December 13, 2017

Tech 360 Briefing: What’s Driving Purchasing Changes?

illustration of a person on a laptop

Disruption is occurring in many established industries…and the wholesale industry is feeling the heat from the Amazon effect. We spoke with people from all sides of the supply chain—manufacturing, distribution, and contracting—to get their perspectives on what is driving these changes and how each part of the supply chain can compete.

Industry Participants

Manufacturer Perspective

Desiree Grace, VP Channel Development and Operations, Utility, Eaton; Previously VP Sales & Marketing, Anamet Electrical; Assistant Professor of Marketing at Augustana College

Distributor Perspective

Mike Polansky, Director, Planning and Procurement, Graybar

Jenifer Betz, Marketing Manager, Frontier Electric

Contractor Perspective

Mark Gillespie, President, TMI Electrical Solutions & Past President, Independent Electrical Contractors (IEC)

The impact of purchasing changes

It’s more than just a technology thing. Contractor, commercial and industrial end users are demanding better ways of getting things done. Using technology or going online is often just the most accessible way to do it.

Greater Access to Products

People and businesses can easily search and connect online. As a result, end users are looking beyond location and tradition as their purchasing criteria.

Electrical and solar contracting firm TMI Electrical Solutions has seen dramatic changes in the past decade. The Cincinnati-based company launched its solar and energy division in 2010, and continues to install lighting, distribution equipment, pipe and wire for institutional, industrial and commercial markets.

“The Internet provides me opportunities to shop for products outside of my market area to give me the best possible price and service for a product,” said Mark Gillespie, president of TMI. This is especially true for the energy and solar market, he said, since it lacks representation locally.

Information is critical to competing, said Mike Polansky, director of planning and procurement at Graybar.

“Having good accurate product data is one of the items that can distinguish us from our competition,” said Polansky. “Therefore, the need to have the most current, up-to-date information regarding an item—all the way from weights and measurements to compliance information—is absolutely paramount.”

The Amazon Effect

End users are watching Amazon and eBay’s advances into commercial and industrial product lines with interest.

“We already shop there,” said Gillespie. “I know I’m going to get my purchases in two days with Amazon, and I use eBay for hard to find parts. It’s no longer just a place for individuals to shop.”

Frontier Electric in Chicago, whose primary customers are OEM, is responding by developing its online offerings.

“Online purchasing has had a huge impact on the industry. We definitely feel the pressure to have our products on our website and do eCommerce,” said Jenifer Betz, marketing manager for Frontier. “That’s the biggest thing that we’re trying to act upon. We need descriptive product data to be able to compete.”

Expectations Increasing

Online purchasing in our personal lives increases our expectations of faster delivery, notification, tracking, and access to product information and inventory.

“When any of us buy online, we get advance ship notices. We like knowing when our purchases are going to arrive. This information allows us to plan, be organized and efficient, so of course we all want that in our business life too,” said Desiree Grace, who recently joined Eaton’s Utility Division as VP, Channel Development and Operations after leading sales and marketing for the past four years at Anamet Electrical.

Takeaways: How to respond to these trends

Make it easy: amp up the convenience

Empowered consumers want it now. Contractors are being squeezed by a labor shortage, so they need less hassle and expense to access information and buy products.

“We rely on online sources for over 90 percent of the information that we receive about a product,” said Gillespie. “Much of the product data that we gather during the pre-sale process supports the design and estimate of project costs prior to even securing a contract.”

According to Grace, it goes back to human nature: people take the path of least resistance.

“If people can cut and paste as opposed to having to go look for information, nine times out of ten they’re going to do that. That’s why I believe digital product content plays a role in product sales,” she said. “People are busy.”

Gillespie’s team needs technical and product information, like UL approvals, technology information or certification support. “We’re relying on digital information so much that if my computers are down, I feel handcuffed,” said Gillespie.

Remove delays & red tape

Cumbersome. Difficult. Challenging. That’s how contractor Gillespie described his experiences finding product information and expert answers in the electrical industry.

“One of the most frustrating things is to go to a manufacturer website, plug in a product number into their search and nothing comes up. It will show up in supply houses all over the country, but not on the manufacturer website,” said Gillespie.

This makes him unsure about the accuracy of product information. “You never know what you’re going to find,” Gillespie said. “Manufacturers don’t realize how their products are being displayed online.”

Gillespie would also like to have a faster way to get product questions answered. “I typically have multiple contacts to get an answer, which takes more time and adds expense. Compare that with energy products, where I can have my answer in less than 24 hours,” he said.

To be able to respond, distributors need digital information from manufacturers.

“We need to have the data that helps our job be more automated, have quicker turnaround times and be faster.” said Polansky, “We don’t want our staff spending valuable time chasing down answers. We need the answers now.”

Manufacturers are feeling dual pressure to provide timely, accurate product information, said Eaton’s Grace.

“The distributor is a conduit of information flowing to its end user. If manufacturers aren’t providing distributors with good product data and information, it can make the distributor look like it has dropped the ball,” said Grace. “No one in their right mind wants to make a promise to a customer and then fall short.”

“I don’t see this slowing down,” she said. “It’s becoming a greater expectation of the total offering of a manufacturer to both distributors and end users.”

Invest in stronger relationships

Relationships across the supply chain are being tested, evaluated and redefined as each part of supply chain works to remain competitive.

As a manufacturer, Grace said distributors are looking for ways to automate repetitive, routine elements in purchasing and inventory management so they can work with manufacturers to plan and prepare for complex projects.

“I’ve seen a greater appreciation of partnering and working together to solve customer problems and needs, like responding to national disasters. Before Hurricane Harvey, Eaton positioned power systems inventory in the market to assist our distributors and customers with a rapid recovery,” said Grace.

“The relationship that we have with the supplier is built on the fact that we’re working together as partners, which keeps the supply chain vibrant,” said Graybar’s Polansky.

“As a distributor, when we’re able to go to this library of data, the IDW, it makes us more efficient and creates a better relationship with the supplier, ultimately reinforcing that we’re going to market together,” said Polansky.

Gillespie said that his contracting firm makes every effort to develop partnerships with manufacturers and distributors so everyone can be successful. “The benefit to that is you’re not always shopping around and dealing with different people and different products; instead, you have ‘go to’ people, and you get a higher level of service,” he said.

“The best way distributors can support me is to give me easier and greater access to the information they have, and direct access to the people who have the information,” said Gillespie.

Looking Ahead

“If you’re a fan of analytics, you can’t dispute the data: people aren’t picking up the phone or catalog anymore,” said Grace. They’re going online and looking up information—self-serve. If a person can cut and paste a specification into a drawing, that’s making the spec work a lot easier. If you don’t have that information, they are going to leave your website and go to someone who does,” said Grace.

“Our company is all about early innovation,” said Gillespie. “Yet, I believe, when it comes to technology, we’re still in the wild, wild west. Who knows what’s coming tomorrow or what new trails are going to be blazed? It’s amazing. I welcome the next five years with great anticipation,” said Gillespie.