When it comes to supply chain management, the fax machine is king in the industrial distribution arena. Daunted by the cost, time and operational changes required to fully automate the function, many distributors continue to place orders, follow up on delivery times and exchange information via manual systems like fax machines, phone calls and yes, sometimes even snail mail.

Because adoption of technology is not yet widespread, even distributors who have gone to automated systems continue to push paper through fax machines when dealing with their suppliers — specifically, the smaller ones who are using age-old systems. For every Black and Decker or 3M that's ready to get automated and hook themselves into a distributor's system, there are a thousand smaller vendors that are not.

Despite the obstacles, getting your manufacturers to post their inventory on a shared system, then use that system to accept orders, changes and requests for information, isn't as hard as one might think. For starters, it requires a user-friendly supply chain system that's not only affordable, but also comes with its own incentive: the opportunity to make more money when the smaller vendor makes the effort to get hooked in.

"With small companies, it's typically just a matter of getting around to doing it," says Pat Cowan, e-commerce executive for Moorestown, N.J.-based Wilmar Corp., an electrical, plumbing, HVAC and industrial supply distributor. "Small vendors are typically busy doing a million things at once, so adding a new system is like adding yet another [project] to their plates."

But once that supplier sees how easy it is to just hop on a PC and use a Web browser to handle everything that they once did by hand, they usually come around and have a good attitude about the conversion, Cowan says.

"Small suppliers just aren't going to say 'we don't want your business' to us," Cowan explains, adding that because Wilmar strives to eliminate all of the paper from its operations — both on the purchase order and invoicing side — conversion to an automated system sometimes requires a firm stance from the distributor.

"From an overhead standpoint, we want to completely eliminate our automated fax function," she adds. "The efficiencies we gain and the cost reduction we realize are so huge, that to keep [suppliers] around just for the exceptions is not viable." The key, she adds, is to find a user-friendly, low-cost supply chain system that makes it easy for vendors to comply with your program. "That way," she says, "they can continue to participate as preferred vendors."

Most industrial distributors have a few common automated supply chain management needs. According to Jim Frome, chief strategy officer at SPS Commerce in St. Paul, Minn., a provider of supply chain integration services, the primary need is managing the flow of information about goods and services that circulate through the supply chain. Those items flow from the distributor's vendors, to the distributor and then to customers — a flow that works most efficiently when channeled electronically through the distributor's back-end system. When these systems work correctly, items like purchase orders and information concerning invoicing, shipping, bar coding and planning flow seamlessly, and with little or no human intervention.

For many companies, that perfect scenario is still just a pipe dream. "In many cases — especially when distributors are dealing with their smaller business partners — all of that is still done via the fax machine," says Frome. At the root of the inefficiencies, he says, is that up until recently there have been unmet needs on both sides of the issue. For example, while most large distributors have EDI connections with their larger suppliers, small to mid-sized distributors and manufacturers have traditionally been left out of the "seamless integration" game.

Take Neil Montgomery, president and CEO of Oakville, Ontario-based Davis Controls, for example. His instrumentation and control products distributorship deals with the majority of its suppliers via fax. A few suppliers, he says, do use "extranets" ("private" internets that only select users have password access to), but even those systems can be cumbersome for a distributor to use. Because their systems are disparate, a duplication of effort is required: Davis Controls has to get on the extranet, enter orders into the manufacturer's ERP system, then go back and re-key that information into their own system.

And while Montgomery says he longs for the day when all parties participate in a single, universal solution, he says the issue of control will come into play. "Suppliers would like to see a changeover to where they have complete control, but we're heavily invested in our own tools and systems, so it's difficult for us to relinquish," he says. "This is the same problem we ran into with EDI-based systems."

Technical issues aside, there are various other obstacles to overcome when getting suppliers hooked into an automated supply chain. For example, Rob Rennie, CEO of theSupplyChain.com, Inc., a provider of supply chain management systems in Newport Beach, Calif., says a small supplier typically will not put forth the effort to get onboard unless there's something in it for them. A distributor, he says, just can't tell that small manufacturer of saw blades to "connect to me," because the act of connecting adds no real value to the supplier's business.

But present them with a solution — say one that's Internet-based and simple to integrate with their own internal business and accounting system — and they may take a second look. The system should help the supplier improve his own inventory management, up his bottom line and give him a way to better satisfy his customers.

"We've found that the smaller vendor is far more skeptical about what technology can do for them," Frome adds. "Because of this, you really must provide a clear technological benefit to help them over that mental hurdle."

Sometimes, simply weaning suppliers off the fax machine takes considerable effort. Bryan Ware, director of operations for San Francisco-based CellPoint Systems, Inc., a manufacturer and distributor of plastics and metals, says many of his company's smaller vendors still hand-write orders — and some don't even have access to e-mail yet.

"When it comes to supply chains, I don't think I can force the hand of some of these smaller players," says Ware. "The main challenge is the fear of technology itself, and the second is overcoming their 'I've always done it this way' mentality."

Getting smaller suppliers hooked-in is probably starting to sound like quite a project, but Jay Taylor, executive director of professional services for Macola Software, Marion, Ohio, says it does pay off in the end. The most successful distributors, he says, need access to inventory information, must be able to place orders quickly and efficiently with their suppliers, and should always be focused on reducing overall ordering costs, improving customer service, and overall business planning. Such goals, he adds, can be achieved with an automated supply chain that includes all vendors, not just the big ones.

But even if your suppliers are slow to adapt, remember that all of this automated supply chain stuff is still fairly new. Just a few years back, tools like the phone, fax and even snail mail were common modes of placing orders and checking stock. Also remember that it's those bigger vendors with their seemingly bottomless pockets and chain of resources who will naturally be the first to embrace more seamless ways of doing business.

The key to dealing with the smaller companies is to be patient but firm, and to use a three-pronged strategy. For starters, says Frome, don't even try to use a one-size-fits-all approach to your automated supply chain. Instead, take the time to figure out the unique needs and wants of each supplier — a time-intensive effort that will pay off in the end — then choose a solution that can be tailored around those factors.

"They're all in different businesses, and they all have different needs, so you have to give them a wide variety of options from which to choose," says Frome. Next, he adds, realize that there's no quick and dirty way to notify vendors of their need to hook into your system. Consult with each one, and give them the information they need to figure out how to approach the system from their own perspective.

Some may need training, says Frome, and others may require information technology assistance to get up and running. Be cognizant of this, and be ready to help them yourself or point them in the right direction.

Lastly, says Frome, ensure that your system has its own dedicated IT resources. "A supply chain isn't the kind of thing that you install and just let it manage itself," he explains. For example, he advises distributors to keep someone on staff who can keep the infrastructure going, and who can perform actions such as adding and removing suppliers from the network.

Taylor says the key to luring the smaller, non-tech-savvy vendors onto the system is to start slow, and to lay out your goals and overall strategy along the way. Then, sit down with each vendor and discuss those goals in conjunction with their own aspirations in an effort to make the changeover a win-win for both parties. "Doing it right requires open lines of communication between distributors and their vendors and customers," says Taylor. "That's what effective supply chains are all about."