One BlueLinx - Transforming A/R into a Leading Contributor to Revenue Generation

Roxane Gray 0:04
Thank you. I’m so glad everyone could make it. Maybe we can entice people as they’re getting their IVs to come on this way. But I wanted to just register your vote when we have a poll question. There’s a little bit of housekeeping if you’ve been here. And then we want to talk about, you know, how did we get here, we just became a customer of HighRadius. And we needed to make the proposition to our company executives on why this was a good decision. And so we spun it a few different ways, instead of just automation is good. It’s what our back office is going to really contribute to our overall sales strategy with this, and I truly believe that this is an excellent opportunity for us to do so. So to tell you a little bit about ourselves, since we’re not quite the household name of Staples or Adidas, or some of the other folks here, we are a leading wholesale and wholesale distributor of building products in the industrial and home construction space. So we’re a two step distributor. That means we purchase from manufacturers and distribute those products to dealers and other suppliers and local markets, who then sell those to end users. The 50,000 skews that we distribute are classified as structural and specialty. So all the numbers that are quite priced right now. That’s part of our distribution services. And then also specialty, which is like engineered wood products, molding, siding, trim cedar, all the fun stuff. So one of the main ways that we distribute this, and this is key to how we function as a back office is through our branches. There’s 52 of those across 40 states. And so these branches serve a broad base of over 15,000 national, regional and local dealers, specialty distributors, national home centers and manufactured housing customers. So our branches are very busy. In other words, so in the last year, I managed a lot of different things up here. We’ve had 38% growth year over year, massive, we had almost a million sales orders processed. So we have big dreams. And so we want to maximize this, we don’t want this to just be a bubble for us. We want to enhance our customer experience, accelerate all this organic growth within specific products and solutions, and deploy the capital to drive sustained marketing, margin expansion. So we’re looking for ways to increase our top line. We also are exploring growth through m&a. So in order to do this, we evaluate potential acquisition targets that complement our existing capabilities. So we always have that in the back of our minds as a potential risk to our back office, growing organically and inorganically, no matter what industry you’re in, and whether you’re focusing on organic or inorganic growth. We knew that we had to look at our processes and our infrastructure, so we cannot scale efficiently. If that’s not addressed. We wanted to find out what were our roadblocks for sustainable growth. Right now, our salespeople sell what they’re comfortable and knowledgeable selling, we train our sales teams on their product knowledge. But without data tailored to our business and the trends of our customers. Understanding the customer profile in depth is a challenge. We have a very antiquated ERP, to put it mildly. Currently, our collections and credit process is centralized and reporting is not available on demand to any of our branch sales teams. With huge sales volumes, it’s really, really difficult to even export our data and provide real time value. I mean, it’s just an exercise in spreadsheets. So far, we’ve managed credit collections and cash apps with his team of 22 people. But with growth projections, we need to add in more resources to manage that scale. So beyond what we’re doing to maximize our current processes, because we have our teams working as hard as we can. We’re trying to use the automation that’s available to us and things like Microsoft Flow, but Excel and Microsoft Flow can’t get this done. So I started looking for a solution for our back office in the space that HighRadius plays in. So we said what we want to do with our people and we want to partner with our sales teams. My theme for all of my teams this year is partnership. How do we become a branch support center? Right now they view us as corporate, what is corporate doing to stop me in my job, and we don’t want to do that anymore. We want to ensure that all of our processes, we can see that end to end, in one platform.

Roxane Gray 4:53
All of our controls are addressed and then be able to slice and dice our customer segments in a way that we want to prioritize and also deprioritize some of our interactions with our customers. And then we wanted to have a dashboard of reporting that was easily accessible by all of our branches to be able to know what their customers were doing at any given point in time. In more than just, I sold this much with my customer last year. So we zeroed in on HighRadius as a solution. We said that, even though we are going to be thinking about an ERP in our future, we wanted to be able to get a layer on top of that. I wanted my teams to have their day to day processes uninterrupted. Even with new systems, even with acquisitions, if we have our team, we very appropriately use the boat here with the anchor, they can sit there above the fray of all of the systems, and all of the different acquisitions that we could potentially see in our future, they’re just sitting inside of HighRadius, they don’t have to learn a new system, they don’t have to bifurcate their teams in order to say, Oh, we just acquired that. Let me devote five people to this right now. So we zeroed in on a HighRadius to be able to do that for us. So by aggregating the data from our ERP with our real time dashboards, we can help the finance team have a partnership with the sales branches. Where there are targeted customer segments, we’re partnering with sales to provide real time order trends and credit information along with on time payment history to facilitate the conversation around discounted payment terms or rebates. By having this information going into the customer, the salesperson is more knowledgeable and confident they have more than data points. Now, we’re not just walking in there with coffee and donuts and saying would you like to buy some? you’ve done this for me for a really long time. Let’s keep going. Now they have a story, we want to recognize how much you’re, you know, working with us. And by the way, thank you for paying on time, here’s the discounted payment terms, the customer drives more blue business to BlueLinx, they know that they’re getting recognized for what they’re doing, and it becomes an easier sales transaction. Overall, that way, we turn the back office into a revenue Insights Team, instead of just A/R, we become that partner, like I said. So we’re looking to reduce our costs to serve those segments of customers can be addressed with automated, donning proactive credit reviews, and removal of discounted payment terms, all set up with the system rules, I don’t have to spend time on them anymore, I can just say that that’s the segment of customer that I would really rather maybe they go to somebody else they’re not. They’re not part of the overall sales growth for us at the moment. So and then the management team hasn’t a line of sight into the full customer base and all of its activities. So with the future acquisitions, as I keep talking about here, we wanted a platform that can consolidate all the activities in one platform. So doing that, with multiple ERP system systems and different customer records, sometimes there’s a big risk when we would acquire when we’ve done this in the past is that we have that customer sitting in two different systems, they’re getting communicated with two different ways, their balance is showing different in different systems, we have just this overall risk to our cash flow that we really don’t want to have, when we’re trying to go through this big acquisition process. I want this to be as plug and play as possible. And doing that with HighRadius and knowing that it could be very easy to integrate with. Everybody says it’s easy, but this one is easy. Like the API’s are very clear. I don’t have to have a sub ledger somewhere else. It’s just passing data back and forth. There is no custom coding. And if anybody’s done a system implementation, before, we all know that customer is the dirty word. So HighRadius would be our single source of truth. We are planning to implement a new ERP. And so we had a question: Do we want to wait for HighRadius after? Or do we want to put it in the ERP now, do HighRadius after or do I want to have HighRadius now. And so we sat there and we mapped it out. And it’s far better for us strategically to have a HighRadius first. Because that way again, I can dip down into my ERP, then as we roll out our ERP into our branches, because we’re not going to do it big bang, I will be able to do you know groups of branches at a time. I already have that anchor into the new system. So even if I have customer ABC sitting in my West region, and in my North Region, my north region goes live first, that customer ABC is still holistic sitting inside of high radius. And my team isn’t sitting there having to be trained in the new system, because they’re just working inside of HighRadius. It reduces the risk so much and made my stress level thinking about an upcoming ERP implementation that much less because this was happening and nobody wants to eat.

Roxane Gray 10:10
The way that I’ve implemented before so much of the time, I always thought about, oh, do your do your bolt ons after, you know, get everything in, do your bolt ons after, but with the way that this works, it made more sense to go first. So one of our use cases and all of this beyond this is going to help me with my acquisitions, this is going to help me with my growth. Our credit review process is something else, I have some of my credit team in here right now. And if you imagine those 12,000 customers right now, in a marketplace, where the prices are going crazy, you can’t review their credit line fast enough. It’s highly manual in order to do so. And you have customers that are trying to skip the line and say, No, I need to go up, I need to go up. And then you have other customers that they’re just hitting their limit organically through just buying their normal amounts. And now their orders are on hold. And then everybody gets mad because then that truck can’t go out the door because that order is on hold. So everything comes to a standstill. So dynamically changing the way that we process how this is done, still lends the credence that our order to cash teams are going to support the sales strategy, we are not the roadblock. By automating the credit process with RPAs. And the machine learning and AI that’s involved with all of this, we will be able to get through the approval and revision process that much faster. The workflows to do order management inside of credit were a key selling point for us with HighRadius. Because of the blocked orders, just apply the rules, and then release, apply the rules release and oh, by the way, go into the credit queue and make sure that the customer gets reviewed timely, we’ll be able to segment those customers dynamically based on their credit profile as well. I don’t need to review this one right now. Because you’re part of potentially quad three. So it’s okay. You only have deliveries once a week, so we can wait a second. So a lot of people like to talk about their Northstar, and so does our CEO. And so we’re back to, you know, we’re big on referring back to it. We don’t just want to buy the shiny tools, we have bigger goals. And so aligning ourselves time. And again, with sales in that partnership and leveraging HighRadius, we can transform our A/R function into a customer insights generation team, we partner with sales to identify the right customers we should sell to, we can identify which customers are costing us money to do business with on the back end, not just on the front end with potential credit memos and things along those lines. But on the back end, they take too many deductions there five days late all the time. You know, let’s make sure that those customers are also addressed just like courting the ones in the beginning. So we have some objectives we have, aside from the bigger support of the sales strategy, we have a great DSO, like our DSO right now is , like yes, we have a great DSO, our DSO right now is about 32. So it’s not a play for us to sit there and say let’s reduce it down even more. But for me, I want that cash posting rate. You know, there’s 1 million sales orders, all of that cash is coming through the system. And it’s being applied manually, with a lot of penmanship on there going on, pay this invoice or pay that invoice. So we have a big play on doing the 80% cash posting rate, we’ll be able to get rid of our lockbox savings with the cash application module, we’ll be able to automate at least 40% of our workflows, at least, that’s the minimum. And then we want to reduce our, we have about 94% current collections right now. But I want to get that one to 30 bucket down, I want to be able to address that proactively. And I want to make sure nobody gets out of that bucket. So we want to reduce that from 6% to about 3%. So big dreams. I do appreciate everyone’s time and sticking it out for being the last one here before lunchtime. And thank you everybody for your questions and please do. I’m on LinkedIn. Roxanne with one and, and then we you know, contact me and I’ll be very, very happy to share the story as we go along in any lessons that we get Okay. Thank you!