QUICK READ:
- Lionel, the model train brand, purchased a diecast cars line of business from Motorsports Authentics in 2010.
- To support both divisions, Lionel replaced its antiquated manufacturing system with NetSuite.
- Lionel uses NetSuite to track profitability of each division and manage inventory accordingly.
- NetSuite SuiteCommerce Advanced synced Lionel’s three ecommerce sites with its financials and inventory.
- Next, Lionel will use NetSuite SuiteAnalytics for insight into how it can better reach the current generation of kids and adult enthusiasts.
When it comes to model trains, there is no name more iconic than Lionel. Since 1900, the company has manufactured miniature, electric replicas of real-life trains that have captured the interest of children and collectors alike.
Lionel’s trains became popular toys during a period when American railroads were glowing symbols of innovation and progress. That inspired a golden age for the company through the 1950s. But as Americans came to rely more on cars, model trains didn’t catch on the same way with a younger generation, and Lionel’s business took a hit. That, along with a few unsuccessful initiatives, resulted in the business filing for bankruptcy in 1967. The once publicly traded company changed hands multiple times in the following decades, then found new success with a few iconic trains and innovations like the first wireless control system.
By the 2000s, the brand had started to regain its footing thanks to popular designs like The Polar Express, which would become its best-selling train set of all time. That positioned Lionel to purchase the diecast cars division of a company called Motorsports Authentics — a joint venture between Speedway Motorsports Inc. and International Speedway Corporation, the owners of most of the race tracks NASCAR raced on at that time — when it divested that part of the business in 2010. For Lionel, miniature trains and race cars were a perfect pair: two types of collector’s items similar enough, in fact, that the same Chinese factory made both.
The merger also marked an opportunity to move from an antiquated legacy software onto a system that could meet the needs of the newly minted Lionel Holdings.
The First Big Project: Finding a New ERP System
Originally with Motorsports Authentics, Rick Gemereth became the CIO of Lionel after the two companies became one. His first priority: Find an ERP system that could serve both the diecast car and model train businesses.
At the time, Lionel still used an outdated manufacturing software called BPCS that printed out paper reports and displayed information on bulky monitors. The AS/400-based system used a programming language called RPG — introduced in 1959 — and managers required assistance from the IT team to create reports.
In looking for a new ERP, leadership debated whether to make the long leap to a cloud-based system. That group decided it was worth the cost savings and convenience of outsourcing infrastructure management, upgrades, and fixes to the vendor. Gemereth’s team considered options including Microsoft Dynamics and JD Edwards. They chose NetSuite based on its history in the cloud and several employees’ past experiences with NetSuite’s ecommerce solution at Motorsports Authentics.
“NetSuite was in the cloud even back in 2010, before it was in vogue,” Gemereth said. “We took a chance on the cloud back then, and it certainly paid off in the long run because now everybody's either in the cloud or getting into the cloud.”
Despite the obvious need for a new system, Gemereth’s group faced some internal resistance in moving to a new ERP. Strong support from the Lionel CEO and listening to the concerns of end users helped overcome those objections.
“We spent a lot of time understanding how the teams that would use the new ERP operated,” Gemereth said. “We involved them in defining our processes, which helped earn their buy-in.”
Simplifying Multi-Subsidiary Management, Increasing Automation
Lionel opted for NetSuite OneWorld, a solution designed for businesses that have multiple subsidiaries or operate in multiple countries, to unify its model train and diecast car divisions. Most notably, NetSuite OneWorld allowed the company to view financial statements and reports for just one side of the business or consolidated reports that included both.
“We needed to treat Lionel trains and Lionel Racing as separate operating entities so we could track the profitability of each,” Gemereth explained. “OneWorld allows us to assign sales and expenses based on the product lines, which in turn shows us which ones are making money, which are not making money, or where we need to focus our attention.”
NetSuite fundamentally improved the accessibility and depth of Lionel’s reporting, too. Any employee with system access can pull reports on not only financials but also inventory, sales, and orders — a major improvement in 2010 that continues to show its value today. With that information, Lionel can double down on top sellers and offer promotions for slow-moving items. Those numbers also help supply chain leaders optimize inventory levels by placing reorders at the ideal time.
Moreover, Gemereth credits NetSuite’s flexibility with helping Lionel continuously refine processes over the past decade-plus.
“Being able to customize NetSuite eases our processes. A little while after a customization, for example, the warehouse team will say, ‘This process has gotten better, faster, easier,’” he said. “We've heard that in many areas.”
Lionel has saved additional time and money by implementing mobile scanners in the warehouse, automating AP and AR, and using EDI to automate transactions with large retailers; the company processed 80,000 EDI documents in 2021.
Bringing Ecommerce Into the Suite
The organization previously ran the ecommerce site selling trains on a homegrown solution and the site selling diecast cars on Magento — now known as Adobe Commerce — but it soon ran into challenges with the latter.
“This was around 2013, and there wasn't an easy path to transfer data between the two systems,” Gemereth said. “So we built our own pipeline to do that, which was less than successful.”
Magento and NetSuite applied taxes differently — one at the line level and one based on the total purchase value — which sometimes made balancing accounts a headache. Additionally, Lionel had to train call center employees on two systems instead of one, adding to onboarding time and costs.
That led the company to move both sites to NetSuite’s SuiteCommerce Advanced solution, which was new at the time. Lionel continues to use SuiteCommerce Advanced (opens in new tab) today and recently brought its customer service site onto the platform.
“I love running our entire business on one platform because it makes everything a lot easier and we only need to know how to use one system,” the CIO said. “And everybody can access NetSuite easily, so that simplifies and expedites the reporting process.”
Gemereth noted that NetSuite Learning Cloud Support (LCS) has also helped the business get new employees up to speed faster without consuming the time of internal resources.
“Just like every other company, we experience turnover,” he said. “The training we're getting from NetSuite has helped us speed up the transition from a new employee who doesn’t know NetSuite to a productive individual.”
Capturing a Younger Generation
Many Gen Xers and millennials inherited their passion for trains from parents who eagerly anticipated Lionel catalogs and had train sets on every gift list. Reaching today’s generations has proved more challenging given the endless entertainment options available.
“We did a demographic study a handful of years ago and found that kids really still love trains,” Gemereth said. “But when they get a little older and get handed a cell phone or a tablet, the train loses some of its appeal.”
Lionel is bridging that gap by investing in technology of its own, like apps that allow customers to control trains from their smartphones and via voice. The manufacturer is also amping up its social media presence and pursuing more licensing deals with Disney, Warner Bros., and other big names so it can produce trains featuring popular characters and logos.
Lionel can better understand what products and messaging appeals to this younger audience thanks to a recent investment in NetSuite SuiteAnalytics. The module will also simplify calculations like sales-based licensing dollars owed to other companies.
The goal: Build relationships with younger customers meaningful enough to stretch long past childhood.
“A lot of us have trains because our fathers had trains,” Gemereth said. “So we're trying to promote that so that as today’s young people grow up and have their own families, they’ll look back on our trains and cars fondly and want to provide that same experience to their kids.”