Tobacco Distribution Case Study

Tobacco Tax Case Study | Creager

Tobacco Distribution Situation

Situation

In business since 1958, Creager Mercantile is a wholesale supplier and one-stop-shop for everything beverage, candy, Mexican candy, grocery, Mexican products, vaporizers, tobacco, automotive products, gift shop supply and more. Located in Denver, Colorado, Creager serves customers nationwide and stocks thousands of items from top sellers to hard-to-find items. Unlike traditional big-box stores, Creager carries a much wider variety of wholesale products to better serve its customers. Creager Mercantile does not operate as a traditional distributor but is set-up for customers to shop while onsite cash-and-carry style. As a small business locally owned and operated, Creager prides itself on its customer service and giving back to the community by participating in special projects.

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Tobacco Distribution Challenge (OTP Tax)

Challenge

Similar Inventory Items

As a growing business Creager was challenged with the management of over 4500 inventory items, some of which are very similar. Historically, managing this inventory in the warehouse led to a high number of picking errors and customers receiving invoices for the wrong items. In addition, employees were continuously having to manually look up items in the company’s BSE system because the items would not scan properly at the check-out counters. For Creager, the average order dollar value was around $400 and depending on the mix of products, could include anywhere from 30-100 items. If any of these items did not scan properly at the check-out counter it could add up to 2 minutes per item as employees tried to find the right code. For larger orders, this extra 2 minutes would add up quickly, slowing down the entire process.

Managing Tobacco Tax

Another challenge for Creager was around managing Tobacco distribution tax. Tobacco is the most scrutinized product that Creager Mercantile carries. In Colorado, there is a 40% Other Tobacco Product tax (OTP) which includes cigars, smokeless items, and a variety of different products. As a business carrying these inventory items, Creager is responsible for calculating and recording its OTP tax properly and making sure that the company reports the proper taxes to the government.

Prior to using Blue Link, Creager would manually calculate the OTP tax based off of the invoice from vendors, trying to ensure that the inventory cost and corresponding tax amounts were correct. As this was a manual process, it was prone to human error which led to wasted time and resources trying to identity and then manually fix any discrepancies.

Pick, Pack and Ship

Another challenge for Creager was around the picking, packing and shipping process which was inefficient and unorganized. Trying to process a simple sales order could take up to 20 minutes. Since Creager Mercantile does not operate as a traditional distributor, the warehouse was not set-up for efficient picking, but rather for customers to shop while onsite cash-and-carry style. This meant that when an employee needed to pick an order, the location of any given product in the warehouse was unclear, meaning the picker would waste time trying to locate items for the order.

Tobacco Distribution Solution

Solution

As Creager became more and more frustrated with its existing software solution and manual processes, the company decided to start searching for alternatives. Among other issues, the company’s existing BSE software did not have robust reporting functionality and was slow and expensive. The system was supported by a single individual leading to delays and frustrations. This led Creager to start the search for a new software solution and ultimately led to the implementation of Blue Link ERP.

To start the search process, Creager reached out to the company SoftwareAdvice.com which then recommended Blue Link ERP as well as 4 other different software solutions as a potential good fit. After initial sales calls, Creager became frustrated with its interactions with the recommended vendors – most of whom were in a huge rush to demo the software and were being extremely pushy about the sale. Blue Link ERP, however, was able to stand out from the competition with its consultative sales approach.

“When we talked with Blue Link, we worked with Mark Canes and we loved the fact that he was patient. He was more concerned with seeing if Creager and Blue Link would be a good partnership than getting money out of us.” – Zach Taylor

After in-depth discussions with Blue Link, it was determined that the software would be a good fit from a functionality and budget standpoint. To close the deal, Zach and another member of the Creager team decided to make the trip to Toronto to meet Mark and the Blue Link team face-to-face.



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Tobacco Distribution Results

Results

Working as its trusted technology partner, Blue Link ERP has helped Creager increase sales orders, customer satisfaction and company growth. Blue Link has made it easy to analyze data from different sources and has provided Creager with robust ERP functionality to automate processes and reduce manual work.

OTP Tax
When it comes to managing OTP tax and tobacco distribution, Blue Link ERP’s accounting functionality ensures accruals are accurately tracked and added to inventory costs/items in a way that is simple for employees to do and understand. Blue Link users just need to check a box for specific inventory items where the OTP tax applies, and the system automatically calculates the amount. It now takes the company less than 5 seconds to make sure that proper inventory items have the right tax accrued.

Mobile Sales
Creager implemented Blue Link’s mobile point-of-sale app and B2B online order portal. The mobile app allows Creager’s delivery drivers to take and process orders while onsite with customers, and the B2B online order portal provides customers with access to ordering and account information 24/7/365. Both tools have helped the company increase the number of sales orders 50% from before using Blue Link to now. Better warehouse management has made the order pulling and shipping process more efficient leading to almost 100% accuracy with invoices.

Customization
Through customization, Blue Link provided Creager with the ability to setup and automate mix and match quantity deals. Prior to Blue Link, Creager had to manually change the price on all items associated with a mix and match deal. Working with Blue Link to create a custom spec, Creager can now click a button in the system to change the price of mix and match items – this feature alone has increased the company’s beverage sales by at least 50%.

Reporting
Reporting with Blue Link has been simplified and automated. Creager is able to easily open Excel sheets that are live linked to Blue Link to get all the information needed in real time.

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Blue Link Testimonial

The software is working way better than our previous software. The support team has been remarkable, when we submit a case it gets fixed in a very timely manner. We are still working out the kinks but we are getting there.

creager
Zach Taylor
Sales Manager, Creager Mercantile