August 29, 2007

Net Price into Stock: Van Meter Industrial and Lutron Electronics

Whether you call it Net Price into Stock or Net Cost Into Stock, everyone has an opinion on this topic. More so, everyone has an opinion on this topic in relation to the IDW2. Distributors want it, some manufacturers understand that, but there are many who are not doing it; and there are many distributors who are suffering.

Let’s take a look at how two trading partners made Net Price into Stock via the IDW2 not only work, but work quite well for both the manufacturer and the distributor.

The Manufacturer:

Lutron Electronics

HQ: Coopersburg, PA

Offices in: the United Kingdom, China, France, Germany, Hong Kong, Japan, Singapore, Spain and Brazil

Lutron offers products to satisfy virtually any residential or commercial project.

The Distributor:

Van Meter Industrial

HQ: Cedar Rapids, Iowa

15 locations throughout Iowa

More than 300 employee owners

Doing business as a distributor without Net Price into Stock information makes operating the business virtually impossible. And doing business with Net Price into Stock without the IDW2 is highly dependent upon getting each manufacturer trading partner to send the distributor the information they need in a timely manner and uniform format. Unfortunately it does not happen that way, adding unnecessary disorder and confusion to the fundamental intention of the IDW2 – to serve as a one stop shop for all manufacturers and distributors to respectively supply and pull all business information – this includes Net Pricing from the manufacturer.

“Without IDW2 I lose all current changes and future information — which I don’t want to do. Suppliers need to understand that distributors want their data from one source not multiple sources,” said Joe Wallace, Administration Manager, Van Meter Industrial. “Receiving into stock net pricing via IDW2 is a huge efficiency gain. Multiple sources require duplicate imports and duplicate data management.”

Recently, Lutron Electronics made the initiative to set up their trading partner, Van Meter Industrial, with Net Price into Stock via the IDW2.

“We have been participating in the Electro E-Biz Forum for the past four years now. I find great value in attending this event. Meeting with distributors and other manufacturers helps me better understand their needs and the overall needs of the electrical industry. This year, during the Forum and the IDW2 Users Group meeting, it was very clear the number one request of the distributors was Net Price into Stock,” said Leo Gould, Information Systems Manager, Lutron Electronics.

During a session discussing Net Price into Stock, Van Meter, one of Lutron’s distributors made a request to the suppliers in attendance, to provide this information through the IDW2. Van Meter and others provided a good understanding of the benefits for the distributors. “Since this was the number one request of the distributors and Lutron’s number one principle is to ‘Take Care of the Customer’, I knew right away my job was to go back to work and reprioritize,” said Gould. “Van Meter was gracious enough to be the first distributor to do this with us.”

Distributors have ranked Net into Stock pricing as the most important IDW2 feature. It allows manufacturers to control authorizations and deliver private prices to a single location. The IDW2 also passed some very tough external and internal system security audits to provide IDW2 participants the safest and most secure method to send and receive pricing and product information.

“It was great to hear about the security rating that the IDW2 received; but this did not play a role in making the decision to provide this information. Lutron was already confident in the security provided in the IDW2 prior to that rating. The ‘excellent’ ratings just support our original belief in the system,” said Gould.

The Net Price into Stock feature can help:

• Reduce invoice and PO discrepancies for distributors.

• Eliminate labor costs of maintaining thousands of special pricing agreements.

• Give instantaneous pricing updates.

Originally, Lutron had been providing their product and pricing information to customers via CDs and more recently directing them to the company website over a secure connection. “But these processes are not as automated as using the IDW2,” said Gould. “I knew we needed something that would be a more integrated solution for Lutron and its customers.”

“I look forward to the day when my IDW2 pricing, including cost, is 100% synched to the supplier’s data. Then with confidence I can tell my Purchasing Department and Accounts Payable department that the price you see in IDW2 is the price you should see on the purchase order we cut to the supplier,” said Wallace.

Half of Van Meter’s updates are done via disk because they thrive on Net into Stock Pricing. This requires intervention from an employee to translate the data on each disk before he/she can even bring it into their business system. The IDW2 already contains an extraction and import process to automatically translate this data if the manufacturer supplies it directly to the IDW2.

“If net into stock pricing could come via IDW2 I would see half my translation time go away! That would allow more time to be proactive instead of reactive,” said Wallace.

The Process

“With Lutron it was easy. I did not have to do anything but extract the data once it was put in to make sure it matched the disk data which I already had in-house,” said Wallace. Lutron’s input of this information saved Van Meter on labor, brought efficiency gains to the company, allowed for quicker system updates and mostly, provided them with all the features to use IDW2.

Van Meter is currently working with additional suppliers to set their company up with Net Pricing via the IDW2. Wallace is adamant about having this information from all his suppliers and there are hundreds of employees like him who are willing to work with their suppliers to make this a priority. “I would tell any manufacturer who is not currently providing their Net Pricing to the IDW2, ‘What are your road blocks and can I do anything to help remove them?’” said Wallace.

Gould stated, “When suppliers provide their information electronically to the IDW2, it is always a great step towards data synchronization. Not only can the distributor get accurate information, but it just makes good business sense to have a central repository to access all your product and pricing information.”