Steve Sevruk of McLendon Hardware

(Jun. 24) SAN DIEGO

At the Activant users' group meeting, Pinnacle 2009 drew just over 400 hardware store owners and building material operators. Several of them agreed to sit down with Home Channel News for a freewheeling discussion on the intelligence of Gen Y workers; gui vs. character interfaces, data-driven inventory management, and whatever else was on their minds.

The participants:

David Bohl, president of Kibler Lumber, Mt. Orab, Ohio, a five-location Do it Best dealer with two units in northern Kentucky and three in southern Ohio.

Randy Burgess, VP Ace Hardware, Anacortes, Wash., a one-unit dealer in the Puget Sound area.

Steve Sevruk, controller, and Nathaniel Polky, purchasing support manager of McClendon’s Hardware, TK locations in the Greater Seattle area

Denise Silnes, IS manager at A.H. Bennett Co., five building materials outlets, Minneapolis, Rochester, and St. Cloud, Minn.; Eau Claire, Wis.; Fargo, N.D.

Dennis Stine, Stine Lumber, 12-unit chain of home centers, mostly in Southwest Louisiana

Home Channel News: Are any of you implementing new IT systems or software packages?

Denise Silnes, A.H. Bennett Co.: “We were one of the beta testers for Activant’s “Catalyst” program in our accounts receivable department, which does cash receipts for all five branches. Our credit manager was always having problems with setting up new accounts. She’d come in one the weekends and stay late at night. We’ve been using Catalyst for a month and our credit manager loves it. It’s a big time saver. [With existing customers], everything is on one page instead of having to scroll through eight different pages. It’s easier for her to track how they’re spending and what they’re spending.”

Steve Sevruk, McClendon’s Hardware: “I’ve only been at McClendon’s for about three months. Before I came, they had their general ledger done by an outside party. Right before I left for the conference, we created our first in-house financial statement. Now we have control of our financial statements and can do it internally instead of passing it out to a CPA firm who doesn’t really understand the business.”

Nathaniel Polky, McClendon’s Hardware: “We brought on a warehouse management software package in the spring of 08. Until then we had been running a pseudo proprietary package in our warehouse that wasn’t effective. This allows us to run automatic replenishment into our warehouse and then do automatic fulfillment into our stores. Just that one piece of technology has allowed us to standardize how we replenish our stores, cut our carrying costs significantly, and reduce our inventory.”

HCN: Isn’t it hard to justify new IT expenditures at a time like this, when revenues are off and profits are down because of the economy?

Randy Burgess, Ace Hardware: “I just purchased a new server about 20 minutes ago. So far, everything is fine. [Laughter]. We’ve always embraced technology and it’s time to upgrade. The system was slowing down, there were capacity issues. I did use the lease option on this, so it kept my monthly cash flow more manageable.”

Dennis Stine, Stine Lumber: “Not withstanding the economy, we recognize that we need to have the appropriate ammunition to compete against our greatest competitors, which are Home Depot and Lowe’s. We’ve closed every gap there is -- we’ve built million-dollar boxes that are in line with those guys -- but we need to close the gap in technology. Our old system is a real workhorse, but it just doesn’t have the robustness that our competitors have. Now we have the infrastructure in place to be able to scale [up].”

David Bohl, Kibler Lumber: “We’re in the Midwest, in manufacturing areas, with lots of plant closures and layoffs. Our sales have gone from $25 million to $15 million in three years. So we’ve really reduced our [capital expenditures] and learned to [better] utilize the system we already have. Falcon and multi-location purchasing has allowed us to reduce our inventory from a little less than $6 million to about $3.5 million over the course of a year and a half.  We’ve implemented Performance Driver, a productivity suite, down to the store manager level. We can drill down to individual sales people to see what they’re selling, by product, by margin, or by customer. Competition is pretty severe in our area, so if a particular salesperson is only selling sticks, I can ask them why they’re losing the window business or the millwork business.”

HCN: A lot of unflattering things have been said about Gen X, Gen Y, and other young workers, but we’re wondering if they’ve become the technology leaders in your operation because they tend to pick up things quicker.

Dennis Stine: “When we moved to the new system, the cashiers were fine within about three hours. The old timers were [still] complaining after two months.”

Steve Sevruk: “It takes me a while to get my head around things. The good news is that I have a guy like Nathaniel to translate things for me. We like having employees who have been around a long time; on the floor, they’re wonderful for selling. But when it comes to technology, to ROI, young people are going to help us get there.”

HCN: How old are you, Nathaniel?

Nathaniel Polky: 26. I’m a Gen Y. I like to just jump in and do something. But how do you get others to find the benefit and get the same results without overwhelming them? That’s challenging.

HCN: It must be frustrating at times.

Nathaniel Polky: “At certain times. Pace is usually the issue. There are things I would like to go faster on.”

Denise Silnes: “I find that the older people in our company like things written down step by step. Some of the younger people are a little too gung ho. They want to try things they’re not supposed to try. They’re always pushing the limit.”

Randy Burgess: “I used to be Nathaniel. I came into the business really young and sometimes I was too gung ho trying to implement changes, and be on the cutting edge of new technology. But now I’m 38, and I watch my oldest son carry on a conversation while he’s text messaging and doing other things. My brain doesn’t split up into that many pieces. But you have to embrace that. It’s what’s driving our organization forward.”
 

David Bohl: “We’ve always run order entry in a gui [graphical user interface], instead of a character, interface. I overheard a conversation between two of our younger employees, one of them came from Home Depot, about how antiquated our computer system was. It was an eye opener to me. Here I thought we had invested a lot in technology, but they dismissed us as a 1990s company.”

Dennis Stine: “We allow both. You can pick either a gui interface or character. The younger crowd all went to the gui. The older crowd said, `I can’t even see that screen. Give me character.’” 

HCN: How has the downturn highlighted your technology deficiencies or strengths?

Steve Sevruk: “At McClendon we’re doing centralized purchasing, and I guarantee you, there’s a $2 to $3 million reduction in inventory because they’re relying on the people behind the scenes to do it, rather than the people in the stores.”

David Bohl: It’s driven us to be more centrally stocked at our larger store. We used to deliver from all our locations we’re now using ship sell to ship it from our central location.”

HCN: When the economy finally turns around, what will be your next big initiative?

Steve Sevruk: “The Web. What we had before didn’t give us what we wanted. But we all know we have to address the Web.”