Improves productivity, reduces inventory and accelerates accounts receivable
Nucleus Research analysts examined the deployment of IBM Cognos 8 Business Intelligence at U.S. Lumber and found a 3,623% return on investment (ROI) with payback in only eleven days.
U.S. Lumber is a $325 million distributor of specialty and wholesale building materials. The company has approximately 6,000 customers and eight distribution facilities which serve markets in 14 Southeastern and Mid-Atlantic States.
As the housing boom approached its apex, U.S. Lumber decided to monitor the primary drivers of its profitability and cash flow; sales, accounts receivable and inventory. The company determined that the existing business model was adequate for the then-strong economic market; however the system would not enable employees to perform analyses with sufficient speed or granularity in the event of an economic downturn. U.S. Lumber needed to restructure its methods of managing sales, accounts receivable and inventory. Maintaining the existing use of static reports, labor-intensive analyses and poor forecasting would not be feasible in a faltering housing market.
U.S. Lumber decided to adopt IBM Cognos 8 BI and has benefited from its end-user driven tools with web and Java-based functionality that improve productivity and reduce financing costs by lowering the levels of accounts receivable and inventory. The company reduced financing costs using the new system while tracking and identifying slow moving items within its inventory. Productivity improved as a result of the upgrade, bringing tasks that previously required labor-intensive reports and spreadsheets to a far more rapid tracking and invoicing process.
“IBM Cognos 8 BI gave U.S. Lumber the visibility it needed to churn its inventory and AR faster, which both improves cash flow and reduces financing costs. A real success factor here is that the project champion was able to keep the project simple, which reduces costs and risks,” said David O’Connell, senior analyst, Nucleus Research.
All Nucleus Research ROI case studies are independent assessments, evaluating the costs and benefits from the IT deployment. The case study is available at http://www.NucleusResearch.com