The Campbell Group Powers Away Deductions Using ChiCor's Deduction Management System.(Brief Article)

Just about everyone likes to find a bargain or a time-saver. Imagine using 80 percent less water to wash the car, clean the garage or wash the deck out back, but doing a better job than you could with the garden hose. That's what a power washer can do. Now change hats: Imagine using fewer staff resources, and taking less time, yet getting more done. That's what the Deduction Management System (DMS) can do. It's not an unlikely comparison, odd as it may seem. Power washers and DMS, a software package developed by ChiCor, Inc., can both be found at The Campbell Group, and both are getting results.

The Campbell Group is an Ohio-based manufacturer and distributor of air tools, power washers, painting systems, welders, generators, air compressors and other products for the contractor and do-it-yourself markets. Employing more than 1,200 people throughout the US, The Campbell Group sells through several national retailers including The Home Depot, Wal-Mart, Lowe's, NAPA, Grainger, Menards and True Value stores, as well as through its own factory outlet stores.

The company has had great success growing the business. Its operations consist of three divisions: Campbell Hausfeld, Powerwinch and Wayne Pumps. The three share the same Enterprise Resource Planning (ERP) system and some administrative functions, but operate separately. According to Chief Financial Officer, Glen Bowler, the company decided the three divisions should work closely to get a particularly sticky situation (invoice deductions) under tighter control.

Like most manufacturers selling through the retail channel, The Campbell Group spends a considerable amount of time handling invoice disputes, damaged goods claims, returns, pricing errors and other discrepancies that drain staff time and resources. On average, deductions range from 8 percent to 15 percent of sales, according to AMR Research. Often, the disputes are legitimate and quickly settled. In some cases, however, a deduction is not authorized and the manufacturer--with proper supporting information--receives payment from its retail trading partner.

When handled manually, the resolution process can take as long as 120 days. Manufacturers and retailers exchange mountains of paperwork via mail and fax to achieve resolution. It is not uncommon for some large manufacturers to process 30,000 deductions in a month, amounting to hundreds of thousands of dollars in administrative costs.

When Bowler reviewed the situation at The Campbell Group, he decided automating the settlement process would be a great place to start. His options were either to work within his J.D. Edwards WorldSoftware ERP system, or install an add-in package that could be integrated with J.D. Edwards. Bowler sent representatives to see a DMS installation at NuTone, Inc., where he previously worked as vice president of finance, and they visited ChiCor's corporate offices. Bowler and Mary Alice Pollard, a deduction consultant who also worked at NuTone, wanted to make sure they exhausted all options.

"Mary Alice was the manager of deductions and cash application at NuTone and implemented DMS there," Bowler said. "It worked well for them. With that experience, we recognized our problems and opportunities were not dissimilar. DMS seemed like a good fit for The Campbell Group. We already knew it worked."