceDay, they're logging into the portal I showed and kind of clicking around and making comments and you know, interacting with your buyers at Napoleon, right?

Louise: Yeah, yep.

Sarah: So, talk a little bit more about that. Like who at Napoleon is actually using SourceDay.

[47:25] Louise: So, we actually have our...we call them material planners, they're the ones who are placing the POs every day. They're the ones who are communicating with the vendors, who are the ones who update all that information. So, they were the primary users at first. We do have a couple of senior buyers who are in there just when there are pricing changes, you know, they can go in and kind of have a look at it, when the planners can kind of alert them and say, "Hey, can you have a look at this and see, are they correct? Is the pricing...does the pricing change now or what's going on with that?"

So, they have some access to that as well. Again, we have a couple of managers who have access to go in if there's something they need to follow up on. It's really more just view only. So they can see the reports, they can see the metrics as well. And then we have our AP users. So we've got, let me see...we've got nine material planners in there, that's including one in Kentucky and one in Europe. We have I would say a couple of senior buyers, a couple managers. AP, I think we've got four users in AP, including managers, so that pretty much rounds it out. So we've got quite a few people in there.

Sarah: Great example the magic that happens when you find a solution that helps all these different groups in a business work together more seamlessly.

Louise: Absolutely. Absolutely.

Sarah: You know, one of the questions that came in was about your AP experience. I want to make sure we are clear. Because we are now the system of record for POs, and all the change you know, typically at least a third now more than half of the lines will have a change to it from when it's first issued from the planning engine in Visual to when the buyer and supplier are in agreement.

That final PO is then in SourceDay, so we also take the supplier invoice, so the vendor invoice for those parts once those parts are fulfilled, and we match it against the final PO, and we match it against the receipt data in Visual. Which is how you get to the 95% reduction and discrepancies number that you talked about at the top, right?

Louise: Right, for sure. Because there's no, again, there's no going back and forth saying but I sent you this email or I didn't get that email or whatever, right? It's just the information is there, you acknowledged it as is, so from either side. And so that's what we're going with, right?

Sarah: Right, right. And I didn't show it today, I probably should have if this was a question. But there's an audit trail of every interaction, on every PO line of every order that SourceDay captures that any of those users that you describe, the senior buyer, the manager, the material planner, the finance person can pull up at any given time and see what happened or transpired for that line, and who approved, along with who rejected. So that he said, she said scenario just goes away. That it's not necessary anymore.

[50:12] Louise: Right. And all the buyers, all the material planners have access to all the POs that are in there. So not necessarily just theirs, I mean, they can see it with a filter if they just only see their POs, which typically is what they would do.

But somebody's off on vacation or off sick for a day, they can jump in and have a look at that person's POs, and that audit trail really helps because then you know who's looked at it, when, and what action needs to be taken, if any. So just having that information available is huge.

Sarah: And there's a productivity side of it, but that was one of the questions, is what kind of efficiency gains, I mean, the people are spending less time on the wrong stuff.

Louise: Right.

Sarah: Right?

Louse: Right.

Sarah: I think more important, Napoleon's not paying too much for their parts. Like you're not accidentally paying invoices where the pricing is wrong, it's too high.

Louise: Correct, correct.

Sarah: Or paying for parts that you haven't yet received because the vendor sent you a partial ship, and not a full one.

[51:06] Louise: That's right. That's right. Yeah, so definitely we make sure that we're spending the right amount of money and in the right, you know, towards the right parts and the right places. In terms of efficiency, like on the buyer side, I think we're seeing time savings of up to two hours a day, you know, and across nine planners, that's a lot of time that we're saving throughout the year where they're, you know, they can pay attention more. If there is a price discrepancy, let's call the vendor up and have a conversation about that.

Or, you know, whatever exceptions, planning information in the system. And that's the other great thing with SourceDay updating Visual automatically when everything's acknowledged, then they don't have to go back in there and look at things over again, and they know that the information is going to be right in the system. There's no, "Oh, I forgot to change that data. I forgot to change that in Visual." And so then, you know, that can create a discrepancy as well, and that is all eliminated as well.

Sarah: Yeah, yeah. That's great. So, the next question was about on-time delivery. And we haven't spoken about that as much. On-time delivery is always...it means a little bit, something a little bit different in every business, you know, is that the vendor commit or is that what you originally requested in terms of delivery date? How does Napoleon track delivery, on-time delivery today? How do you measure that?

[52:20] Louise: So, on-time delivery, I believe we're just measuring just the vendor committed to this date and this is when we receive it. Does it matter, does it not? And it can vary in a couple of different areas, because we do have some of those offshore vendors where they're only responsible to get the product to port and then we take over from there, right.

Whereas before, it may have looked that, you know, if the order was late, well, maybe it's the transportation company, but the vendor is one who's getting dinged for it. Like so now with SourceDay we're able to kind of separate that and compare and say, okay, the vendor had to get it to port on this date, which they did, and so they met it. The transportation company ran into whatever issues, rail strikes, whatever it is, and so that's what caused the delay. So, we're able to separate that information now very easily where we couldn't before.

Sarah: Sure. And it creates a better relationship with your supplier.

Louise: Absolutely.

Sarah: Part of the advantage to them using SourceDay, they get paid faster and more correctly. And you're not accusing them of doing things they didn't do. And they have a paper trail too.

Louise: Right, exactly.

Sarah: Yeah. And then a follow up on this one, is the on-time used with the receipt date and the PO date?

[53:35] Louise: Yes. Yes, yeah. So whatever due date is in the system, even if it's not the date we originally requested, if it's the one that we've agreed to with the vendor, then that's what we hold them accountable to. I think we do also have a field where we keep track of what the original desired date was, so we can kind of look at you know, we asked for this date, but they're always coming back and saying it's going to be a week later, a week later, a week later. Maybe their lead time needs to increase.

Sarah: Correct. And you know, you make an excellent point. This is an area that we can now give you visibility and less often wrong lead times. So, it eliminates that back and forth all together.

Louise: Yes, yeah, definitely. So that's where we kind of track it as two separate things. And the scorecard that we use with our vendors looks at the delivery date on the PO versus when it was actually received.

Sarah: Right. And that's an important thing for the audience. Our scorecards are all configurable to your business and however you measure this stuff is how we measure it for you.

Louise: Correct.

Sarah: You don't have to change how you do business to work with us. So that whole scenario is part of how you achieved a 15% improvement in on-time delivery. Has that led to better customer satisfaction, do you think?

[54:50] Louise: Absolutely. Absolutely it does. I mean, it helps all the way through, right, your productions are running on-time, they have the parts they need when they need them. And so we're able to ship to the customer when we promised it to the customer.

So, it just, you know, it starts...it all starts at the beginning. If your parts are late, your production is going to be late, your order is going to be late going after the customer. So the more we can improve the frontend of that, the better we're off, and the better our customers are off.

Sarah: Right. And we have an internal saying at SourceDay, you know, our mission is to stop those misses at the source, that first step, that first mile of the supply chain.

Louise: Exactly. Otherwise, you're all scrambling all the way.

Sarah: And no more scrambling. Yeah, exactly. Okay, so let's see, last two questions, I think, was all we'll have time for, but they're around AP. So, are you able to use AP for all your vendors or only SourceDay vendors?

[55:52] Louise: That's a great question, actually. Because this actually came up in a conversation last week. So, right now we have...one of the customizations we wanted was we wanted only certain, you know our direct spend POs to go in. So, we added, we actually had a filter added to only bring in certain POs with certain buyer IDs on them.

And now with AP, now that we're very familiar with the AP module, and we want to roll it out to all of our vendors, so for the AP module I believe we're going to remove that filter, so then all the POs can flow through there. It's still going to pick up all the right information, it picks up the receipts, the POs, the invoices, so it can still do the matching even though the vendor may not be using SourceDay to communicate with us on the PO side. Oh yeah, so that's definitely something that we're doing now.

Sarah: And then, this next question, is the AP process automated from the supplier side, or are they manually importing or feeding the invoices?

[56:54] Louise: I believe they're still emailing us the invoices like they always have, so their process has not changed. From the AP side they're not seeing, you know, they're not impacted that way. And I believe the functionality, I'm not sure if it's there yet or not, but will be there where the vendor can just upload the invoice right into the portal. So that will kind of set up the step as well, right?

Sarah: Yep, that's right. So the standard practice today is to map to how they do work, how they work today. So we'll take the emails, we use OCR capability to digitize them in the right formats and do all the field mapping per vendor for you, so that the invoices make it into SourceDay in a way that can facilitate the matching and the vouchering process that you just described.

So that's the standard practice. But as you said, we want to make it as easy as possible for vendors and suppliers, so we can do deeper integrations, provide file uploads. There are some, you know, customers that have us doing so. And you know, the vendor exports a spreadsheet and uploads it to SourceDay, so they don't have to send 100 invoices, 100 emails, we have that capability. You know, depending on the situation, it's more or less the lift, but that's absolutely the vision is to make it as seamless as possible and let the humans do what they're best at, which is figure out, you know, if there's an issue let's work the problem human to human. Let the machines take care of the stuff that we don't need to pay attention to.

Louise: Exactly, exactly, yeah.

Sarah: Yeah, yeah. Well, as we wrap here, Louise, I want to personally thank you for taking your time. I almost... For those of you who don't know, Louise has an idyllic spot on a beautiful lake up in northern Canada that she has generously given us an hour away from. She sent us a photo this morning, and I was really a little bit jealous but mostly grateful that you gave us some time today, instead of staring at that beautiful vista, so...

Louise: Oh, it's my pleasure. I'm staring at it now as we're talking anyway, so...

Sarah: Oh, okay, good. Well...

Louise: No, it was a pleasure, thanks for having me.

Sarah: It's always a pleasure, and I'm happy to see you healthy and safe and doing well and look forward to talking again soon.

Louise: Yes, definitely. Thank you, Sarah.

Sarah: You're welcome. And for the audience, quick reminder, we'll be sending a recording for this out to you as soon as it's done being produced. And thanks everyone for joining us. We hope to see you again. We have another webinar next week, if you enjoyed this, we are going to be exploring a similar conversation with Dell Technologies, the Art of Procurement and Machine Metrics. So keep an eye out for that and register if you haven't already. Thank you, everyone. Stay safe out there.