Tech Sparks Transformation of Action Health

Posted by Ranga Bodla, Head of Industry Marketing, NetSuite

Cloud ERP leads to realignment, culture change for distributor

For more than 35 years and through two generations of ownership, family owned Action Bag Co. served two separate and very distinct markets: healthcare packaging, which accounted for 80 percent of the business, and retail gift supplies, which generated the remaining 20 percent.

Then, in 2014, a new generation of leadership joined the company—Sean Cwynar, grandson of founder Marie Gebbie and son of current CEO Nancy Cwynar, who took over as director of sales, and Phil Negri, who was brought in as CFO. The two Notre Dame MBAs quickly deduced two things: the healthcare portion of the business was growing steadily while the retail business was largely flat; and the healthcare market's shift toward a more cost-conscious model to keep up with the growing needs of an aging population represented an opportunity.

In response to those two realizations, Action Bag Co. took two important steps. It found a strategic buyer for the retail gift supply business in order to concentrate on the more lucrative healthcare packaging business, and changed its name to Action Health to reflect that new focus; and while other companies in the market were recoiling from — and resisting — the shrinking margins hospitals, pharmacies and home health facilities demand, Action Health doubled down on a strategy to embrace that new low-margin reality. Its new mission: deliver savings to the supply chain.

To do that, management knew Action Health would have to deliver the most competitive price the business could reasonably support. That meant doing things more efficiently than any of its competitors, and technology would be a big part of the answer.

The company turned to NetSuite's cloud-based ERP application, which has helped Action Health transform itself on three levels.

It has enabled the company to get out of the IT maintenance business so it could focus on its core competency and innovate in more forward-looking areas such as real-time access to business data; it has delivered cost reductions that have been passed directly on to the supply chain, as well as scalability that has the business performing at a higher level; and it has helped Action Health attract more and better talent, particularly from the Millennial generation, by not only providing engaging, user-friendly tools, but also making possible a more flexible work environment, with sales staff working remotely 60 percent of the time.

Still, a transformation is only as good as the business benefits it delivers, and Action Health has seen its bottom-line results swell as a result of its new strategic focus:

  • Sales have grown 18 percent in the past 12 months, a significant improvement over the company's historical average of 2 percent;
  • Across-the-board efficiency gains have fueled a 40-percent gain in revenue per employee; and
  • Having a lean, scalable solution that stresses OpEx over CapEx has resulted in a 200 percent increase in operating income.

It's clear that Action Health's strategic decision to focus on its healthcare packaging business and modernize on NetSuite is helping the company make progress on its internal vision: to be No. 1 in every market the company serves.

Reaching such a lofty goal, particularly in a market that values low costs above all else, requires strong focus, maximum efficiency, and a talented workforce.

With a streamlined business, a modern and nimble technology platform, and an atmosphere that keeps employees challenged, Action Health has seamlessly begun to redefine the distribution of health care packaging, and the rest of the market will have no choice but to follow suit.

Take a look at Action Health’s business and hear about its NetSuite implementation in this video and case study.

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