Technology Forum: Integrating For Success
But times have changed. Decades ago, many of our mothers didn't have full-time jobs, and one of their primary tasks was to buy - i.e., source - groceries and other products for the home. In our time-strapped world, shopping is something that must be completed quickly and efficiently. And the supermarket that offers the biggest variety at the best value wins my family's business.
You probably experience the same situation at your supply house. Whereas 15 years ago you probably had one or more full-time employees dedicated to purchasing, you may now have a part-time person - or a team of individuals tasked with other responsibilities - doing the job. And your customers want one-stop shopping, too. In today's productivity-driven business environment, they want to cut as few purchase orders for as many SKUs as possible.
That's why many distributors have moved to an integrated supply model. Offering a wide assortment of products - even items outside your normal scope - saves customers time and money while entrenching you as a true business partner. And with the technology now available, it's easier than ever to offer your customers the service that will increase your sales and their loyalty.
The How And Why Of Integrated SupplyWhen you perform integrated supply, you source products and process transactions for your core customers. A process flow might go like this:
Your customer - the end user - orders products from you - the lead, integrated distributor. You then process the order and pass it on to another distributor, the fulfilling distributor. The fulfilling distributor then ships the product directly to your customer and sends you the invoice - and you invoice your customer.
This is a big win for the customer, who now purchases and receives from one supplier instead of 10 or even 100. In the past, an end user who needed one product from each of his 1,000 distributors would have to cut 1,000 purchase orders (POs) and processed 1,000 invoices, payables, and shipments. With integrated supply, he cuts only one PO and deals with only one invoice and payable.
While you must carry extra responsibility to respond to customer needs, you gain profitability, as there is room for markup with convenience items. And using an Internet trading network to integrate your back-end enterprise software solution with the solutions of other distributors can help you cut costs and increase accuracy.
How? When you integrate, information flows from your solution to that of another distributor with no human intervention. By connecting your inventories over a private trading network, your computer solution shows the price and availability of all products the other distributors carry to service customers. Now, when your customer calls for price and availability, you can answer without having to make any phone calls. Better yet, you can offer your customers access to a Web site that will give them all the information they need for all the distributors they use, and they never know that they are dealing with more than one supplier.
And, your solution communicates with the solutions of other distributors to automatically integrate all back-end transactions.
Best of all, because there is little to no human intervention involved in each transaction, communication is automatic and easy. And your Internet trading network should further simplify the process by rationalizing item codes. This translates item codes, enabling you - and whomever you communicate with - to use your own part numbers.
Going The DistanceJamie McCraw, inventory control manager at Cayce Mill Supply (Hopkinsville, Ky.), understands the importance of a can-do attitude towards integrated supply - no matter what the product. “If you won't get it for your customer, they'll go somewhere else. It's as simple as that,” he said. “We're willing to go the extra distance to keep our best customers.”
McCraw uses an Internet trading network and the Web to source non-stock products, ranging from regular requests for safety gloves to more unusual, one-time requests for cell phones and license plates. “If you can think of it, we've probably sold it at one time or another,” he said.
The ability to supply customers with just about anything is a “security blanket,” he said: “We know we'll have their business for a long time to come.” Because all sourcing is done right from their desktops, all customer-focused employees can manage the task quickly, easily, and efficiently. Cayce Mill customers benefit from the ability to cut one purchase order for an endless variety of products, resulting in reduced administrative costs.
“It's really important to stay flexible in this business,” McCraw concluded. “Just because someone wants PVC pipe today doesn't mean that he's not going to want something off-the-wall tomorrow. You have to use the Internet to offer your customers more stuff. And if you don't, we will.” <<
- Doug Levin, Prophet 21
Doug Levin, executive vice president of Prophet 21, is widely recognized as an expert in technology for distributors. As a leading technology provider for the distribution industry, Prophet 21 develops technology solutions and services to help distributors increase sales, improve customer service, and reduce operating costs. Read more articles by Prophet 21 experts at www.p21.com.