CASE STUDY – IRISH OIL
DISTRIBUTOR
This Irish Oil Distributor implemented Herbst Software in 2003. Since then:
- Their sales volumes have grown tenfold, in 7 years.
- Net profits grew in proportion.
- Number of administrative staff in “direct” stayed constant, despite the increase in volume.
- Volumes per delivery truck increased significantly.
Company thrived in a very competitive market with constant price changes. Herbst Software played a major part in that growth.
Pre Insight days – 1998 to 2003
The company had an “Industry Standard Accounting Package” and battled with the following issues:
- 2 accountants, 6 office admin staff and information 4 months in arrears.
- Major debtor control problems.
- Major direct debit processing problems.
- Stock control was extremely difficult.
- Very little management information.
- Very user unfriendly.
- Not an integrated system – bits added on. Upgrades had become a nightmare.
- Very expensive licence.
- Very slow response to problems, and very expensive repairs.
In their own words – “We could not run our business – we had to change”.
Decision to change to Herbst Insight:
After one presentation from of Herbst Software we knew we had identified the ideal solution. “Herbst Insight Software” provided us with the following:
- Live up to date information.
- Competitive licence fee.
- Great service.
- Paperless solution.
- Exception reports for meaningful information.
- Controls of: stock; credit; margins; and overheads etc.
- Ability to communicate easily, and cheaply with customers.
- User friendly.
- Paperless – electronic.
- Remote dial in; with ability to drill down to source document.
- Simple to remember codes for input – for speed and accuracy.
- Flexible.
- Decentralised System – stand alone independent depots.
Herbst Insight Software gives us all the answers
Herbst Insight has given us live, meaningful and easy to understand information including :
- What makes up our gross profit?
- What are stock losses cost us: by month; by product; and by driver.
- The margin, per litre, this period and year to date.
- What is our gross profit per drop / delivery?
- What gross profit are you making on small drops?
- How do volumes compare with last year and budget?
- What are your truck costs? Do you know what KM/Litre you are getting?
- What trucks are profitable?
- What percentage of sales by a driver, are collected as cash?
- How do we maximise gross profit?
Most companies don’t know the answers to these questions but we do, and the information is automatic and live. If something is wrong we can take immediate action e.g. adjust our margins.
Our layout of Profit and Loss allows us to:
- See the Euro value per drop; instead of cents per litre.
- Control the losses.
- Control mixing of products.
- Bulk collecting, or delivering, when domestics are quiet.
- Schedule evening, and Saturday, service.
- Reward drivers well for drops in excess of normal and for new business secured. Effectively turning our drivers into a marketing asset.
- Be more effective with telesales.
Reports on profitability:
- Euro per drop – exception report by product.
- Stock loss by driver on face of P&L.
- Driver summary.
- Actual volume last year, versus budget and cumulative year to date.
- Credit exception reports.
- Credit summary.
About Herbst Sofware
Herbst Software puts Owner back in charge. Owner can now see, for him/herself, the live reports that are necessary to run the business and he/she does not have to go to 3rd party sources for information. By the time this data is gathered, and analysed, it is often out of date.
Owner can see, today, what each driver is making, and what business he has to do. Owner can see, today, what cash a driver is collecting. Owner can dial live into any company from anywhere with broadband. The software helps you control the business and grow it profitably without cash flow difficulties.
Trucks represent 70% of your overheads . You have to maximise the usage of this largely fixed overhead if you want to grow profits. Therefore you need to:
- Maximise daily volume (bulk load morning plus domestics afterwards).
- Driver must know what new orders have come in for his/her area.
- Double shift, where possible, to minimise delivery cost and give evening service.
- Do all bulk collecting, or delivering, if domestics are quiet (We were the first company to use drags).
- Keep the trucks new – you have a happy driver and minimal repairs / downtime.
- Daily driver summaries.
- Driver profitability report and control of bunkers.
Administration Control – 30% of overheads:
Insight has helped us to minimise amount of time spent on admin, and to maximise time for selling / collecting cash and updating our database.
We have to have sufficient staff to provide a professional, and friendly, telephone service. When not answering the phone, our staff must be productive.
- Hand held computers – to greatly reduce admin time:
- Drivers act as admin people.
- Reconciles stocks, and controls payments.
- Totals cash collected.
- Always know what stock is on board.
- You know what calls are ischeduled for your area tomorrow.
- Info on customer, such as history, directions, telephone etc.
- Map of the area.
Office knows where you are, and what product you have on board.
Time spent by office confirming was greatly reduced.
Purchase invoice automatically created.
Automated wage calculations.
Allocation of specific debtors to telesales person.
Automated direct debit.
Sales and marketing:
Text, or email, those customers who have not made a purchase in the last 6 months.
Promotions by market sector.
Bring Christmas deliveries forward.
Price changes.
External data base.
Credit control:
Every debtor has a credit limit, and credit terms.
Every debtor is allocated to a market sector – see balance sheet.
If a new sale takes the customer outside any of the parameters, it has to go to Credit control with note from the manager on how account is to be brought into terms
Arrears of credit are allocated to specific telesales persons for follow up with notes
“Forbid” – prevents any transactions with a customer
Credit summary report
Management bonus partially determined by credit performance
Daily checking of cash collected by drivers
Balance Sheet:
Stocks quantities and values live
Liquidity
Bank balances
Debtors by market sector
General Management reports and reports to Board:
Litres and margins not sales in currencies
Comparisons with same month last year and against Budget
Cumulative year to date
Summary credit arrears