Case Study:
Brief
Drybar Holdings, best known for its hairstyling shops specializing in blowouts, struggled with meeting the needs of its accounting and manufacturing teams on the products side of its business. While it had found NetSuite to replace its aging QuickBooks implementation, the company’s split into two divisions required more customization than the team could handle.
Overview
Who is Drybar?
In 2010, Drybar began in Brentwood, California, with a straightforward concept: provide the best hair blowouts. It started as a side business in true entrepreneur fashion and quickly raised $2.5 million to expand. Now, Irvine, California-based Drybar boasts approximately 160 locations throughout North America.
Sticking closely to its “bar” theme, Drybar’s cashiers are called “bartenders,” and the different versions of hairstyles feature cocktail-themed names like the Cosmo or Manhattan. The company’s revenue grew from $1.5 million in 2010 to $39 million in 2013. In addition to its locations, it also sells a growing product line dedicated to helping consumers achieve the perfect blowout at home, sold in its own shops and retailers like Sephora and Nordstrom. Coupled with inventory struggles, Drybar’s desire to expand its franchise business meant that it needed to move off its legacy system if it wanted to continue growing.
“We were having a lot of issues with scaling quickly and effectively. We also have franchise partners who are hooked into our system, too. And as we wanted to expand that side of the business, we weren’t able to do that at all.”
The Problems
The Initial Challenge
Inability to support manufacturing
Ten years ago, when Drybar first kicked off, QuickBooks was the logical choice to get up and running. But with the company’s booming success, two years after implementing QuickBooks, it knew it needed an ERP system. Drybar had begun researching different platforms, knowing that it required features to manage its manufacturing operations. This included creating work orders, capturing all costs for an accurate landed cost, and the flexibility to keep custom attributes with each item.
The company also wanted to create a portal for its franchise partners and retail stores to conduct inventory transfers. It also needed reporting visibility. “QuickBooks just didn’t handle inventory well. At the time, when products were still a part of our business, we did a lot of manufacturing. It just wasn’t working with QuickBooks. We needed a solution that included not only meeting the needs of our accounting team but also manufacturing,” said Diara Burris, Director of ERP Systems. NetSuite had already been implemented and heavily customized by the time Burris arrived at Drybar. Still, the real difficulty was yet to come.
Spinning off the Products Business
When one business becomes two, systems become strained
“When the split happened with Drybar Holdings, which is the store, and Drybar Products, which is the products division, we needed customization in NetSuite to be able to differentiate the Products and the Holdings transactions from one another so we could operate as two separate businesses in the same system.”
However, NetSuite’s ACS team stated that this would take months. Drybar only had three weeks to split the companies into two divisions within NetSuite, which would be a temporary arrangement until Drybar Products migrated to the system its new parent company used.
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The Solution
How Kodella Came to the Rescue
In-depth scripting knowledge was required
Burris came into Drybar just as the business units began splitting. When ACS quoted a lengthy timeline, she brought in Kodella, a company she had heard of when working with ColorProof. Using its in-depth knowledge of NetSuite, Kodella set up a custom segment custom GL scripting to handle the two companies’ accounting activities, operating separately. Now, transactions in each division would be kept separate, allowing for accurate reporting.
“For the last eight months, we’ve been able to function in NetSuite as two different companies. We’re able to have independent financial reporting and have employee permissions set up for the company that they worked for so that we were able to get the proper accounting transactions created without any kind of manual entries. I’m not sure how we would have been able to function without the work that Kodella did on that project.”
Further Analysis
The New NetSuite Implementation
How a new instance will reduce customizations
Currently, Drybar runs OneWorld NetSuite, but because of all the customizations it has done to the system, it plans to launch SuiteSuccess in March 2021. Features like online bank matching for reconciliation purposes weren’t part of the original implementation. Drybar added Supply Chain, Advanced Billing, Advanced Financials, Advanced Inventory, Advanced Procurement, Demand Planning, Light Manufacturing, and Multi-Book Accounting modules. It also needed bundles like Fixed Assets, Warranties, and Repairs Management. The current iteration also only allows for 20 locations – a serious limitation for Drybar.
The company plans to move to NetSuite SuiteSuccess, which includes many of these features out of the box. It expects to have more robust reporting capabilities and a way to track everything that has a financial impact on the company, such as the number of blowouts being performed in one location. Getting set up with transactional data will help the company identify opportunities and continue to grow the business. And if anything requires heavy lifting, Burris knows who to call.
“If there’s something that NetSuite can do that my ACS team is telling me can’t be done, it will be one of those things where I may reach out to Kodella for help.”
Wrap Up
With the initial division split completed, Drybar can now function in NetSuite as two different companies, improving reporting accuracy and preparing the company for its new NetSuite instance.