Company Name and Location:
Ferguson Enterprises, Inc.,
Newport News, VA

Description of Business:
With more than 1100 locations, Ferguson is the largest distributor of plumbing supplies and pipes, valves, and fittings (PVF) in the US. Ferguson is also the third largest distributor of heating and cooling equipment (HVAC).

Credit executive contact info:
Len Brown, Regional Credit Manager
407-816-8545
Len.brown@ferguson.com

Annual Sales:
$7 billion

# of customers:
Not available

Customer base characteristics:
Very large customer base mix of small and large customers, geographically dispersed

Challenges:
The credit management structure at Ferguson was decentralized, with credit managers in local branches and regional credit staff covering specific geographies and working with the credit branch managers. This decentralization led to inconsistencies in the decision-making process, with some information being available in some branches but not in others.

There were no tools to manage systematic file updates, and when there was turnover in a branch, the branch suffered from the poor credit decisions that had been made or from the discovery that no decisions had been made at all, hurting Ferguson's mission of providing superior customer service. In addition, during busy times, credit applications would be put aside for more collections-oriented work and subsequently were not getting the attention they deserved, even though many decisions were "slam dunks." There was no system to effectively prioritize credit applications requiring more attention.

Goals:
Solution objectives included:

• Centralizing credit application processing to create economies of scale
• Creating master electronic credit files available across the company
• Establishing a file update process to keep all customer data up-to-date
• Developing an automated decision process using an effective scoring model that would speed the approval process

Type of scoring solution:
Rules-based scorecard

Vendor and Product Chosen:
eCredit Enterprise Edition

Costs:
N/A

ROI:
The automated credit scoring process allows Ferguson to enjoy virtually instant credit approvals that capture sales and customers that were lost with the old system. The consistent, accurate credit decisioning identifies undersold sales opportunities and reduces credit losses. In addition, all transactions are time and date stamped, and consistently documented for Sarbanes-Oxley reporting. The new system has also helped foster a portfolio approach, rather than an individual account approach, to credit.

Results:
The use of automated scoring means that a credit decision can be rendered within minutes of submission and that the branch is freed from the burden of time-consuming manual processes. However, the branch does maintain all the flexibility and power it needs. The branch edits and activates accounts. If a decision is needed immediately, local staff can view the customer's file on-line to analyze the credit decision and scoring while the customer waits.

Centralized file processing alleviates the pains of inconsistent data, and credit managers can now be confident that an account's information is current and accurate. With the new system, the credit manager can concentrate on marginal decisions and on identifying undersold accounts. Best of all, we are better able to carry out our corporate mission by leaving more time for relationship building and personal visits and freeing up certain staff to be re-deployed to more customer-oriented duties.

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