While the initial skepticism and fear regarding the Internet’s impact on distribution have subsided, there are still a number of pertinent and important issues floating around out there that deserve some attention. Among them are determining how to make the most of the Net for your business, making your job — and your customers’ lives — more streamlined and avoiding many of the trip-ups you’ll encounter along the way.

These were the subjects addressed recently during a panel discussion held at ISSA2000 in Atlanta. The panel included a number of e-consultants and experts including Michael Marks, principal and managing partner, Indian River Consulting Group, Melbourne, Fla.; Randy Covill, senior analyst for e-commerce at AMR Research, Boston; Jim Broering, a consultant with Arthur Andersen; and John Schachat, chief technology officer and executive vice president of Networld Exchange, an e-commerce software provider in Bonsall, Calif. Givent the years of experience and tons of know-how packed into this panel, the spirited discussion led to numerous audience questions, and provided for a basic understanding of where distributors are today and how they should position themselves for the future.

E-Business vs. E-Commerce
Before beginning the conversation, the panel made sure to differentiate e-commerce from e-business. E-commerce means actually performing transactions over the Internet, while e-business is more generic. It involves some level of working the Internet into day-to-day business processes.

“E-business is using these tools in your business to streamline it and to almost create a process,” said Marks. “Instead of everyone doing everything manually, it’s digital.”

And all agreed that the degree to which the Internet should be utilized by businesses depends entirely on individual needs and the needs of customers.

“There are a lot of distributors,” said Marks, “who, instead of becoming ‘dot-coms’ have become ‘dot-dashes,’ or a digitally aligned supply house where you’re in the business of creating and managing relationships.”

“It’s all about the customer,” said Broering. “What this e-commerce is giving you is the ability to have another channel to your customer.” The panel agreed that the Internet is, and should be thought of as a tool, and the important thing for distributors to determine is how they are going to implement and use that tool.

“You give them the capability to choose the way they want to do business with you,” Broering continued. “It’s about customers and serving them better. That’s the No. 1 point.”

“The question is, how do you use these tools to make your customers more accessible to you,” Marks said. “These tools can allow you to reach more customers, and do more business while maintaining customer relationships.”

Marks feels that one of the major problems with distributors in the jan/san industry is that they are reluctant to embrace and use this technology to their advantage. Many are set in their ways and aren’t willing to learn what the Internet is all about. But Marks warns this could be a big mistake for any business. The technology is available and it can do nothing but contribute to business’s overall success. The jan/san industry has been slow to acknowledge this technology, and Marks feels it’s wasting precious time and energy.

Covill, too, warns distributors not to miss the boat. He cited a recent AMR survey of Fortune 1000 companies that predicted that $5.7 million dollars would be moving by way of e-commerce by the year 2004. And he added transactions weren’t the only thing included in this figure — process improvements were factored in and were a large part of the total.

“We’re looking to dramatically improve business processes and lower overall costs of these processes,” Covill said. “We don’t believe in disintermediation, because our research shows it didn’t happen.”

Ominous Threat
When the Internet first fell upon the business world like a sometimes-suffocating but surprisingly well-fitting blanket, business owners first welcomed it with open arms until those first fears rose to the surface. What if? What will happen? Are distributors going to be wiped out by this thing? How will I compete against these low-priced dotcoms? Theirs was a fear of disintermediation, or the dissolution of the distributor’s role in the supply chain, and it was a fear that, according to the panel, shouldn’t have triggered as much lost sleep as it did.

The panelists contended that the distributor’s role is irreplaceable. Customers thrive on the contact, service and relationships that define a distributor.

And this is why many of the dotcoms failed, the panelists agreed. They concentrated almost entirely on front-end sales and didn’t have the ability, knowledge or foresight to pull things off on the back end. Things like fulfillment, consultation and customer service were left by the wayside. And an unhappy customer is a customer who will buy from somewhere else the next time — even if it might cost a little bit more.

“What the Internet brings to everybody is a standard form of communication,” said Schachat. “How you use it is up to you.” Schachat likened the Internet to a toolkit, where distributors have the ability to choose the tools they want to use.

“If you can use this technology to improve existing processes, talk to customers and expand your horizons, it can only benefit you and make you more competitive in the future,” Schachat continued.

“To get started toward e-business — if you aren’t there already,” Broering said, “you need to make sure your internal systems are accurate and that the information is available on a real-time basis.” He said access to up-to-date information is one of the things that’s most important to customers, and key to their trust in you as a supplier.

“As you move to an e-business world, the ability to provide real-time information to customers is crucial,” Broering adds.

It’s important that online information jives with what your salespeople are saying, and that everyone is on the same page with inventory availability. You don’t want to jeopardize the confidence of the customer, the panel agreed.

“Along those same lines,” said Covill, “what we’re seeing is, as the information gets more accurate, it allows them to look at their inventory and promise or make levels of commitment to customers that they haven’t been able to before.” This can go a long way in keeping customers happy.

“You’ve got to have ‘inventory integrity,’ said Marks. “I’ve seen a lot of people do things really, really right and this thing will trip them up.”

And because customers often don’t trust distributors when the inventory integrity isn’t there, a lot of excess inventory results, which leads to higher costs. The Internet, according to the panelists, has the potential to alleviate mistrust, so people will pay for real inventory, and not stockpiled excess.

Customer Input
Communication with customers to make processes efficient and effective is the goal distributors should be looking at. The Internet can assist you in reaching that goal, but it’s not the end-all, be-all answer. Finding out what customers really want from your business will get you off on the right foot, panelists agreed.

“I think it’s really all about collaboration,” said Covill. “It’s talking with key customers and seeing how the technology can help build that relationship and improve those processes. I need to collaborate with the key audience that I really want to influence,” he added.

Channel Surfing
Marketing via the Net was also a topic of the discussion, and according to the panelists, many businesses are already going about this in the most effective way.

Panelists seemed to agree that the Internet provided another channel of communication — not one that exceeded or replicated the purpose of any other channel, including phone and fax — but one that expanded on those capabilities.

And business owners also get to make a choice with their own Web presence — do they want to host a public or a private marketplace? According to the panelists, private marketplaces have been the most profitable and effective for most businesses. With private marketplaces, it’s most beneficial to market yourself to your existing customers, and then expand markets. Print your Web address on your stationery, business cards, and any box that leaves your warehouse, the panel advised. Make customers aware that it’s there for their use. Salespeople become marketing agents by going out and showing customers how and why to use the site.

“There is a race going on right now to find good information,” said Covill. “As e-commerce gets established the whole supply chain is going to desire new and good information. Distributors should establish themselves now as the ultimate information provider.”

“The one thing I would advise everyone to do,” said Schachat, “is not to wait. It’s not something to be scared of. It won’t bite.”

Curb Air Pollution by Logging On to New EPA Site

Since the more-stringent diesel emissions standards proposed by the U.S. Environmental Protection Agency (EPA) won’t begin to take effect until 2004, the agency (EPA) has provided businesses and industry a way to get a head start. It has developed a program and corresponding website to help make a more-immediate difference in this type of pollution. The Voluntary Diesel Retrofit Program provides fleet operators, air quality planners and retrofit manufacturers information on creating effective retrofit projects. Currently, diesel vehicles account for 15 percent of the nation’s emissions of smog-causing nitrogen oxides.

NAW Launches E-Newsletter

The National Association of Wholesaler-Distributors now provides a new service — a three-times-a-week e-mail newsletter that summarizes relevant business information. The free service, called “NAW Smartbrief” offers articles on customer service, marketing and sales, e-commerce and more. To sign up, wholesaler-distributor executives should click here.




POSTED ON: 1/1/2001