Chicago Rubber & Seal Case Study by Netsuite ERP
The Company: About Chicago Rubber & Seal
Chicago Rubber & Seal, Inc. was founded in 2000 as a distribution house for a series of custom-molded shaft seals and O‑rings used in building marine engines and other products. It kept in inventory a three-to-four month supply of 150 products and 131,000 parts and used QuickBooks to keep track of orders, invoices and shipments.
The Situation: Accounting Procedures
But Chicago Rubber couldn’t always have exactly the right supply of sought after products in inventory. With established customers, it would often receive a blanket order for a year’s supply of an O‑ring or seal and ship them out on a regular monthly basis, says Kelly Cosgriff, Territory Manager. But not all orders are so predictable. When a customer needed an unanticipated amount in an order, the planner would have to print a report on the status of the sought-after products in inventory. If the supply on hand was insufficient, they needed to place an order with a manufacturer and get it drop shipped or delivered into his warehouse to meet customer demand.
As long as Chicago Rubber’s inventory was greater than the amount being ordered, Cosgriff could take orders, print invoices, pick tickets, and shipping labels. But once he needed to drop ship the order, QuickBooks accounting procedures broke down, unable to distinguish between the firm’s inventory and a manufacturer’s separate production, Cosgriff said.
The Solution: NetSuite ERP
When the Chicago Rubber & Seal staff learned about NetSuite it didn’t take long to get hooked. “It was supposed to be a test,” says Cosgriff, referring to the free 15-day trial NetSuite offers from its Web site. “But it was an instant transition. It took 20 minutes to get the QuickBooks accounts loaded.
For a few days, we did double entries. Then they insisted we drop QuickBooks and start using it for real.” Once Cosgriff switched from QuickBooks to NetSuite, he was able to implement clearly demarcated orders for drop shipment and stock and send them to the manufacturer. He could start doing his own payroll processing, a service that had been costing his young business $150 a month. And he could more effectively track his cash flow.
“Any small business is worried about its cash flow day to day,” he said. Cosgriff set up the Executive Dashboard feature that includes a total for accounts receivable, accounts payable, and forecast for the month. Cosgriff says he gets a report on how many days a payment is past due and faxes it to the customer. “It doesn’t hurt to show people you are watching,” he notes, and getting customers to pay on time is part of how a small business guards its cash position. Before making the decision to go with NetSuite, Cosgriff says, “we looked at Microsoft Great Plains and other accounting packages, but our relatively small firm couldn’t afford the $30,000 to $40,000 price tag.” Instead, he signed a three-year deal with NetSuite for about one-tenth that cost.
Now three people at the firm make use of the system and the learning curve for them has been short. “A lot of it was self-explanatory,” Cosgriff says, “and the online help was very good. We also hired an accountant who was familiar with NetSuite, and now he logs in online to handle our accounts from anywhere.” This year Chicago Rubber & Seal will expand its product line by another 100 parts. It won’t have to worry about whether its accounting system can keep up.
The Results: NetSuite ERP Implementation Benefits
With NetSuite, Chicago Rubber & Seal is avoiding $30,000 the company would have paid for Great Plains accounting software. It is saving $1,800 a year on payroll processing; it can more effectively track cash flow; and with the Executive Dashboard, the company gets a quick snapshot of accounts receivable, accounts payable, and forecast for the month.
“A lot of it was self-explanatory,” Cosgriff says, “and the online help was very good. We also hired an accountant who was familiar with NetSuite, and now he logs in online to handle our accounts from anywhere.” — Kelly Cosgriff, Territory Manager.