Change is good

The connected service center wins

Above: From the top floor to the shop floor, everyone has visibility into a service center’s daily activities.

The connected service center wins

April 2022 - A specialist in software for the metals service center industry has been acquired by a private equity firm and, as a result, is flush with the capital needed to scale up its expertise and its core products.

Founded in 1983, Enmark Systems Inc. agreed to be acquired in 2021 by Accel-KKR, a  private equity firm holding $10 billion in assets.

Grant Stanis, a product of one the Big Four accounting/consulting firms, was appointed CEO. “I was brought in as part of the acquisition,” he says. Stanis is working with Enmark’s owner Michael Rybicki, who “realized how great the market was and wanted to invest further in the software.

Lots of companies were interested in Enmark,” he notes.  Menlo Park, California-based Accel-KKR, he says, is “a unique investor with Silicon Valley chops” that fielded questions from Enmark about how it can provide greater value and improved technologies. “I worked with a lot of private equity firms; this one is not just about driving profit at all costs,” says Stanis, who has experience consulting in the manufacturing and distribution sectors.

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The younger generation of employees expect instant access to real-time information in order to make sound decisions.

Valued inventory

Enmark works with over 200 customers. “We want to partner with customers and provide more than software—we want to be thought leaders,” he says. For example, “We have a new module, called Value Added, coming out in June. “Many of our customers when they do something with the metal, they expense the inventory. Say you take two coils and join them, and slit it or cut it to length, then put the rest away in stock to sell at a later date.” Service centers take the labor, overhead and other materials needed to make all that happen and expense it as it occurs. “What if we put in a day’s worth of work and $5,000 worth of cost. Most clients expense those costs. That’s fine. Take the expense now.”

However, when companies enhance the value of their inventory, they can capitalize those costs temporarily and put it on the balance sheet. “Some of our clients have lines of credit based on the value of their inventory. If you increase the value of your inventory, you have more capital to grow the business at low or no expense. We are talking to bankers and accountants about those ideas.”

Enmark is consulting with customers and other industry voices to find other opportunities, such as enabling safety reporting through existing ERP software. “We want to bring all these ideas together to become the platform to achieve” what clients want most.

Visibility everywhere

One clear focus for Enmark is developing the connected service center. “You connect the top floor to the shop floor,” Stanis says. Every level of the service center organization has different needs, but throughout, “speed, accuracy and efficiency wins. You don’t need to have five different systems and log in and out of each” to get to the next source of data. “We are looking to remove friction from system to system and from person to person,” he explains. “You need to know what’s going on at any moment in time. If you are the CEO of a service center, you want to know the current safety status, you want to know today’s purchasing strategy, and you want to know about accounts receivable—all at once.”

Customers are asking Enmark some key questions: “Can we also provide customer portals and realize more value there? Pay bills? Order material? People do business with those who make it easiest to do business with. Our customers’ customers want to know their order is on the way,” Stanis says. “We will invest $20 million in research and development toward the connected service center.”

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Anticipation

During its nearly 40 years in business, Enmark Systems’ software has traditionally gained wide acceptance for managing long products. “We view flat roll as a significantly under-served segment of the market and are actively pursuing capabilities to push Eniteo to the front of the line for flat roll,” Stanis says.

“When people think about Enmark, they think of us as bar or multi-line material software, but more than half of our customers do flat rolled and the needs are varied,” he continues. “Our software today tracks what industry needs, like gauges and [handling] multiple master coils. We have been talking with customers and potential customers to find what they need five years from now. A lot of the enhancements we put into flat roll will also translate into managing the long products. By engaging a broad spectrum, we want to be able to anticipate where the customer’s business is going.”

Demographic change

“We are seeing a shift in demographics in service centers,” according to Stanis. “A lot of folks whose grandparents started the business see it moving on to the third generation. Their lives are conducted on their phone and they pay attention to influencers.

“It’s a modern digital perspective—connect everywhere. With the investment, we want to modernize the software so it is mobile everywhere,” he says. “You can know where your trucks are at all times, when your deliveries are made, when the invoices are sent out. Why wait until your truck returns to your loading dock” before sending that invoice? The connection is inside the warehouse, office and loading dock, “but also to wherever you are.” Employees are looking at daily shipments, looking up customer credit reports.

“We have something called Enmark Pay. Collecting from customers is important,” says Stanis. The pace of the U.S. Postal Service is very slow in a world where payments can be made instantly. Now, “customers can pay electronically. They can receive an invoice electronically and they can click a link and pay immediately. You pay the service center the same day. That’s the type of modernization we want to offer.”

With the private equity resources being brought to bear, “We are excited. It’s a fantastic market in a very American industry with a great set of customers,” Stanis says. MM

Sources

Enmark Systems Inc.
Ann Arbor, Michigan
800/594-9025
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