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396 Part Three Key System Applications for the Digital Age

Summit Electric Lights Up with a New ERP System

CASE STUDY

S ummit Electric Supply is one of the top whole- address some of the unique processes and priori-

sale distributors of industrial electrical equip-
ties of the distribution industry. Summit needed a
system that could handle a very large number of
ment and supplies in the United States, with
500 employees and nearly $358 million in SKUs (stock-keeping units, which are numbers or
sales in 2011. Summit operates in four states and has codes for identifying each unique product or item
a global export division based in Houston, a marine for sale) and transactions, very short lead times for
division based in New Orleans, and a sales office in order processing, inventory distributed in various
Dubai. models, products sold in one quantity that could be
Summit distributes products that include motor sold in another, and no-touch inventory. Summit
controls, wire and cable, cords, lighting, conduit and handles some products that are shipped directly
fittings, wiring devices, support systems and fasten- from the manufacturer to the customer’s job site.
ers, outlet boxes and enclosures, and transformers Scalability and inventory visibility were Summit’s
and power protection equipment. The company top requirements. The company needed a system
obtains finished goods from manufacturers and then that would handle orders and inventory as it
sells them to electrical contractors working on proj- continued its rapid pace of growth. In the distribu-
ects ranging from small construction jobs to sophis- tion business, the lead times for fulfilling an order
ticated industrial projects. As a distributor, Summit can be only minutes: a Summit customer might call
Electric Supply is a “middle man” on the supply to place an order while driving to pick up the order,
chain, and must be able to rapidly handle a high vol- so the company has to know immediately what
ume of transactions and swift inventory turnover. product is available at what location.
Since its founding in 1977 in Albuquerque, After extensively reviewing ERP vendors, Summit
New Mexico, Summit has grown very quickly. selected ERP software from SAP because of its
Unfortunately, its homegrown legacy informa- functionality in sales and distribution, materials
tion systems built in the 1980s could not keep up management, and financials, and its knowledge
with the business. One legacy system was for sales of the distribution business. Summit visited other
entries and purchase orders and another was for electrical distributors using SAP, including some of
back-end reporting. Integration between the two its competitors, to make sure the software would
systems was done manually in batches. The systems work in its line of business. Summit was able to go
could only handle a fixed number of locations and live with its new ERP system across 19 locations in
limited the range of numbers that could be used on January 2007.
documents. This meant that Summit’s information Nevertheless, Summit still had to customize its
systems department had to use the same range of SAP software to meet its unique business require-
document numbers over again every few months. ments. Most SAP delivery and material scheduling
Once the company found it could no longer process functions were designed for overnight processing,
its nightly inventory and financial updates in the because many industries have longer lead times for
amount of time that was available, the systems had order fulfillment. Waiting for overnight inventory
reached their breaking point. A new solution was in updates would significantly delay Summit’s sales.
order. Summit found it could solve this problem by run-
Summit started looking for a new enterprise ning smaller, more frequent updates for just the
resource planning (ERP) system. This would prove material received during the day, rather than run-
to be challenging, because the company’s legacy sys- ning big inventory updates less often. This provided
tems were so old that the business had built many more timely and accurate snapshots of what was
of its processes around them. A new system would actually available in inventory so that orders could
require changes to business processes and the way be rapidly processed.
people worked. Wire and cable are one of Summit’s most popular
Summit also found that most of the available product categories. Summit buys these products by
ERP software on the market had been designed for the reel in lengths up to 5,000 feet and then cuts
manufacturing or retailing businesses, and did not them into various lengths to sell to customers. This

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