Royal Appliance MFG. CO and PowerTrack - Devouring the Dust in Freight Payment!

We all know that using a vacuum is the best way to clear up the dust and dirt found in  your home or office.  But what about the things that distort your view of the freight payment process?  That is where the PowerTrack Network truly provides a crystal clear picture.

About Royal Appliance MFG. CO.

Located in Glenwillow Ohio, Royal Appliance Mfg. Co. develops and markets a full line of cleaning products for home and commercial use, primarily in North America, under the Dirt Devil® VAX®, Medisana®, and Royal® brand names. In 1984, Royal introduced the first in a line of Dirt Devil floor care products. In May of 2003, Royal Appliance Mfg. Co. was acquired by Techtronic Industries Co., Ltd.  The company generates $360 million dollars a year in revenue.  

Royal's line of products with the Dirt Devil brand name include: uprights, stick vacuums, handheld vacuums, canister vacuums, and carpet shampooers.  These products are sold through major retailers nationwide.

This 100-year old company is dedicated to building quality products that meet consumers’ cleaning needs. Continuous innovation and quality in its products and operational efficiency are key drivers of its future growth. 

Challenges

Royal Appliance had been using a traditional outsourced third-party freight payment company, and it had a couple of key issues that needed to be addressed.  It needed more information than its outsourced solution could provide, including the ability to track freight costs to individual product lines, and the ability to accurately accrue freight costs each month.  It also had high error rates that couldn’t be resolved by its outsourced freight payment provider.

Referred to PowerTrack by an existing customer, PowerTrack provided Royal with the missing pieces of this freight payment puzzle

PowerTrack Results

Since implementing PowerTrack in June of 2005, Royal Appliance has seen dramatic improvements in each of the areas mentioned above, as well as back office efficiency, business intelligence, overall profitability and its bottom line.

Business Intelligence

For Royal Appliance, PowerTrack is all about business intelligence and visibility.  It uses the myriad of financial and logistics data within the PowerTrack Network to:

• Analyze the source and root cause of accessorial charges.
  
• Identify shipping costs by product line and customer.
  
• Incorporate transportation and shipping cost into overall product price.
  
• Determine the best location for distribution centers to minimize shipping and inventory costs.
  
• Enhance shipper/carrier collaboration efforts.
  
• Determine areas where transportation shipments can be consolidated or expanded to keep trucks full and profits on track for both Royal Appliance and its carrier partners.

Efficiency

• Royal Appliance processes over 1700 invoices through PowerTrack in an average month – over 2,000 during peak season.  This translates to close to two million dollars a month – all handled by one PowerTrack super-user.
  
• The number of payment errors has dramatically decreased and are being handled much more quickly.
  
• Ability to immediately determine the exact cause of exceptions – be it detention time, inaccurate billing or incorrect rate.
  
• Royal Appliance pays for all its freight bills once a month, extending its payment terms from 7 to 30 days.  Its carriers have improved Days Sales Outstanding by 20 days.
  
• Increased accuracy of balance sheet information and monthly freight expense.
  
• Accurate accruals and consolidated billing increase working capital available to Royal Appliance.

The Benefits to the Bottom Line

PowerTrack gives Royal Appliance the ability to allocate freight expenses down to the product and SKU level. Through the proper allocation of expenses, Royal Appliance has been able to analyze which of its product lines are truly profitable.

When product lines are not as profitable, Royal Appliance can work to change the biggest factors in profitability, like freight costs, or look to eliminate product lines.

Royal was able to open a new distribution center that reduced its reliance upon expedited services, cutting total transportation costs by about $225,000 each year - about 1.25% of their total transportation spend while improving customer service.    Rather than taking 3 days to ship a product to customers, it now takes on average one day...better delivery service means better sales and higher profitability through reduced expedited services.

Transportation providers are paid quickly and easily – usually within 1-3 business days, keeping driver turnover down.

The Future

In the near future, Royal Appliance will begin to process over 6,000 containers in international ocean freight shipments through the PowerTrack Network, resulting in over 1.8 million dollars worth of payments a month.

"The business intelligence available in PowerTrack has been invaluable to us in getting the right products in the right distribution centers and accurately forecasting costs.  It is helping us manage our business immensely and is having an affect on overall profitability. In the accounts payable area we have saved in hiring the people who would have been necessary to process our numerous freight bills.  Not to mention the savings on paperwork, filing and storage.  The custom built reports within PowerTrack are easy to design and run – we get the information that we need without having to tap into our own IT resources."

--Mike Bauer, Logistics Analyst, Royal Appliance