According to Steve Epner, Brown Smith Wallace Consulting Group, “Data synchronization is one of the most significant opportunities for cost-savings in the electrical channel.”
As many know, IDEA has helped many manufacturers and distributors to pursue this path, saving them thousands of dollars (see “A Valuable IDEA” for a sense of potential profit improvement – full report / executive summary). Some distributors have taken the next step of working with their key customers to standardize product information, pricing and ordering / invoicing processes to take advantage of e-ordering, e-invoicing and e-account management to reduce peer-to-peer inefficiencies. The challenge is taking a one-to-one approach and broadening its reach.
Intuitively, to achieve synchronization, it is presumed that a central resource exists from which companies can contribute and extract data as there would only be one “bank” to “deposit” and “withdraw” from.
In looking towards the next couple of years, and the slow growth environment that many expect the industry to experience (definitely less than the past few years), the need to reduce operational expenses (or manage their costs in relation to your growth rate) is critical to ensuring profitability.
Additionally, given the speed of change demanded by customers (desire for e-invoicing, e-catalogs, e-account management services) as well as the frequency of changes emanating from manufacturers (i.e. product changes, pricing), it will only be practical for distributors and manufacturers to seek, and accelerate, data synchronization and process standardization to grow their business.
To capitalize on these opportunities distributors and manufacturers should consider conducting an eBusiness Audit to better understand their potential, be they process issues, the need for “new” technologies or a better understanding of the tools that currently are available.
Next week IDEA will be holding its Electro E-Biz Forum in Vancouver. Over 120 people are expected to attend. Topics include the State of Private Labeling, The Changing Landscape of Invoicing (both topics presented by Allen Ray based upon ARA/CMG customer research), Using Information to Link the Supply Chain, Special Pricing Authorizations: The Benefits of Automating the Process, Web 2.0 Catalog and much more.
Allen Ray will be attending this week’s conference and will share his insights and observations from Vancouver.
2 Comments
1st Day Thoughts from IDEA’s E-Biz Forum in Vancouver,BC
The E-Biz Forum started yesterday with a packed crowd. Due to last minute registrations, attendance is over 200 people … more than IDEA expected.
Yesterday’s sessions were well attended, and informative:
• Adam Fein launched the conference with an overview of the Forces of Change facing distribution industries and emphasized that private labeled product usage will rise and the sharing of POS data he foresees as issues that will affect distributors.
• I conducted two break-out sessions.
o The first, The State of Private Labeling, was very well attended. If you would like a copy of the presentation, email me. The essence of the message is that there is much interest on the topic, that all elements of the channel are concerned about the impact on margins and brands, and that many are searching for strategies on how to compete.
o The second session was The Changing Landscape of E-Invoicing. Decent attendance, but this session competed against a net pricing session (guess which session had more people!!). To learn more about this, look for our upcoming white paper or register for our webinars sponsored by Billtrust.
• A takeaway from conversations regarding the net pricing session is that many manufacturers appear to be unsure about providing net pricing information. Key concerns seem to be the overall lowering of the price for the item.
As one would expect, the recent changes at IDEA have created much hallway conversation.
The Feds announcement yesterday of a ½ point decrease in the interest rate gave rise to this thought …
• Many electrical distributors claim their SPAs or ship and debits once a month….usually with a 30 day period.
• Many manufacturers pay, totally or partially, some amount of this debit within the next 30 days….that’s a total of 60 days.
• If a claim gets kicked back by a manufacturer because of bad data, which is often the reason – wrong UPC number, wrong price, etc), then the distributor is looking at 90+ days to get their money back. Some are much longer is getting resolved.
• So think of this as a balancing act. If you have to wait 90+ days for credit from a manufacturer and are waiting to get paid from your customers, given that DSO’s are increasing for many, just how vulnerable is your cash flow and if inflation starts up, what will be your cost to carry that claim money. Talking with a bank economist this afternoon was about the U.S. not being protected from inflation of other economies any more…… just something to think about. Synchronized data and utilization of standardized SPA processes can help reduce your turnaround time and improve your cash flow.
More coming tomorrow from Vancouver.
Allen
We have tons of junk in our system that has sales history attached to it. We feel we would loose it, if we cleaned it out.
Maybe you guys could offer up an article as to what we should do with it?
DC
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