WD-40 Co. runs its IT systems like a well-oiled machine. The San Diego-based maker of the famed WD-40 oil, has achieved a 208% return on its IT spending, earning a spot on the 2005 SearchSMB 50 list., the top 50 small and midsized public companies that parlay technology spending into outstanding business results.
WD-40 spends nearly $5 million on IT annually and produces $16 million worth of economic value. The company's 2004 revenue was roughly $243 million; it spends about 3.2% of its revenue on IT projects, especially automated tools and electronic systems to streamline sales and order entry.
"The electronic input, coupled with checkpoints in the ERP, allows us to process approximately 40% of our orders without human intervention," said Bob Hoagland, WD-40's vice president of IT. An SCO Unix platform powers an ERP system known as Innatrack, produced by The Barke Group Inc. in Eden Prairie, Minn.
WD-50 has 12 fulfillment sites in the U.S., connected by a private frame-relay network that provides real-time connections. The sites consist of a mix of packaging facilities, warehouses and distribution centers, as well as a warehouse and operations center in Canada.
"They receive a steady stream of inbound orders -- including a lot that don't need to be touched by human hands -- check them for accuracy and fulfill them," Hoagland said.
Fulfillment sites receive preprinted shipping documents daily. An application developed by Carlsbad, Calif.-based Spectrum Data Services creates custom labels and automatically notifies customers when shipments will be arriving.
"Maximum [turnaround] time on orders is three business days from date of receipt, with one to two days being the norm," Hoagland said.
Data, including that from WD-40's subsidiaries, is consolidated from the ERP system into a SQL-based data warehouse. From there, data gets fed to Web-based applications that salespeople, management teams and an extensive broker network can access on a "near real-time basis," Hoagland said. All of WD-40's Web applications have been custom developed: some in-house, some by consultants. Business intelligence by Ontario, Canada-based Cognos is used for financial consolidation and reporting.The customer comes first Technology is used strategically to customize product offerings to WD-40 customers. WD-40 sells directly to about 60 "trade channels," including mass merchants, groceries, hardware stores, automotive supply companies, drug stores and wholesalers. The system enables the company to offer special promotions to each class of customer, based on given parameters.
"Each one of these trade channels has its own unique set of requirements," Hoagland said. "We have been able to use technology to structure our pricing, promotions and order fulfillment around those different trade channels, and to automate the checking of inbound orders against those active promotions."
WD-40 resembles other companies that successfully turn IT spending into a bottom-line advantage. Jeffrey Kaplan, founder of ThinkStrategies Inc., a consulting firm in Wellesley, Mass., said two characteristics distinguish such companies. "First, they recognize that every investment decision they make should be carefully evaluated, whether it's in IT or some other segment of their operations. Second, they realize that measuring the return is only one part of the decision: They also must understand the strategic intent of the investment," Kaplan said.
Like other companies on the SearchSMB 50, WD-40 aims to align IT spending with corporate goals. Hoagland is part of a strategic management team that regularly reviews IT projects, assesses their progress and determines future spending priorities. Corporate goals are infused into annual performance appraisals.
"We want to make sure we have functional business units more involved in the whole process. That way there are clear expectations: how the project is executing and what the deliverables are going to be," Hoagland said.
WD-40 estimates its flagship oil product is found in about 80% of U.S. homes. For decades, WD-40 oil was the company's sole brand, a ubiquitous household lubricant with manifold uses -- from softening baseball gloves to quieting creaky hinges. But acquisitions and expanding products, such as the 3-in-One Oil brand, help drive the company's attempt to squeeze more value out of its IT systems. .
Hoagland, who joined WD-40 nine years ago, oversees a staff of 10 IT professionals, six of whom work in San Diego. IT support staff in Atlanta, New Hampshire, New Jersey and Cleveland provide regional help to salespeople, who are located throughout the country. WD-40 also has global operations, including Latin America, Europe and the Pacific Rim.
"Our focus in IT is to spend money, so to get value from that, we have to provide stellar support. For a salesperson in New Hampshire to be able to directly call an IT staffer in her time zone when she is having e-mail problems or whatever ... that is just huge," Hoagland said.
Along with automating internal ordering systems, Hoagland's IT team is continuing to enhance automated tools that were provided to remote salespeople. WD-40 equipped its salesforce with laptops, cell phones and other mobile devices about five years ago. Aiding the project are two of Hoagland's IT staffers, both of whom have experience in sales.
Refinements are being made that enable WD-40's field force to execute Web queries against customer data contained in a primary business system. Hoagland said salespeople have doubled their productivity by replacing paper processes with Web queries.
Hoagland's IT team also includes a database manager with financial expertise -- "that was huge for us because none of us knew anything about finance" -- and an ERP manager who has rolled out systems for global manufacturers.
Garry Kranz is a freelance technology writer in Richmond, Va.