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Last Update: Thursday July 29, 2021

Key Idea: Keep Your Technology Current

Distribution of thousands of small products everyday depends upon perfect systems.   More...

Key Question:


If everything else is equal, technology can put you at the top of the heap.  David won the US rights to distribute Fossil and Seiko watches because he proved that his systems could handle huge volume.

Before the Internet became ubiquitous, David spent big bucks to use Electronic Data Interchange.  The King Company execute all business transactions electronically, thereby improving accuracy and speed. Processes that once took weeks, are now be done in minutes.

They got EDI because their big customers demanded it. Wal-Mart wants its inventory delivered "just in time." No one has a stock room anymore and Wal-Mart was one of the first companies in the world to perfect the just-in-time inventory system. When the watches arrive at Wal-Mart, they go straight to the sales floor. As the watches are sold, SII sees the activity in close to real time. Therefore, they can replenish stock without a Wal-Mart buyer placing an order.

EDI allowed David to deliver just in time and consistently best his competitors.

Think about it

What could you be doing now if you had more effective technology?

Clip from: The King Company with David Arnold

Austin, Texas:  He was a high school coach that loved watches.  It all began with a stop watch and became a love for any kind of watch.  The trunk of the family car was always filled with samples. And, he and his wife would go just about anywhere in Texas to find a new drugstore to carry his brand of time. When this story was taped, David had 65 employees and $50 million in annual sales. To create this American dream story, David did a lot of things right.

Look at ways he applied the most sophisticated technologies to the business of ordering, warehousing, selling, shipping and financial transaction processing (collecting on accounts receivable within minutes not 30-60 days).

The watch industry is one of the oldest, but here we learn about some of the newest business practices to create profits and a foundation for the future.

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The King Company, now SMI Direct

David Arnold, founder

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Business Classification:

Year Founded: 1991

Keep Your Technology Current

STERLING: The technology is changing so rapidly that if we're not on the edge of technology, then we're going to get left behind. We could not be where we are today if we weren't on EDI.

DUSTY: We're doing roughly 250,000 orders a year. Ninety-seven percent of them are electronic.

STERLING: We send all of our orders via the Internet. We send them purchases via the Internet. We send projections on the Internet, and offer them access to our AS/400, so their information is out here. All this is done electronically.

MIS Manager: This is the magic box (referring to an IBM AS/400).

HATTIE: (Voiceover) The King Company relationship with software provider Butler and Curless guarantees that Sterling can sleep at night . They provide 24-by-7 connectivity service and support.

MIS Manager: They said, `Well, one of the things that we do to provide better customer support is we want a direct line to every one of our customers.'

HATTIE: So if you need help with them, you're instantly on the same line together.

MIS Manager: Correct.

STERLING: All of this used to be done with paper. We used to take orders by mail and by fax. We still do, but today 97 percent of our orders are now paperless. When we get an order via EDI, the machine immediately sends back to them a confirmation that we received it. It's paperless. We then send them an Advance Ship Notice -- an ASN -- of what we're going to send. Then, we invoice. As much as possible, we don't even send paper invoices any more. They're all electronic invoices. And we are now working with customers that they pay us electronically.

HATTIE: I was going to say, "Can you get their money from their bank... ...via your little electronic data interchange - EDI?"

STERLING: We just brought our first customer on doing that. And it--the savings has been phenomenal. We had a customer that would send us a check, a remittance, that would be over 100 pages long because we sent them invoices. Now that's all done electronically and it's matched, and it can be posted to their account in a matter of minutes or hours vs. days or weeks. So it's very--this is very--and we also get information the customers share with us, the sell through information, which is absolutely critical for our business. We know what's not only selling to our customers, but to the ultimate customer, who is the consumer.

HATTIE: (Voiceover) Doing business with big business will always require those of us who are small to have big technology, and today, it's cheap.

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