Success Stories
Technology and a Member-centric focus drive the switch to LBMX
Their history is as straightforward as one can find in the world of buying groups: In the summer of 1995, a handful of entrepreneurial gypsum specialty dealers combined their purchasing power to get a pricing edge in their respective markets.
However, that singular focus of doing what’s best for the entrepreneur has been – and continues to be – the force behind their growth, and the reason this forward-thinking group embraced technology well ahead of their competition.
Today, The Drake Group, headquartered in Maryland, is an amalgam of 57 member companies operating in over 188 locations throughout the United States. They are fully-owned and operated by their members and exist for their sole benefit. Their Web site, gypsumtoday.com, is an impressive cache of current and archived industry, technical and product information developed by and for leading companies in the North American construction industry.
Who The Drake Group is, what they do and how competitive they are about all of it is crystal clear. No surprise that a conversation with Jeff Dushack, the group’s executive director, around the matter of member EDI (electronic data interchange) and their relationship with a system provider is equally clear-cut.
Their member-centric focus was behind the move to leverage technology and deliver value. But when their desire to advance and improve was stonewalled by their existing vendor’s cavalier attitude towards smaller enterprise customers, Jeff and a technical colleague began a search for a considerably better alternative.
This is their journey to EDI with LBMX.
Where they were – Before EDI with LBMX
The Drake Group has always been ahead of the curve and their competition: They have been offering EDI to their members for more than a decade. In fact, they were category pioneers when years ago they developed an e-commerce solution that consolidated purchase orders from member companies to improve efficiencies for key vendor partners.
By 2012, the group was running EDI on a platform called ‘PTX’ by their then-EDI vendor. Since they are not a central-billing organization, distilled to its essence, PTX allowed them to “match our members to our vendors” and enable electronic purchasing on what was commonly known as the ‘Drake Hub.’ But that was pretty much the extent of the system’s capabilities, and it offered no features the group could implement in the future.
As we got further down in our pricing comparison, we realized the choice was coming down to 'softer' issues – they are committed to customers, our space and they focus on groups and co-ops.
Jeff notes Drake is always looking to leverage technology, and understands there are going to be glitches in any IT system requiring vendor support. But the strategic changes they wanted to make and the technical issues they encountered were hampered and exacerbated by conflicting fundamental differences in how to run a business.
Of their previous EDI vendor, Jeff points out “we felt like we were a nobody with them.” To hear him describe the relationship, the vendor was a big, complicated organization and it was never entirely clear who The Drake Group should be or was dealing with.
Add in the promise of a software upgrade that never materialized. And this wasn’t a typical, better-features-smoother-operation upgrade either. The configuration of Drake’s servers and operating system were changing and without the upgrade EDI capabilities would cease to be available to their members – it was mission-critical.
After listening to months and months of the vendor’s heel-dragging, the group left. “We didn’t think there was a future in the relationship.” Even now, years after leaving, Jeff wonders if the vendor knows they lost Drake’s business.
Making the right choice – Why EDI with LBMX
No smart customer stays where their business is not valued, and The Drake Group is no exception. They began the search for a new EDI vendor in 2012, and started the conversation with LBMX in 2013. The decision to move would eventually come down to qualities that are hard to measure, yet are of immeasurable value.
Compared to their immediate previous experience, working with LBMX was a stark contrast. A considerably less hierarchical, flatter organization, soon after talks began Jeff felt confident he or his technical colleague could call LBMX and quickly speak to someone who knew them by name and could resolve the issue. “We had a feeling our business would be important to them.”
That high level of customer focus worked hand-in-glove with LBMX’s deep and broad knowledge of the industry, and the buying group and cooperative business models. “As we got further down in our pricing comparison, we realized the choice was coming down to ‘softer’ issues – they are committed to customers, our space and they focus on groups and co-ops.”
Softer issues didn’t negate the harder ones, however. Doing a surface comparison with their old system revealed similar capabilities of moving data electronically from A (members) to B (vendors). Immediate problem, solved. That, however, was merely the beginning. Previously, Drake was staring into the abyss of the status quo with their old system that was also nearing end of life. Conversely, LBMX allowed the group to once again look to the future. The solution would afford them a host of additional benefits, backed by a team of experts who are as committed to evolving as they are to customer service, and who would support the group’s drive to be technologically progressive.
The Solution
At its heart, the LBMX Group Solution is an EDI capability that replaced the Drake Hub, and allows members to order their products via a common internet platform on the LBMX web portal. Tom Jones, LBMX’s Chief E-business Officer explains, from there “it [the system] cross-references member orders with supplier product numbers, and generates and delivers an electronic purchase order to the supplier, who then sends an electronic invoice to The Drake Group.”
For the uninitiated, that process – all paper- and person-free – has huge upsides. Start with the efficiency around eliminating data re-entry and the inevitable human errors, plus the ensuing overhead expense of having that employee in the first place. For the management team, the biggest benefit comes from the real-time capabilities the platform provides. “There is no good reason with technology like this that any business or group should have to wait for information from a vendor or their head office to see exactly where they stand with product orders and purchases.” For the members, they gained a central repository housing all their relevant product documents, giving much greater efficiencies, accuracy and visibility into their business.
This is a new level of visibility into their business they didn't have previously.
Where they are now – After EDI with LBMX
The first phase of the system, which has been up and running since February 2015, covered purchase orders; the second phase involves moving all their vendors over to the electronic invoice process described earlier.
As The Drake Group gathers more vendors onboard for the EDI invoicing (not possible prior to LBMX), the group’s capabilities to manage the business are enhanced. With visibility into historical and real-time current purchasing data, Jeff points out they can automate their internal reporting and track their performance with any vendor. Carry that forward, and it allows Drake leadership to quickly determine their position on rebate thresholds for tiered programs and take steps to ensure they reach them. The upshot? Higher rebates for members.
For Drake Group members, the transition to the new LBMX order system was a non-event; “invisible” is Jeff’s description, and exactly how he hoped it would be. A big immediate benefit and value is the LBMX Document Centre as an access point for reporting. Under the old system, reams of invoices were emailed and presented in a rudimentary text format. With LBMX, members log into the platform, and can view past and current invoices, order acknowledgments, and clarify the status of a purchase order, all in pdf formats. “This is a new level of visibility into their business they didn’t have previously,” he says.
Where they will go – The future with EDI by LBMX
The group now has a path forward to engage additional reporting capabilities, and smoother and more efficient rebate processing. As it is with most buying groups, expensive vendor rebate agreements are based on sales. As Drake gathers more vendors on EDI, the system will hum at a peak of efficiency, allowing the group to automatically calculate rebates, receive rebates much sooner, which means members have rebate cheques in hand quicker than before.
Higher rebates in members’ hands sooner, better reporting, deep visibility into the purchasing, and a firm grasp the status of their vendor programs. The Drake Group now have LBMX at their side, a team of technology and industry experts who measure their own success against that of their customers. Their future is as straightforward as one can find in the world of successful, member-centric and technologically progressive buying groups.