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Schoolhouse Electric Stays Loyal to Local Suppliers While Increasing Growth With SAP Business ByDesign

Feature Article | January 24, 2018 by Christine Donato

Schoolhouse Electric, Portland-based maker and retailer of handmade, iconic lighting, furniture, and domestic home goods, was founded on family values and quality.

To reinforce that sense of family and community, owner and founder Brian Faherty joins his team of employees each day in the Portland, Oregon, warehouse, which happens to be where his wife also works. He’s the inspiration behind the products, which are vintage with a minimalistic utilitarian and even retro aesthetic.

Handmade is Best-Made

Buying domestically helps communities minimize carbon footprints, support local businesses, and keep tax dollars close to home. Schoolhouse does just that.

Chris Tufts, vice president of operations and finance at Schoolhouse Electric, recently joined me on the phone to discuss how the company is adapting digitally while also maintaining its artisan craft. As we talked, I could hear the bustling of creation and laughter in the background. His desk borders the lighting assembly center at the flagship store in Portland.

In the past, it was difficult to compete with the Amazon and Google retailers of the world that can ship a product to customers in as little as two days. Most products sold by Schoolhouse are assembled by hand (even hand-sewn pillows and cushions), a process that takes time and precision.

In addition, 80 percent of product parts are purchased from U.S.-based mom and pop suppliers, some of which provide custom-made parts for Schoolhouse.

“Ordering from mom and pop vendors is a challenge when it comes to scaling up, but it’s a great asset to the product that we can offer and the quality that’s included,” Tufts said.

Today’s customers expect fast delivery and reasonable prices, so to scale growth and cut lead time, Schoolhouse decided on SAP Business ByDesign, a full cloud ERP suite, to manage its business and provide near real-time visibility into supply, inventory, and customer trends.

Before implementing and going live with SAP Business ByDesign, Schoolhouse Electric staff performed a manual, quarterly inventory assessment on 2 million pieces of inventory. The process required the warehouse to close for a full weekend each quarter.

“It was a mess unquestionably. The results of the inventories might have been more harm than good depending on who you had counting different things and whether they could tell one washer from another.  It was pretty messy,” said Tufts. “With SAP, we have a regular ongoing constant cycle counting. We know exactly what inventory accuracy is by floor, by product segment, and we can track that to a high degree of detail. We know where and how much of each part we have.”

In addition to keeping parts on hand, Schoolhouse discontinued ordering obsolete parts.

“Without SAP, it was hard to visualize all of the material needed to make a product that has a five- to 10-part assembly process. By tracking our builds and materials in SAP Business ByDesign, we now have quick answers, and we’re able to quantify the impact and strategize how many of each product we can make in a certain timeframe. Today we are at 98 percent product availability, an increase from 70 percent in early 2016,” said Tufts.

Growth with Industrial Roots

Schoolhouse Electric plans to open a third store in Pittsburgh, Pennsylvania, a former industry hub of the U.S.  The city is a perfect complement to the Schoolhouse style. It’s a new hub for technology leaders like Uber and Google, the cost of living is reasonable, and there are many universities in the area.

Tufts closed our conversation mentioning that without the cloud ERP solution, Schoolhouse Electric wouldn’t exist in the market. The third store in Pittsburgh would not be a reality: “Without SAP, we wouldn’t be the size that we are. We wouldn’t be growing 25 percent year-over-year because we simply wouldn’t have had the competitive lead times, and we wouldn’t have been able to fulfill customers’ products as we committed. Our business benefits are stronger than enabling growth.  It would really not be happening had we not gotten into a cloud ERP system.”

Learn how SAP Business ByDesign can help your
small to midsize business here.

To implement SAP Business ByDesign successfully, Schoolhouse Electric partnered with Navigator Business Solutions. Learn more here.

Follow me on Twitter: @CMDonato.
This story originally appeared on the SAP Community.

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