Sometimes you have to go against the grain to succeed. Just ask some distributors who forged ahead with IT and e-business projects this year while others held back.

Graybar is one company that believes it is turning the slump to its advantage by implementing new software and business processes, which may position it for stronger gains when recovery finally begins.

In contrast, less than one-third of MRO distributors said they would increase IT spending this year, while 64 percent expected to spend the same and five percent planned cuts from 2001, ID's 56th Annual Survey of Distributor Operations found.

Graybar, the largest North American distributor of networking, telecommunications and electrical products, plans to spend $90 million over three years to upgrade its computer systems. It picked SAP for a top-to-bottom overhaul. That covers inventory planning, order and project management, accounting and financial software, warehouse management and more, says Beatty D'Alessandro, Graybar's vice president of IT strategy. The company expects to test its new network in the Minneapolis area in February.

The point, says D'Alessandro, is to augment Graybar's physical network of 250 branches and 14 "strategically-zoned warehouses with an information network that allows us to bring the right materials to the right place at the right time for our customers.''

Under Graybar's current system, customers can call in looking for a product and a service rep can see what's available at different locations. One of the new system's chief benefits will be taking that visibility to a new level.

The company expects to improve inventory planning with its suppliers — which should result in lower costs of product ownership throughout the supply chain, potentially lower prices, and most importantly for customers, better product availability.

Next year, for example, Graybar's suppliers will be able to see how many quotes the distributor gives on products.

"Based on the historical facts of what percent of those turns into orders, the supplier can plan production,'' says D'Alessandro. "They can look into and do evaluation, based on our quoting activity.''

"We could support an infinite number [of suppliers] to do that,'' he continues, "but now the question is: how many are willing to build this visibility into their system?''

Of course, very few distributors can afford Graybar's scale of investment. But they may benefit from a few pointers based on Graybar's experience so far. First, the employee-owned firm acted a lot like you might expect a much smaller distributor would when eyeing and implementing technology: its top executives, including CEO Bob Reynolds, engaged and supported the project fully.

In addition, Graybar believes that the recession is an opportune time to implement new technology, in part, because the distributor can limit exposure to the inevitable start-up glitches to a few customers. "When things are slower, it's time to improve the things that need to be improved," adds D'Alessandro.

That's food for thought for distributors who have put off IT investments. It's also a message leaders in the Industrial Distribution Assn. and other industry groups should consider as they debate creating transaction standards for doing e-business with their suppliers.

Ken Brack can be reached at kbrack@reedbusiness.com.