New answers to old problems

By David J. Manthey -- Industrial Distribution, 8/1/2000

Foremost on the minds of most industrial distribution managers are two important questions: How can we improve our inventory throughput and how can we leverage the power of electronic commerce?

Hughes Supply has addressed both questions with one answer: bestroute.com.

Bestroute.com, a privately held company in which Hughes Supply holds an equity stake, utilizes the tools of the information age to offer a solution to the age-old problem of hard-to-find SKUs.

Since demand within a local market is difficult to predict, local distributors often elect not to stock "B, C and D" items. This decision represents the classic tradeoff between inventory turns and sales volume. Unfortunately, customers do demand B, C and D items-most often in emergency situations.

Procuring hard-to-find items can be a time-consuming and costly process for local distributors. However, failure by the local distributor to find and deliver an urgently needed B, C or D item can result in a lost sale and a disappointed customer.

The bestroute solution is a tool that efficiently preserves the local distributor's sale by providing an "extension" to the distributor's local inventory stock. Bestroute provides in-stock inventory of hard-to-find items on a real-time basis over the Internet.

Through a 125,000-square-foot facility operated by UPS Worldwide Logistics, bestroute offers traditional distributors-as well as contractors, engineers, plant pros, utilities, and purchasing agents-exactly the items that they cannot find anywhere else, and the logistics platform through which to receive them.

If bestroute is successful, it will give distributors such as Hughes Supply the ability to capture lost sales while improving inventory throughput.

While the modern world offers many newfound delights, few will excite the industrial distribution manager like a solution that addresses the tradeoff between sales and throughput.

David J. Manthey, CFA, is a research analyst with R.W. Baird & Co., Milwaukee, Wis. Manthey replaces Jeff Germanotta as the regular writer of ID's Market Index column. He can be reached at (414) 765-3774 or e-mailed at dmanthey@rwbaird.com.