Lohr Distributing Case Study

I’ve seen no better software than Salient with the ability to show the outliers and answer what is going on.

Introduction

Founded in 1964, Lohr Distributing spent more than four decades distributing Anheuser-Busch products in the Lohr Distributingcity of St. Louis, Missouri. With the Anheuser-Busch corporate headquarters just 11 blocks from Lohr’s, many of the day-to-day logistics of sales and distribution were handled for them.

“We didn’t really have to worry about sales. We had a high market share; we weren’t really big into numbers. We just had to make sure we did our job, did it right, had a high quality product on the street and it was very simple for us.”

But when Anheuser-Busch was acquired by InBev in 2008, life changed for Lohr Distributing. The merger changed the landscape of the St. Louis beer distribution market. With thousands of jobs lost among a new organization with entirely different operations, facing the prospect of a shrinking market share and fading brand loyalty, Lohr knew something had to change.

After evaluating several different options, Lohr’s leadership decided the best opportunity to grow their business was to expand from being a beer distributor in St. Louis to becoming a statewide distributor of wine and spirits. To achieve this expansion, Lohr acquired a small wine and spirits company with a presence throughout Missouri, a portfolio of 50 suppliers, and just five salespeople.

With their growth into a new industry, expansion in territory from 66 square miles to nearly 70,000 square miles, it quickly became clear that Lohr needed help if they were to successfully scale up.

We Need Data To Keep Up With Scaling Up

With significant investment from Lohr with new sales staff, logistics support, and marketing efforts, the wine and spirits division began experiencing significant growth in both suppliers and customers. In the first two years following the acquisition, the number of suppliers represented by Lohr doubled; over five years that number tripled. Their overall rate of growth exploded to more than 1,100%, and the original five person sales team grew to more than 50.

Parallel to this rapid growth and expansion was the introduction to new markets where Lohr had not previously operated, as well as new practices not common when their distribution portfolio was composed exclusively of beer.

With so much growth, Lohr’s leadership began to find themselves crushed underneath a mountain of data generated by the logistics of keeping more than 2,500 non-beer SKUs from over 150 suppliers in stock. With no legacy route accounting system in place to handle the increasing complexity of scaling up the business, the lack of data insight was beginning to have a negative impact on profitability.

Lohr needed to find a way to get data to the right people at the right time in a way that was accurate, accessible, and easy for any of their employees to use and interact with. There were only two staff members managing the inventory and logistics for the operation, and they weren’t able to keep up.

Teaching Employees to Fish

Lohr embarked on a thorough investigation of options including the possibility of hiring a data analysis team. For a number of reasons, Lohr determined that a technological solution that could empower employees at all levels of the company to act as their own data analysts was the best option for long-term costs and operational efficiency as opposed to hiring additional staff, which would still make the organization reliant on a select few individuals for insights. At the end of their research, Salient Management Company had emerged as the clear choice to meet their unique set of challenges.

This decision relied heavily on Salient’s experience in the industry as well as their ability to provide accurate, reliable, available data through a flexible and easy-to-use interface. By empowering employees at all levels with Salient Dashboards, every salesperson could access data and discover not only what the outliers are, but to also drill down and discover the true root causes of outliers. This eliminated any bottleneck of data getting to the person who needed it exactly when they needed it. This freedom to discover has also encouraged staff to answer questions they didn’t previously know to ask, making the operation more efficient and the organization’s decision making more informed.

Instead of their employees being fed, they have been taught to fish.

 

Data-Driven Forecasting

Once Lohr had empowered their staff with the ability to drive their own discovery of outliers and root causes, they turned their attention to an even greater challenge. Coming from an industry where logistics and variables were minimal, the new world of wine and spirits multiplied the variables they were faced with many times over.

Considerations such as variable lead time, variable floor quantity requirements, minimum / maximum order quantities, and supplier freight hauling logistics hadn’t been a concern with Anheuser-Busch just over ten blocks away and handling forecasting for them. But now, with more than 150 suppliers and a vast portfolio of 2,500 products, accurately forecasting market demand was a skill that was needed in order to satisfy customers and remain profitable.

Lohr again called upon Salient to build a custom solution that could account for all of the variable constraints and considerations to create a forecasting model that could project inventory, shortages, and create orders. Salient leveraged their nearly three decades of industry knowledge and applied it to Lohr’s unique situation to build a custom forecasting model that could provide exactly what Lohr’s leadership needed.

Salient’s engineers worked directly with Lohr’s managers to bring all of their data and logistics into a single source and provide a clear view of exactly which SKUs need to be replenished, when they must be ordered by in order to prevent an out of stock, and what other SKUs should be ordered at the same time in order to optimize Lohr’s inventory and minimize freight costs. Salient’s custom forecasting module also cross-references multiple reports to make sure that no detail is missed in creating accurate and efficient orders.

Results: Efficient Scaling and Higher Sales

Within six months of Salient’s custom forecasting model being put in place, Lohr has been able to continue managing the entire inventory process with the same two employees they already had. Additionally, instances of products being out of stock were reduced by 40%. Inventory turnover had improved by reducing their day supply average by 25%, and freight expenses were reduced by more than 15% through creating more efficient orders that maximized truck space.

Lohr’s sales managers and team leads now have quick and reliable access to the data they need in order to improve decision making to satisfy customers and grow Lohr’s profits. Reports that previously would have taken days or weeks to distribute are now available on demand and significantly better understood than before.

Lohr’s operations division has also seen the positive impacts of Salient’s solution. Operations managers are now able to quickly track and optimize key performance indicators including cost per delivery, route efficiency, and profitability per stop. By leveraging Salient’s Geospatial analysis tool, delivery routes have been optimized to make the best possible use of time and resources.

During the time since Salient’s solution was implemented at Lohr, sales have doubled and profits have continued to grow as decision making improves, operations become more efficient, and managers at all levels of the organization continue to better understand how every action adds value.