Depatie’s accounting team is the same size as it was a decade ago — yet the company is three to four times larger now. Advancements in technology and improvements in processes allowed them to achieve that growth — yet it tends not to be quantitatively reflected.

Automation machinery manufacturing company Depatie Fluid Power has spent over 60 years distributing hoses and fittings, seals, valves, and more. Since its founding in 1956, the company has grown to five locations serving the aerospace, medical, oil and gas, industrial, and services fields.

Recently, Depatie has closed several acquisitions, leading to significant growth as its 2,000-plus customer base grows and extends further across the United States and abroad.

To fuel growth, Depatie turned to real-time metrics — a focus that has only intensified over the last two and a half years. In this installment of our Metrics that Matter series, we will look at the company’s metrics strategy.

Flash Reports

Depatie relies on the live data tracking provided by NetSuite, with team members using personalized dashboards and notifications to monitor their relevant metrics on a daily basis. For Ryan Thomas, general manager at Depatie, that entails receiving a digitized flash report from NetSuite at the beginning of every day as a pulse check of key financial and operational metrics.

“[My flash report] gives me many of the key financial metrics like accounts payable and receivables, cash flow, bank balance, discounts off of payables,” said Thomas. “It also shows me net sales and gross profit percentage, which can be broken down by Depatie’s different locations, so I can see how they're trending.”

From an inventory perspective, Thomas also checks standard KPIs from NetSuite daily. He watches Depatie’s pipeline, sales this month versus last month, order entry activity, inventory levels, and on-time delivery. The team at Depatie also created a database that they monitor to make sure they balance inventory levels with sales.

“I don’t know if there are any metrics that don’t matter,” said Thomas. “There are just core business metrics that matter more than anything else. For us, it’s sales, receivables, inventory, profitability, and churn. If we watch those, they tend to drive the income statement, the cash flow statement, and ultimately the balance sheet if we're doing them well. So those are our leaders.”

External Sources of Data

The fast-paced disruption over the past several years taught many CFOs to avoid the insular view of looking only at internal performance. For its part, Depatie consults numerous external sources.

To gauge where the marketplace is trending, the team at Depatie consults macroeconomic reports produced by J.P. Morgan Chase. However, these reports are viewed through the lens of the company’s reality: Because Depatie is a smaller, regional firm primarily doing business in the Midwest, it has to be cautious with macrotrends because they might not be entirely relevant to its business space or customer base.

“A lot of times, [the reports are] more for affirmation that what we think is happening is actually happening,” said Thomas. “They allow us to have a checkpoint to say, ‘Okay, this trend is occurring. What are they saying about why it's occurring? Are there any outlooks as far as how long it may continue or what might happen next?’ That gives us validation [on the assumptions] we are making decisions with.”

For benchmarking purposes, the team at Depatie also taps into information from the Bureau of Labor Statistics (BLS) and from the trade groups they belong to, the Fluid Power Distributors Association (FPDA) and the Association for Supply Chain Management (ASCM). These external sources help create and inform cost categories and contracts, as well as how they compare in the market.

“We look at these sources and track against it to see if we are in alignment,” said Thomas. “We look for a sense of how we are sitting in our market. Are we moving ahead of the market or behind the market as far as pricing and costing? We need to make sure we’re not getting out of whack.”

Metrics They Want to Track

Going forward, Depatie is looking to turn some of the most integral components of its business into a metric: Flexibility, productivity, and efficiency.

“The part of our business that is really elevated right now is the one that is difficult to measure,” said Thomas. “And that's the ability to measure our flexibility and efficiency. Because, right now, those are the only things that you can count on. You need to be able to adjust quickly and be extremely efficient at what you're doing.”

As an example, Thomas noted that their accounting team is the same size as it was a decade ago — yet the company is three to four times larger now. Advancements in technology and improvements in processes allowed them to achieve that growth, yet it tends not to be quantitatively reflected.

“There is more to that story than just the people per department,” said Thomas. “The only way you can do that is by becoming more efficient and effective. We need the continued drive towards that and to be able to articulate it in a way that the organization understands it.”

The best way to accurately measure efficiency and productivity through quantitative measures is still to be determined. However, Thomas sees the overall metric as being a composite of several areas across different departments, such as the number of orders and fulfillments each month, as well as how quickly they were placed and fulfilled.

“I think an overall efficiency or productivity metric would be really valuable,” said Thomas. “Because I believe that the more efficient you can get transactionally, the more value you can provide your customer. But I also believe it makes it a better place for people to work because it pushes [towards automating] mundane tasks and allowing employees to focus on more engaging value-add activities.”

Bottom Line

On a day-to-day basis at Depatie, a thorough approach to metrics is integral to fostering growth and continuing to provide value to clients. However, that strategy has become even more critical in the past several years given the prevalent disruption. For more on Depatie’s “metrics that matter,” be sure to check out the next installment of this series where we delve deeper into how their metrics strategy has been used in the wake of the COVID-19 pandemic and its ensuing knock-on effects.

See how your business can maximize inventory sell through and avoid stockouts in ademo of NetSuite Inventory Management (opens in new tab).