Cutting Edge: Wireless Evolution
Distributors today have more choices than ever when it comes to wireless communication products and services.
There are a wide range of device choices with expanded capabilities like: voice, data, bar code and radio frequency identification (RFID) scanning, global positioning systems (GPS), and signature, video, and image capture.
But don't blink: you may miss a new development.
“By the end of this summer, our robust wireless network will be EDGE enabled,” says Ruben Rivera, Cingular Wireless, data sales specialist. “EDGE is third-generation wireless data technology equipped to bring high-speed DSL capability to your wireless devices.”
WHAT IS WIRELESS?Wireless devices, like your garage door and TV remote, transmit signals through radio waves instead of wires.
Wireless information is primarily transmitted over two kinds of networks: wide area networks (WANs) and local area networks (LANs).
WANs are a geographically-dispersed collection of LANs and can cover very large areas. Most WANs are not owned by any one organization but rather exist under collective or distributed ownership. Examples include the Internet, military networks and airline reservation networks.
Wireless LANs, already popular in airports and hotels, connect network devices over a relatively short distance. They may service a smaller area than WANs, but LANs can transfer data much faster.
A third kind of network gaining acceptance is Voice over Internet Protocol (VoIP). VoIP is a technology that allows telephone calls to be made over computer networks and offers substantial cost savings over traditional long distance.
“While traveling to branches I have been able to receive e-mails even when my cell phone reception was going in and out,” says Sid Strickland, president, Atlanta-based Home Depot Supply, Trade Solutions Division. “Communication solutions like the Blackberry help keep me informed and quickly accessible.”
WIRELESS ADVANTAGESFrom inventory management and fleet management to sales force automation, wireless technology is now available off the shelf, making wireless a lot easier.
One distributor with trucks equipped with GPS tracking noticed a box truck whose doors were going up and down excessively. Additional vehicle monitoring concluded this driver was illegally selling material.
E-mail and calendar applications are the most common wireless uses, but customer relationship management (CRM) applications are gaining momentum. For example, salesforce.com has formed an alliance with several PDAs and Blackberry to equip sales force, technical support and customer support representatives with additional tools.
Other wireless advantages:
-- Increased mobility. Key personnel are no longer tied to their desks.
-- Speed. Faster decision-making is a competitive advantage.
-- Sales-force efficiency. The knowledge gap between what the inside sales know and what the outside sales need to know is decreasing.
-- Improved customer service. Problems are quickly identified and solutions are promptly implemented.
-- Increased productivity. Employees have unlimited capacity to improve, especially when equipped with the right tools.
-- Safety and security. From superior wireless security products for the office and warehouse to tracking a lost or stolen vehicle.
LOWER COST OPPORTUNITIESPrices for both devices and network time are dropping between 15% and 20% each year, according to research conducted by Gartner Inc., a research and advisory firm based in Stamford, Conn. Sending an e-mail can reduce voice charges 10-12%. Products and services can be purchased a la carte or bundled.
Wireless installation and maintenance costs vary due to a wide range of construction factors, but there are cost savings to consider:
-- Lower network and installation costs of a wireless network.
-- Lower cost of upgrading network communication.
-- Lower costs to add/move/change computing systems as employees come and go.
-- Lower cost of establishing and maintaining conference rooms and common areas.
Cost savings cannot be assumed, however.
“I am stunned that anything gets done,” says Pat Carr, executive vice president, Poole & Kent Co., a Baltimore-based mechanical contractor. “We have too many people on the phone, abusing the privilege. We were sold on the increased efficiency and productivity promise, but the costs are exceeding the benefits. We are reevaluating all aspects of a wireless network right now and are prepared to scale back if necessary.”
“You have to choose the right plan and closely manage and monitor it,” says John Martin, president, S.I. Goldman, a mechanical contractor in Longwood, Fla. “For example, we'll chargeback personal calls through payroll deduction. One guy spent $400 talking to his broker.”
ROIA sound strategy starts with having the right goal - profitability.
The success of wireless projects depends on three elements working seamlessly: the device, the network and the application. If one of those elements isn't up to par, then the project won't work.
According to Sage Research, a market research and consulting firm in Natick, Mass., 80% of wireless users plan to increase their investments in the first six months of 2004. Increased productivity was the No. 1 reason given.
In a joint press release authored by contractor Del-Air Heating, Air Conditioning and Refrigeration (Lake Mary, Fla.), Nextel and Xora, $350,000 in costs savings is expected from new wireless automated time cards.
Intel found that wireless connectivity delivers roughly 16 minutes of additional productivity per day and a return on investment of over $6,000 per person. And that is just at the office.
WHAT DO YOUR CUSTOMERS WANT?A large distributor spent $120,000 on a customer satisfaction survey in 1998. The survey results revealed that customers want:
-- Calls returned timely.
-- Accessibility to inside or outside sales staff.
-- Advance notice of a late delivery, and quick notice of a backorder.
The solutions six years ago included working extra hours, out-hustling and outmuscling the competition.
Customers still want the basics, but today, distributors can work smarter, using wireless solutions to proactively communicate, identify and solve customer needs.
WIRELESS COMPETITIONDistributors reap the benefits when wireless competitors go head-to-head for their business. Recent improvements to devices and networks have been impressive as manufacturers and service providers make every effort to impress and gain market share.
Mobile phones are no longer limited to straightforward voice functions. Personal digital assistants (PDAs) have color screens, more memory and faster processors. Laptops are smaller, lighter and can be built to your needs. Network coverage is better as calls connect and stay connected.
Think there is no answer for Nextel's Direct Connect? Take a look at Cingular's Mobile to Mobile. Can't find handheld devices or GPS solutions to meet your needs? Keep looking. Not only are there dozens of choices, but many carriers will customize products to meet your specific needs.
NEXTELNextel is a major player in the market and enjoys tremendous popularity. From wholesalers Parnell-Martin (Charlotte, N.C.) and Hughes Supply (Orlando, Fla.) and from Miami-based wholesalers Bond Supply and Lehman Pipe & Plumbing Supply, to Home Depot Supply - each of them said they had at least one Nextel product.
“We understand the construction and distribution business,” says Henry Popplewell, Nextel's vice president of distribution and transportation. “They are two of the backbone industries in our organization. We have worked together as partners and evolved together developing solutions for more than 10 years now.”
According to Kent Lee, Charlotte, N.C. complex manager for wholesaler Parnell-Martin, “Nextel has had good growth and profits along with good people. They give us the basic blocking and tackling tools we need.”
WIRELESS LIMITATIONSWAN bandwidth is still limited. When transmitting data, distributors must sometimes send smaller files so the information moves more quickly. The size of the handheld device is also still an issue. Even the most recent phones and PDAs have small screens - often only a couple of inches in diameter - and it is next to impossible to read large documents on them.
Wireless LANs scored very well in product reliability, according to a recent survey by Sage Research, but they score below average on features such as security and vendor interoperability.
Many applications need to be reconfigured if they are going to be used through wireless connections. Most client/server applications rely on a persistent connection, which is not the case with wireless.
Transactional systems require safeguards for dropped wireless connections. Remedies for all of these shortcomings cost money.
While expressing satisfaction with the walkie-talkie type radios offered by one of the larger vendors, one mechanical contractor says that company's cellular phone service hasn't been up to his expectations. He switched carriers and discovered it could get even worse.
“I don't see a lot of gee-whiz type products and services out there - yet,” says Parnell-Martin's Lee. “The RF bar coding is about it. They're out there, but not cost effective and only a few of the larger wholesalers can afford it.”
SECURITYSage Research concluded that 74% of CIOs cited security as the primary barrier to further adoption of wireless. A wireless security model should address many potential threats and exceeds the scope of this story.
The device, the data, the network and the accompanying information systems are all important areas for consideration. The basics:
-- The device - ensure that end users employ basic security such as power on user ID and password.
-- The network - use encrypted, authenticated VPN tunnels to ensure privacy and integrity of communication between handhelds and connected networks.
-- The data - when transmitting data, use standard encryption algorithms such as 3DES.
NEXT STEPS - HOW DO I START?First, build a business case for the wireless technology. Second, secure the technology. Third, begin to deploy the technology.
It may be a good time to focus on technologies that can be implemented in months, not years, and can demonstrate an immediate return on investment.
Develop a pilot program. Or two or three.
“We're a small company, but as a member of the Embassy Group we have large company access to additional resources,” says Dennis Lehman, president of Lehman Pipe & Plumbing Supply.
“We have just started talking about GPS tracking on our vehicles to our membership (at Embassy Group Ltd.). The benefits from safety and security to better vehicle coordination will be a great value for us,” Lehman says.
“We like to try new things,” says Fred Beck, plumbing department manager for wholesaler Bond Supply. “We provided phones to contractors with jobs over a certain size. It got too expensive so we abandoned the program after a year.
“We're experimenting right now with different ways to reign in the salespeople usage, without hindering their effectiveness. And we're looking at new carriers like MetroPCS who offer unlimited calling for one flat monthly rate,” Beck says.
Look for breaks that provide an opportunity for specialized wireless devices that focus on narrow functions with limited features, like improving delivery methods.
“In one area we have four delivery trucks crisscrossing all over town often making multiple stops to the same customer at the same job site,” says Mike Mavros, data communication manager at Hughes Supply. “With a pilot GPS technology program we're attempting to go from four trucks to one, while improving customer service.”
Distributors can also upgrade to new standards when replacing worn-out devices. Typical cellular users replace their phone every 1.2 years.
Specialized wireless devices, often tried within a limited scope, can drive out inefficiencies within an organization and its supply chain while minimizing implementation risk. <<
Terry Helms is president of The Lawrence James Group, a consulting firm with clients across several industries including construction, insurance, legal and telecommunications. He has 20 years of construction experience, most recently as director of marketing for Orlando-based Hughes Supply, leading the department for eight years as the company grew from $600 million to $3 billion in revenue. He can be reached at THelms@TheLJG.com or at 407-376-5945. <<
The number of PDA users in the United Sates reached just more than 14 million in 2003 and will grow to 20 million by 2008, penetrating 7% of the overall U.S. population.
Source: Jupiter Research
Question: What developing technologies have the greatest potential to change construction in the years ahead?
Wireless broadband - 26%
RFID tags - 6%
Embedded sensors and self-monitoring materials - 31%
Building information modeling - 17%
Biometrics - 5%
Robotics - 16%
Source: informal Internet survey posted on McGraw-Hill Construction Web site. (Percentages may have been rounded off.)
According to the Yankee Group, a Boston-based research and consulting firm, U.S. companies will spend $4 billion over the next four years to add RFID and electronic product codes to their wireless supply chain initiatives, a move that could result in $200 to $400 billion in savings by eliminating or curbing erroneous transaction information.
(For more on RFID technology see past stories in SUPPLY HOUSE TIMES: “Cutting Edge: Warehouse Management” (March 2004); “Say Goodbye to Bar Codes” (April 2003); “Focus on Technology” (April 2001).)
Wireless Users Mostly Satisfied
BRAND COMPLETELY VERY
Verizon Wireless 20.0% 44.6%
T-Mobile 21.7% 33.7%
Sprint PCS 10.9% 44.3%
Nextel 17.6% 50.0%
Cingular 16.7% 40.5%
AT&T WS 11.7% 34.2%
TOTAL: 15.4% 40.6%
Source: In-Stat/MDR, www.instat.com, www.MDRonline.com
Hitting the market are cell phones that can let you surf the Web, get stock quotes, order pizza and just about everything in between.
Question: What would you like to be able to add when using your cell phone?
Do timesheets - 11%
Receive RFIs - 6%
Do punchlists - 3%
Track jobs - 11%
Buy products - 6%
Connect to my project Web site - 12%
I just want to make phone calls - 52%
Source: informal Internet survey posted on McGraw-Hill Construction Web site. (Percentages may have been rounded off.)