RDL Distribution specialises in the distribution of building materials such as bricks, tiles, blocks, aggregates and cement. Formed from a management buy-out in 1999, the company is now the largest independent in the construction sector with a network of 26 depots throughout the UK supporting a fleet of 750 vehicles. Customers include leading building product manufacturers, such as Ibstock, Hanson, Lafarge, Celcon, Omya and BLI.
"RDL Distribution has attained a reputation for expertise in managing products that require special handling," says Patrick Buck, IS Manager. "This expertise, combined with fiercely competitive pricing and a range of services from spot haulage to complete outsourcing has created one of the largest independent distribution companies in the UK."
The adoption of PS Financials accounting software is providing management with real-time access to financial information, which has resulted in significant improvements in forecasting accuracy. Reduction in administrative overhead is enabling RDL to undertake detailed business and profitability analysis and use 'what if?' modelling to support its shift from geographic to product focus.
Competitive pricing is achieved through efficient logistics and maximised load volumes that ensure RDL runs at a minimum 70% laden mileage for any of its 360,000 loads per annum. "By increasing the percentage of laden miles, we can reduce the cost per mile for our customers and provide them with an efficient and cost-effective outsourced distribution solution," confirms Dale Harris, Financial Accountant at RDL Distribution.
However, this success and expansion created a huge administrative pressure and requirement for management information that could not be supported by the existing in-house developed financial accounting system.
Harris explains, "RDL treats each vehicle as a profit centre, producing monthly profit and loss (P&L) accounts for each. Furthermore each vehicle is allocated to a depot which is itself a profit centre and has P&L accounts that include both RDL vehicles and those of subcontracted haulers."
"RDL regularly reassigns the location of vehicles to maximise efficiency and meet customer demands, a process that required the creation of 28 nominal codes per vehicle, that resulted in an average of 30,000 nominal ledger codes. The old system was unwieldy and difficult to use", says Dale Harris and we could not allow direct access by non accounts people."
Management reports were paper-based and cumbersome, appearing at least seven working days after month end. The audit process was complex, with a paper-based audit trail, whilst time consuming input routines left the company little time to undertake the analysis required to sustain business growth.
"RDL required a flexible financial system that provided ease of input and enabled us to allocate vehicles as profit centres with full vehicle history. We also needed rapid production of management accounts, preferably online rather than on paper," explains Harris.
Following a significant market review, RDL Distribution opted to purchase PS Financials accounting and business management software, which is used by over 30 staff at head office and depots throughout the country.
Buck explains, "PS Financials' unified ledger design provides the flexibility to support our complex vehicle management and cost tracking allocation requirements." He adds, "User Defined Input (UDI) provides an extremely efficient and time-saving way of allocating costs."
For example, RDL is using UDI to ensure vehicle repairs are automatically charged to the appropriate depot, irrespective of a vehicle's location when the repair invoice arrives. "By automating this process we have been able to save several days each month previously spent manually allocating costs," says Harris.
UDI screens are also used for inputting up to 5,000 purchase invoices monthly, a process that used to require 1 ½ people full time. Now, the automatic allocation of costs to the right vehicle and/or depot has reduced to a task for one person. Harris adds, "The accuracy has also improved, minimising chances of errors in the payment process."
The company is using functionality within the software to add factual information, such as mileage, to the accounts. "We can now provide management with cost per mile for fuel and tyres, for example, which enables comparisons to the industry average, highlights high costs and supports vehicle benchmarking for future planning. We are now turning data into information", says Harris.
In addition to having management accounts online within four days of month end, management now has real-time access to the accounts system. Managers regularly interrogate the system to check costs have been correctly allocated, improving accuracy and significantly reducing the time spent by accounts handling queries.
As a result, both sales and profits forecasts have become far more accurate. Indeed, from monthly sales of £4.5 - £5 million, forecasts are within £3,000, while monthly profit forecasts are within 1%. Says Harris, "Prior to implementing PS Financials forecasts were estimated. Now, the level of accuracy in our forecasting is excellent and provides confidence in strategic decision making."
The reduction in administrative overhead has also enabled RDL accountants to undertake more comprehensive analysis of financial performance. In addition to using drill down to identify problem areas, the company is using 'What if?' analysis to support decision-making.
Harris explains, "Looking ahead, we are planning to sectorise the business to ensure continual efficiency improvements. Using PS Financials it is simple to ascertain the impact of, for example, moving a brick depot within the business hierarchy and the implications of reapportioning costs. As the organisation grows it will become increasingly important to undertake such detailed business analysis and assume a product rather than geographic focus."
PS Financials will also enable sector managers to drill down to attain vehicle performance irrespective of location and achieve real-time profit management.
Looking further ahead, the company plans to move its customer sales database into PS Financials to create a single corporate database for further analysis and business understanding. "Being able to assess the profitability of a specific customer across every depot will refine our understanding of the business and support future development," says Harris.
He concludes, "The implementation of PS Financials has saved RDL time and money through automation and ease of input. As a result we can now undertake other projects which bring cost and savings efficiencies to the business and, critically for an organisation that has recently undertaken an MBO, demonstrate to auditors, banks and Customs & Excise the excellence of our financial information, further improving our credibility as a business." | 
