AGNEW BUILDING SUPPLIES ERP CASE STUDY
Timber! How collaboration powers industry disruption
Trans-Tasman vendor collaboration enables pure-play online hardware retailer…
When Justin Newman from VTH in Sydney was approached by a disruptor who wanted to revolutionise the building supplies market in Australia with a digital business model, he immediately recognised that success depended on the best available technology solutions. For this he called in New Zealand’s First Software and its n2 enterprise resource planning solution for the ecommerce and back end Distribution functionality, and another Kiwi company Vesta-Central to provide the product data platform.
Because of the collaboration of these three vendors, Michael Agnew’s Agnew Building Supplies is equipped with a powerful online solution which is central to the success of Australia’s first online-only hardware retailer.
Agnew Building Supplies was founded with a vision to provide rapid access to a complete range of building suppliers online. Unlike traditional ‘bricks and mortar’ retailers, Agnew Building Supplies is born in the cloud and provides customers with the best online ordering and fulfilment experience, so they can spend more time on the job site.
Taking hardware online
While some hardware can be bought online from the major incumbents, the reality is that these organisations are not specialist ‘etailers’. That’s the opportunity Michael Agnew recognised: he could do it better, faster and get materials on site cheaper.
But doing so depended on an appropriate technology infrastructure.
On the back of a longstanding business relationship, Agnew approached Newman with the idea of creating an online store with a supply chain optimised for speed and low cost. “At VTH, we specialise in the front end, e-commerce stuff, so I said I can’t do the full supply chain – but I also said I will find out who can,” Newman relates.
A Trans-Tasman study of the market led him to First Software and its n2 ERP solution. “We wanted a system which had the power to do nearly everything required – ecommerce, warehousing, distribution, financials, procurement and supply chain – it had to do as much as possible out the box, and VTH would work with that company to do the rest.”
Alex Petraska, General Manager of First Software, says when he started planning with Newman he could see that n2 ERP fit the bill. “The standard n2 ERP software was very close to what Agnew Building Supplies needed, so working with VTH, we developed some industry-specific functionality into it.”
He adds that some 95 percent of the functionality required was already there, due to having customers like Forman Building Systems (part of Fletcher Building).
Petraska adds, “n2 ERP has been available for over 10 years and has always focused on retailers and distributors so extending the reach to building supplies stores was a natural progression. In the past we have also built specific functionality for 3PLs and cool stores, so we are adept at creating industry focused extensions.”
And he notes that even with Agnew Building Supplies operating entirely online, n2 ERP also supports bricks and mortar stores with integrated Point of Sale. “Future customers can be a mix of online, in store or both.”
Newman says success for a disruptor like Agnew Building Supplies depends on system excellence which spans the entire supply chain. “There’s no point being efficient in, say, warehousing, but then having people manually entering data for incoming goods. The whole system is only as fast as its slowest point; achieving the sort of efficiency which enables a ‘next day delivery’ depends on the latest electronic data interchange technology – and that’s where Vesta-Central comes into the picture.”
Automation solves a prickly problem
Vesta-Central Founder and CEO Charles Nicolson explains that the company provides a product data platform which simplifies and automates product pricing information across extended supply chains. “Several years ago, we saw that for industries like timber and hardware, getting into ecommerce when stocking hundreds of thousands of products from thousands of suppliers was exceedingly difficult. Pricing information for every product had to be manually entered.”
There’s more to it than pricing, too. Much more. Explains Nicolson: “A company like Agnew would have to work with suppliers on every product to get an image, specifications, videos, safety information and hazard sheets, manuals, technical installation documents. All that information is necessary so anyone buying the product is well informed with everything they need to know.”
Through some technical magic which involves APIs and EDI integration, Vesta-Central enables information to be pulled from source – often manufacturers or distributors – all the way through the supply chain, eventually winding up published on the front end of Agnew Building Supplies’ customer-facing website via n2 ERP. “We are a data collection and sharing platform which enables retailers to easily list their products. Our system sources the information from the suppliers and directly addresses a major barrier for ecommerce operators.”
With cost-competitiveness among the key value propositions offered by Agnew Building Supplies, the Vesta-Central platform plays a crucial role. “Pre-us, organisations hired people to get the data and manage it. And the sad thing is that this is still how most retailers do it today, because a lot of suppliers have no simple way of getting information to their retailers or distribution networks.”
Nicolson adds that data flows up and down through the Vesta-Central platform. “It is synchronised every two hours – so if, for example, a spelling mistake is made, a correction will be updated everywhere that information appears: at the manufacturer, at the distributor and at the retailer, all automatically.”
The system automatically pulls the data from various sources, including ERP systems or spreadsheets, or it is manually uploaded where appropriate. “With Agnew Building Supplies, we wanted to eliminate the need to work on multiple screens with ‘swivel chair integration’. Now, they just work directly in n2 ERP; Vesta is contained inside the First Software solution. It is invisible to the users. When they set up a new supplier, they just log on to n2 ERP, set up the supplier and product range, and a request is triggered to that supplier to upload their product information. Often within a day, the information flows through and an operator checks a box to confirm and accept it to n2 ERP which then feeds it to the website. It is as simple as that.”
Unique to this implementation, Nicolson says First Software, Vesta-Central, VTH and Agnew Building Supplies worked with suppliers to fully automate product pricing. “In the traditional model, a supplier sends a PDF or spreadsheet which is manually rekeyed into the ERP system. In this case, we worked with suppliers to automate pricing from their end into n2 ERP – and not only the prices for today, but future prices, too. With awareness of price changes 3 or 6 months in advance, Agnew Building Supplies is better equipped to optimise purchasing or to negotiate preferential deals.”
What’s more, Vesta Central also includes a component which facilitates Electronic Data Interchange between suppliers and Agnew, automating many of the inter-company processes such as invoicing and payments.
Nicolson says integrating with n2 ERP was a straightforward and smooth process. “What makes for a good interchange is a solid technical team and a good API to perform actions in their system. First Software has that, which makes for a seamless experience.”
All things digital
Newman says Michael Agnew had the vision of what he wanted to create – and that vision all comes back to good data and a good customer experience. “This was a collaborative effort where we all realised our individual competencies and brought together the best bits to deliver a solution which enables Agnew Building Supplies. The team at the client are experts at selling timber and hardware products; we had to make sure to give them the right tools.”
Live and operating since June 2017, Agnew Building Supplies has a system which is performing well and delivering the digital advantages of an optimised, automated supply chain where day to day operating costs are kept to the minimum, thanks in no small part to the complete absence of massive retail operations which also allows them to invest in holding more stock in their 10,000-square metre warehouse.
And the concept is finding favour with Australia’s tradies and DIY enthusiasts. “Agnew Building Supplies is ahead of projections and the system is doing what it should. Right now, we’re implementing the next stage which is digital engagement to drive demand now that the system is proven,” Newman notes.
Petraska concludes: “Agnew Building Supplies’ platform provides an advantage which can’t be underestimated. Without it, the business model doesn’t work. Competitors have enormous costs and expenses and the efficiency Agnew Building Supplies enjoys enables it to compete and grow. Doing business, the digital way, quite simply, depends on having the best technology today and into the future.”