Basic training for e-business

The PTDA is helping members with Internet issues by offering intensive training and an opportunity to interact with manufacturing peers

By -- Industrial Distribution, 5/1/2000

In the highly fragmented and fast-moving Internet marketplace, companies can't march lockstep towards efficient transactions and increased sales, but the Power Transmission Distributors Association offered an executive e-commerce "Boot Camp" to help members set their own pace.

Mary Sue Lyon, executive vice president of the PTDA, says about 80 distributors and manufacturers attended the event, which was held in Baltimore in February. The participants spent considerable time, both in class and during the networking events, talking about how to play in the game and how deeply to immerse their companies in the information age, Lyon says.

"[They're trying to decide] whether they need to get to full transaction capability or just an informational Web site," Lyon says. "It was valuable to help them create a strategy and address issues in relation to developing each step of an e-business."

The PTDA conference provided an overview of Internet topics from A to Z, including how to build a site, back office integration, standards and implementation. One session focused on market makers, such as sites that specialize in industries or products, association sites and auction sites. Another gave participants an opportunity to discuss emerging e-business issues like customer relationship management, push vs. pull marketing and using technology to provide more individualized service to customers.

The first boot camp tapped into a wellspring of unmet needs, so PTDA is hosting another session on July 11 and 12. Lyon says this meeting will probably be in the Midwest, and PTDA is considering adding a third day. Steve Epner of BSW Consulting, the PTDA technology consultant who designed and taught the course with the PTDA Business Information Management Committee, says the event response was strong considering the first mailing was sent during the holidays and Baltimore is "not quite a winter garden spot."

Choosing the e-commerce road

Putting distributors and manufacturers together gave them an opportunity to bounce concerns off each other. Some participants, like Joseph Uhrig, president of Bearing Engineers, Inc. headquartered in Aliso Viejo, Calif., with a sales office in Redwood City, wanted to nail down a definition of e-commerce before choosing his own road through the woods.

Uhrig says he realizes his company Web site should be redesigned to better serve customers throughout its California market. Bearing Engineers specializes in motion control and linear guide products and electrical-mechanical assemblies to the OEM market, Uhrig explains, with annual sales revenues of about $15 to $20 million.

"I think that we understand that eCommerce is here," Uhrig says. "We're going to have to make some changes to have a presence and be less behind. It's going to be a way of doing business in the future and it's a way of doing business today."

Far from just talking the talk, Uhrig was in the process of changing service providers when Industrial Distribution contacted him in March. However, he represented just one point on a continuum of participant attitudes, according to Epner.

"We heard everything from I'm glad I'm retiring in two years because I won't have to worry about this' to This is going to change the face of the industry," Epner says. "People need to understand the business isn't going to be run like it has for the past 40 years and survive."

Manufacturers were invited because cooperation between them and distributors is a necessary foundation for the new business model. Epner says there was extensive discussion about changing roles, which can scare distributors. For example, technology may enable distributors to schedule deliveries from the manufacturers to the OEM without bringing the products to the warehouse.

"The supply chain is no longer a valid model," Epner says. "It's got to be a supply team working together and connected electronically."

Nook Industries, Inc., of Cleveland, Ohio, a manufacturer of linear motion components and linear systems, sent marketing and information systems managers to the conference to make contacts and exchange ideas. Nook's marketing manager Larry Shindell says the boot camp was an "ideal venue to learn about and discuss the needs of PTDA distribution members related to e-commerce within our own industry."

Shindell says a next step might be a forum or roundtable to address issues necessary to establish e-commerce channel partners. "The information gathered at boot camp will help us evaluate different initiatives with distributors."

Cost benefit analysis

When and how to invest in technology upgrades is a circular dilemma: upgrading a Web site for transaction capability is expensive but companies can trim costs by developing an efficient electronic process. So how do they know when to jump into the loop?

"There was very good discussion around the issues of integrating an E-commerce system with backoffice and software programs," Lyon says. "That's a real obstacle for a lot of companies to ensure this is a seamless event for them. It's costly and so new that people aren't sure how to go about it."

Matt Murphy, the director of information systems for Erie Bearings Co. in Erie, Pa., says the 42-year-old family-owned company is polling large customers to see what they want. The mid-sized distributor of power transmission, electrical and electronic products has nine branches in Pennsylvania. Murphy says the choice is between an EDI-like system where customers can connect to Erie Bearings' system and send the data directly or a more general Web site that can accept orders in various formats, but may require customers to enter data line by line.

"You have to do both," Murphy says. "You have to allow for those who don't have a sophisticated internal system and you also have to offer something for the larger customers who are looking for efficiencies in a more automatic fashion. The question is which do you do first since they're both expensive propositions."

Craig Pfeifer, vice president of administration for McBroom Electric Co. Inc. of Indianapolis, Ind., says McBroom is also grappling with transitioning from EDI to the Internet. Pfeifer says he doesn't know if McBroom will make these changes "three months or three years from now."

"We're heavily involved in EDI and would like to marry the new XML language, the Internet and EDI all together to interact with our current customer base and attract new customers," Pfeifer says.

Pfeifer declined to reveal revenues, but says the "medium to large" distributor and electrical repair shop currently has a static Web site used for advertising. About two-thirds of the company revenue is generated from repair and the rest from sales of electrical products.

Uhrig, on the other hand, doesn't use EDI but is interested in XML as a way for customers to electronically submit purchase orders. After fulfillment, he envisions the company sending back an electronic invoice.

"We went to the boot camp to learn about what's going to make the interchange between the customer, ourselves and our vendor less paper-intensive," Uhrig says. "When you do these kinds of things there are going to be cost efficiencies. It's not just for speed and ease."