Meet the fluid power challenge: Learn to embrace the technology that is begging to increase your bottom line!
By Randy Goneau -- Industrial Distribution, 2/1/2000
After recent conversations with three independent Internet related entrepreneurs and two days of electronic data interchange/e-commerce technology meetings, I had a revelation. It suddenly became very apparent to me that unless the players in the fluid power industry are forced to use the newtechnologies that will help their businesses grow, they won't! EDI. VMI. E-commerce. B2B. We can "talk the talk," but we can't "walk the walk."
Why can't we, as an industry, embrace something that can have a significant effect on the bottom line of our businesses? Two reasons come to my mind. First, our industry has reached a level of comfort. The processes we use to manufacture products and provide application support to end users so far have not been challenged.
The way we go about doing business is very comfortable. We can make money at it and the barriers to entry into our marketplace are costly. Knowledge is our power. If someone was to come along and enter our market with a new technologically advanced business model, we might feel a little uncomfortable but not enough to cause us to do something different. This new business model would take some of the food (profit) off our plates but not much. We can afford to give some of our food to others. It's only when a business model gets greedy and wants 25 percent of our food that we'll react by welcoming technology with open arms.
The second reason that we haven't embraced the latest technologies is that we are customer driven. The customer drives the need for fluid power distributors and manufacturers alike to advance technologically. And the attitude is, let's face it, that if the customer's needs haven't changed then why should we change the way we do business?
And the fact is, very few customers have changed the way they do business. Their business processes are relatively the same, but they've gotten a lot better at asking the distributor to lower their prices and lower the "cost of doing business." But that's not enough to effect change.
Distributors and manufacturers have dealt with price issues for years. We're good at coming up with creative ways to keep prices stable. As far as the issue of lowering the cost of doing business, we've consistently met the customer's narrowly defined requirements such as vendor reduction, monthly invoicing, consigned inventory, contract pricing, blanket orders, and credit card ordering. Because our customers haven't required us to do otherwise, we've met most of their needs through non-technological responses.
If that's all customers want, why worry about embracing technology? Previously, I mentioned three technology-based entrepreneurs. Two of those entrepreneurs today are leveraging technology to take food (market share) off our plates in the fluid power industry. I assure you that there are many more initiatives (dot-com businesses) out there that will do the same.
The barriers to enter our industry for these initiatives are small. These initiatives break all our rules. They have no known business model. The world is their market and they are good at helping our customers re-define the "cost of doing business." We don't need to re-engineer our processes; we need to begin to imagine how they could be improved and enhanced by technology.
Randy Goneau is vice president of finance/information technology at Action Automation & Controls, Inc., in Attleboro, Mass.
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