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Beating the odds; computerization keeps A.M. Lutheran competitive in a tough market.

Beating The Odds Computerization keeps A.M. Lutheran competitive in a tough market.

In the 1950s, A.M. Lutheran Distributors, Inc., of Pittsburgh, PA started distributing beer for Dubois Brewing Company, a small Pittsburgh regional brewery. Several decades later, the brands have changed but Lutheran remains true to its regional roots, distributing local brands through a large part of Allegheny County, PA.

In this time of embattled regional breweries, a concentration on regional brews is not a strategy that guarantees success. For A.M. Lutheran, however, it has paid handsome dividends. According to Jim Lutheran, current president and son of the founder, A.M. Lutheran's business has increased 50% over the last five years.

"We are in a tough market," Lutheran asserts, "with some of the lowest case prices in the country. However, regional breweries still have a significant place in this market, because there is a lot of loyalty for traditional brands. As a result," he notes, "we've been able to compete head-to-head with the nationals." In addition to Heileman's Pittsburgh Brewing Company brands, Iron City among them, Lutheran also handles upstate New York's Genesee. The company recently began distributing Molson, and now hauls the Canadian import to 16 Pennsylvania counties.

An important factor in A.M. Lutheran's continued success may be Jim Lutheran's acquisitive nature. Soon after joining the company in 1968, Lutheran presided over the takeover of a competitor, setting the stage for a string of acquisitions that would span the subsequent 20 years. "I could see the way the business was going," Lutheran says, "and the future was consolidation. In retrospect, it was the only way we could have gone. If we hadn't started our acquisitions, we wouldn't still be here." In 1984, construction was completed on a state-of-the-art, 65,000 square-foot warehouse facility, giving A.M. Lutheran the wherewithal to continue expansion.

"Managing our growth hasn't been easy," Lutheran observes. "A couple of years ago it became apparent that one are where our operation was seriously deficient was data processing." A.M. Lutheran had been hooked up to a remote computer that was managed by a local company. "It was called an 'on-line' system," Lutheran says, "but response times were slow, flexibility and capabilities of the software were inadequate and we weren't receiving much service and support.

"When we had first decided to computerize," Lutheran says, "we had chosen a local company because we thought we'd get better service from them. It didn't work out that way, so we started looking further afield." In the fall of 1988, A.M. Lutheran chose a system produced by Intelligent Computer Systems of Mountville, PA. The system chosen by the company is called AWARD, an acronym for Automated Wholesale and Retail Distribution.

A.M. Lutheran started out installing an eight-workstation system. "AWARD is a true multi-user system," Lutheran notes, "in that each workstation can perform any function at any time, regardless of what might be happening on any other terminal." Lutheran reports four workstations are devoted to order entry, two to sales and management and one for retail counter sales. In addition, one terminal is provided for Bob Balint, the system operator and manager.

"I have been able to get reports and sales analysis much more quickly than before," Balint says. "An advantage of a real-time system is that all information is updated immediately. Any report can be run at any time with absolute assurance that it is up-to-the-second and consistent with all other data. I also appreciate the system's comprehensive reporting capability," he says, "because it helps us look at the 'big picture' and focus on specific areas for detailed analysis. It's crucial that we get accurate information as fast as possible," he notes. "Satisfying the reporting requirements for 15 breweries is a big job that requires very flexible software. Not only does the ICS system provide this flexibility, it does so in a much more timely fashion than our old system.

"The ICS computer system can process data much faster," Lutheran says, "we're in a pre-sell environmental and our operators can now enter orders right from the phone. The system even allows us to check account histories as we enter the order so we can make sure the customer didn't forget to order items they normally buy.

"Maintaining our own data has allowed us to implement price and file changes whenever necessary," Lutheran continues, "and we feel much more secure now that we have our own up-to-the-minute data backups."

According to Lutheran, the computer has helped the company in other significant ways. "Our tremendous growth has necessitated much more sophisticated control," he says. "As we have acquired other companies the number of brands we have to handle has multiplied. With the computer we have been able to get the degree of control we wanted. The inventory control system allows us to take a physical inventory at any time on all products or just those of a selected brand or brewery, so we can 'spot check' on a rotational basis." Lutheran notes the ICS system includes a feature allowing physical inventory to be recorded as of a specific date and time, enabling business as usual to continue without affecting the recorded count. The recorded inventory can then be adjusted to match the physical count sometime during the next day or two. "We used to have to get our ending month inventory straightened out before the next month's business could begin," Lutheran says, "causing some pretty late nights. Since we can now adjust the ending month inventory even after we have started the next month, it can be done during normal business hours."

Another area in which the computer helped expedite matters was through assisting in the ordering and scheduling of many packages from many suppliers. "The AWARD purchasing system tracks all product through the cycle from the stage when it is ordered," Lutheranpointsout, "through the point when the order is acknowledged by the brewery, received and the bill paid.

"The system gives us the capability to do some pretty sophisticated sales forecasting," Lutheran observes, "taking into account package seasonality and trends. By combining sales forecasts with product-on-order information, Award provides projections of inventory levels into the future. By generating that type of report and other inventory management reports we can save hours of work, prevent shortages and over-age product." With their new-found confidence in the benefits of data processing, Jim Lutheran and Bob Balint are exploring other avenues for automating the business. "We want to perform our accounting functions in-house," Lutheran said, "and look forward to installing a different system from ICS this spring. It's called ACCLAIM, and includes general ledger, payroll, accounts receivable and accounts payable.

"I was initially leery of using ICS because they're clear across the other side of the state," Lutheran says, "but we've been impressed with the service and support they've given us. It was remarkable to us that they could provide such improved service over a local company."

"Overall," says Jim Lutheran, "I feel much more comfortable with the in-house computer system. It has improved our ability to compete and it has the flexibility to grow should our acquisitions continue into the 90s. Because," he says, "in this business you can't rule anything out."

PHOTO : Jim Lutheran, (right) president of A.M. Lutheran Distributors, has pursued an aggressive strategy of acquisition to expand his market share in Allegheny County, PA..(top) A.M. Lutheran now has five screens on-line, including one for Bob Balint, system manager.
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Title Annotation:beer distribution
Author:Hodge, Andy
Publication:Modern Brewery Age
Date:Jan 22, 1990
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