As the newly appointed CFO of Lawson Products a little more than a decade ago, Ron Knutson realized the significant infrastructure and technology investments that would be required to meet the productivity goals that he was expected to help drive.
In anticipation of the investments that would need to be made, Knutson recalls, he first completed a “competency review” for every member of the finance team, a process that was in part designed to help flag those employees deemed well suited for training tied to future investments.Read More
“We wanted to make certain that we would be training the right individuals,” comments Knutson, who notes that the review ultimately led to “extensive” staffing changes as he sought to lessen the team’s overall dependence on existing systems and use new training to whet its appetite for the adoption and implementation of new technologies, including ERP software.
“Having these individuals go through the implementation process just made them so much stronger coming out of it,” explains Knutson, who credits the new technologies with—among other things—helping the sales team to monitor and interpret customer engagement patterns.
Meanwhile, some of the biggest gains from Lawson’s technology investments may have been occurring inside their system of warehouses, or distribution centers (DCs).
In addition to consolidating the number of DCs from eight to five, Knutson reports, the distributor also significantly lessened excess inventory through the adoption of a demand-forecasting tool that uses historical customer demand patterns to provide Lawson with regular inventory management insights.
Adds Knutson: “We had quite a bit of working capital tied up in inventory, but now we are able to make the right investments in our high-turning items as well as our slow-turning ones.” –Jack Sweeney
CFOTL: When it comes to making acquisitions, what are some of the concerns analysts and investors raise questions about?
Knutson: Our investors understand our overall growth strategy, but at the same time, they really ask a lot of questions around how accretive an acquisition is going to be to the organization. We typically have not gone out and given public guidance. These questions are sometimes tough ones to answer. Although we’ve made seven acquisitions in the past 5 years, our most recent one just took place in the August–September 2020 time frame.Read More
It was a $70 million revenue organization that for us was really a good fit—almost what I would call a DNA match in terms of how they service their customers. So, some questions—certainly around purchase price and accretiveness from an EPS perspective—always get asked. Then, typically, there are the integration questions as well: “What does this mean for cost synergies? What does it mean for existing distribution centers and existing teams and so forth?” These are the types of questions on which our investors typically focus.
The team and the culture are critical to the success of the organization. The year 2020 was tough for everybody, and I would say everybody was impacted in one way or another, regardless of whether the cause was pandemic-related. Working remotely, for example. Culture drives an organization. We have an extremely strong culture in the organization and we work really well together, but at the same time we want to make sure that we have everybody fully engaged moving forward and spending some time with the team. Making sure that this culture is as strong as it’s always been is critically important not just to finance but also to the entire organization.
Value Quote: “We want to make sure that our sales reps have the visibility that they need to see how other sales reps are being successful. If sales reps are being successful in selling a certain category, the question becomes, ‘How do I get educated on that other category and start selling those items?'”
Lawson Products | www.lawsonproducts.com | Chicago, IL