Bakeries don't order ingredients a week ahead. Often, they decide today what they need tomorrow.
Satisfying this demand has helped Otto Brehm Inc. a leading supplier of products to bakeries in the Northeast.
Life was simpler in 1904, when Otto Brehm, a young immigrant from Germany, started his first bakery in a Yonkers, NY. neighborhood. Two decades later, at the urging of other bakers, he opened a warehouse—large enough to hold only a carload of flour—and began a flour-jobbing business.
Today, Otto Brehm Inc. is still owned and managed by members of the Brehm family, but it's a $40 million business with 100 employees serving more than 2,500 retail, in-store and food-service bakeries in New York, Connecticut and New Jersey.
Really Cooking with Software
To keep its customers' ovens cooking, the company maintains an around-the-clock distribution operation. The hub of support is Distributors Management Accounting System (DMAS) from Software Solutions.
"It's the perfect solution for our type of business," Linda Barrett, assistant comptroller, says. "Order-entry and billing drive our company, and DMAS gives us the speed, accuracy and flexibility we need."
DMAS is a fully integrated wholesale-distribution solution designed exclusively for the IBM AS/400 system.
"At Otto Brehm Inc. orders are processed and picked the same day, loaded overnight and the company's fleet of 13 trucks leaves the Yonkers loading dock at 6 a.m. for assigned routes in the tri-state area, Barrett says. "When orders are received, DMAS prints the order, generates a picking list and prepares a bill of lading for the driver. After drivers return from their daily run, invoices are sent out to customers the next day."
Barrett says that 80 percent of invoices are current—COD to 30 days—and that this is why DMAS is crucial to billing and tracking."
Another DMAS feature just as important to Otto Brehm's business needs is the system's ability to provide contract pricing.
"With customer contract-pricing schedules posted in the DMAS database, the company is able to reduce its order-entry process by 50 percent," Barrett explained. "We have half the manpower and we've virtually eliminated pricing errors."
It also decreases the time it takes a salesperson to prepare an order. The company has established a contract price for all customers, from "mom-and-pop" bagel shops to giant supermarket-chain bakeries. Now, when a salesperson takes any order, the pricing is generated automatically. Likewise, order-takers don't have to key in the price, and order-checkers don't have to worry about pricing mistakes.
"It's a phenomenal process, because in our business, there's no room for error," Barrett says.
Pantry Full of Data
With DMAS inventory management, Otto Brehm's buyers are able to automatically generate orders to keep up with the fast-paced inventory turns. The company's $1.5 million stock of flour, sugar, spices and other ingredients turn over almost weekly, ensuring that customers get the freshest supplies. It's a constant replenishment, with flour arriving from the mills almost daily. The company purchases some items by the case, and sells by the pound, so the system, for example, will alert a buyer when stock is down to 50 cases.
"For more than 95 years, customer service has been a hallmark of Otto Brehm, and with DMAS, the company not only delivers the goods, it's more responsive to customer questions," Barrett says. "When a customer calls, the marketing rep can answer a question in a matter of seconds."
For example, if a customer asks for it, the system can immediately find the amount of total outstanding invoices. DMAS keeps a complete customer profile, including an activity history.
"We have no file cabinets here," Barrett says. "Everything is in the system."
Barrett says that by using the DMAS query function, she is can "generate a number of special reports that help executives better manage the business." For example, she can query the system to determine best-selling items by profit margins, customer rankings or even slow-moving items. Consider this: Barrett asks the system for a monthly report on all invoices of less than $400 so that she can review accounts to determine whether they're profitable.
"Is it worth driving four hours to deliver an order when the overhead costs us more?" she asks.
Custom queries are no problem, Barrett says, because "all the files are in front of you."
Query reporting also helps the business manage special promotions. Recently, the company began a new-account promotion for its sales staff. The program provides a bonus based on sales during a four-month period, for four consecutive orders, with a predetermined gross-profit margin.
"That's almost impossible to maintain, because it's perpetual and you'd have to track it every day," Barrett says.
But with DMAS, she wrote a query setting the parameters and the system will automatically track the promotion.
"DMAS keeps track of everything, including the truck drivers," she adds. "When do their licenses expire? When do they need physicals? When do trucks need inspections? It's all in the system."
Otto Brehm installed the latest Y2K-compliant version of DMAS with the full menu of applications, except payroll, which is handled by an outside vendor. The Customer Service Application group provides billing, accounts receivable, sales analysis and inventory control. Financial application modules handle accounts payable and general ledger. Other applications are used for inventory management, purchasing, executive-information systems and cross application.
Powerful Partners Help
Barrett says that the outstanding support she gets for DMAS—from IBM AS/400 business partner I/O International and Software Solutions—is just icing on the cake.
Otto Brehm has 40 terminals supported by a new IBM AS/400. The company plans to implement a Windows NT operating system, and is integrating DMAS data into Microsoft applications, such as Excel.
Barrett says DMAS is very user-friendly and flexible, and that it's easy to train new employees. She likes that the systems is easy to use. Screens for accounts payable, accounts receivable and general ledger all have the same look and feel.
"Once you know one, you know them all," she says. "With the latest version of DMAS, billing and purchasing also have the same look. If you can enter billing, you can enter purchase orders. It's the same idea. People get confident in themselves. And it's very easy to cross-train, which is important in our business."
Another feature she likes: "There's always a way to undo something, too."
As the business continues to grow, information systems will continue to play a crucial role. Otto Brehm recently put its product catalog online (www.ottobrehm.com) through its DMAS database. New items added to the database are automatically updated on the Web site, like when the company adds pumpkin for the fall and winter baking season.
Eventually, bakeries from retail to food service at colleges and government installations, will be able to tap into the DMAS database and purchase ingredients online. And the company continues to add finished goods to its product lines, including already-prepared pies, cakes and cookies.
Case study supplied by Software Solutions Inc. through IBM