By Mark Phillips, Phillips Collection
As a CEO, I get many emails about the software I should be using, and the senders are on to something: In the coming years, small- and medium-sized businesses like ours are projected to increase their spending on digital tools and business software.
In furniture and home decor wholesaling, the industry in which my family has been operating for the past 40 years, the coming digital transformation is causing both excitement and exasperation. This is because business and technology architecture only changes once every 25 years, whereas the average CEO tenure is 10 years or less.
In 2018, I made a decision — led and inspired by my tech embracing son, Jason Phillips — to fully commit our business to the future. I believed Phillips Collection possessed capabilities that could be leveraged in innovative ways. I wanted to go from “day-to-day” to “data” even though I didn’t know what that data would reveal.
From out-working to out-learning
Ours is an industry where working with disparate teams is the norm. Almost 90% of furniture wholesalers have under 20 employees. We are accustomed (nay, inured) to working hard to assemble data from different sources. Fragmented systems and antiquated solutions tend to feel like home.
Take our example. We had an ERP, shipping software, a sales application and a website; each was okay on its own but did not talk to the others. We needed a dedicated employee who was paid to take data from one program and plug it into the others. My conclusion was that when it came to digital transformation, we could not keep “out-working” our competition (who may have more resources.) We needed to focus on “out-learning” them. How did we make this transformation at Phillips Collection?
- We replaced the four disjointed programs with one cloud-based software that connects all our business operations, from sales and customer management to inventory and finance. Today, all our business data is on one platform that employees can access anywhere, anytime and from any device.
As a CEO, I love that I can get instant access to custom dashboards that provide a quick overview of KPIs about our customers, operations and supply chains, no matter where I am or the time of the day. Before using our current cloud platform, I had to wait around for someone on my team to prepare these files and reports for me. - We started using data from reports, emails and web services (like Google analytics) to understand our customers better. Clients always “talk” to us, but these data bits are often underutilized. Forrester estimates that “between 60% and 73% of all data within an enterprise goes unused for analytics.”
- We automated perfunctory processes that are prone to human error. This freed up time to focus on high-value activities. With more free time and better customer data (that is not dated), our teams are empowered to act when it’s most valuable. That means we can focus on redesigning our sales channels and nurturing high-quality leads or on developing new innovative products.
There are benefits that we can easily quantify: increased gross margins, increased e-commerce sales volume, reduction of sales training costs, reallocation of IT time, inventory accuracy and the near-elimination of overselling. Investing in cloud-based software provided a much-needed remedy for Phillips Collection’s one-of-a-kind inventory: more than 5,000 SKUs had to be live 100% of the time.
In and of themselves these results are persuasive enough for any furniture wholesaler or CEO to consider investing in a digital transformation platform. But my goal was to comprehend and control how Phillips Collection will continue to grow and navigate the future.
From responding to anticipating
Data will allow us to get a head start, but here is the deal: Our data should be working for us; we should not work for our data. The faster our industry becomes literate in and invests in the data about customers, supply chain and business operations, the better we will be at maximizing our value as wholesalers.
When we sell goods to our trade partners, our price is set according to the functions we perform: maintaining inventory, extending credit, assembling, sorting and grading goods, delivering, marketing and how fast we can operate efficiently. With the disproportionate reliance on foreign manufacturers, we are going to have to spend more on marketing to get customers familiar with new furniture brands.
As the marketing spend goes up, we need more data. We can reach millions, but will we reach the wrong millions. Only data will help us reach the right thousands instead of the wrong millions. Data literacy will have to be built into the industry. We will need data standards that we can all benefit from and an industry that’s streamlined because customers expect companies to up their digital game. I look forward to tackling these challenges in concert with our team and industry peers.
Mark Phillips is the CEO and president of Phillips Collection, a home furnishing and design wholesale company headquartered in High Point, with showrooms in New York City, Las Vegas, Atlanta, Dallas, Los Angeles and Laguna, Calif.
