October 17, 2007

Trade News: IDEA E-Biz Forum Report

IDEA’s merry band of e-commerce crusaders traveled from all points of the compass north to Canada for their ninth annual meeting of the electrical industry’s IT tribes, the IDEA Electro Biz Forum held Sept. 18-20 at the Sheraton Vancouver Wall Centre Hotel, Vancouver, British Columbia.

While the 150-plus meeting attendees came from a diverse mix of large and small electrical distributors, manufacturers and technology companies, they share some common dreams and frustrations. As the electrical industry’s earliest e-business implementers, they believe IDEA’s arsenal of e-business tools will help members radically improve net profits by eliminating data errors and streamlining their business processes.

But they are an impatient lot. Although the electrical market is light years ahead of most other vertical market segments in the wholesale-distribution world, some meeting attendees were frustrated that manufacturers are not further along in improving online product searches by populating the Industry Data

Warehouse (IDW) with more enriched data and by developing a standardized product classification system.

The meeting also had a bittersweet air because it was the last IDEA conference that Mike Rioux would attend as the group’s president, since the National Association of Electrical Distributors (NAED), St. Louis, announced his departure and search for his successor last month. Rioux led IDEA through some tough financial times during the early years of his tenure, and the group is now solidly in the black. Many IDEA supporters were shocked at the news of his departure and say he will be sorely missed.

Despite these challenges, IDEA members had much to celebrate at the meeting. IDEA’s membership now includes 362 electrical distributors, 128 electrical manufacturers and nine independent manufacturers’ reps, and these companies have access to 2 million stock-keeping units (SKUs) in the IDW. Rioux also unveiled IDEA’s new Web site and corporate rebranding at the meeting. IDEA’s completely redesigned Web site at www.ideaesolutions.com offers a calculator that helps users compare the cost of IDEA’s EDI capabilities to other VANs, live-chat capabilities and new navigational tools that make information on IDEA and its services much easier to find.

Keynote speaker Adam Fein, president, Pembroke Consulting, Philadelphia, batted leadoff at the forum and said the electrical market is much further along the path toward seamless electronic communication between manufacturers, distributors, reps and end users than most other vertical segments in the wholesale-distribution industry. As author of the latest "Facing the Forces of Change" study published earlier this year by the National Association of Wholesaler- Distributors (NAW), Washington, D.C., Fein sees many distribution trades grappling with e-commerce issues. He says the cost-savings that e-business can generate when engineered properly can help users differentiate their services from competitors and adapt their businesses to customers’ changing needs. While he doesn’t see a doomsday scenario for distributors that take a pass on e-commerce, he says those companies won’t grow as fast as the distributors that do apply this technology strategically to their businesses. "Distributors either have to change or will drift," he said. "Many distributors can get by running on fumes until they sell out or go out of business."

To continue adapting to customers’ service requirements, Fein said IDEA members must learn from how they adapt e-commerce to their businesses. He said the peer-to-peer communication taking place in online blogs is particularly interesting, and that the blogs on www.contractoralk.com were worth exploring. Indeed, ContractorTalk’s electrical blog has several postings related to the National Electrical Code with hundreds of page views. Art Cook, president, Buckles-Smith, San Jose, Calif., agreed with Fein and said while many electrical distributors are drifting along and won’t go bankrupt if they don’t belong to IDEA or build out their IT systems, not doing so will minimize their expansion opportunities. "It’s not like we are going to go out of business without good data," he said. "It’s about losing share."

A consistent theme at this year’s Electro E-Biz Forum was the need for manufacturers to load their product records in the IDW with "enriched" or "attributed" data that allows users to search for products by a variety of search parameters and include images, line drawings and other basic graphics.

Rioux said the need for enriched data was, "the biggest challenge that the channel has today." Of its 2 million SKUs, IDEA’s IDW has an estimated 400,000 SKUs of enriched data. An estimated 350,000 SKUs come from the Trade Service database and not directly from IDEA manufacturer-members. The use of the Trade Service data feed seems to conflict with one of IDEA’s founding principles, that if all manufacturers were responsible for the maintenance of their own product data in the IDW, third-party firms would not have to provide that function.

The need for this enriched data becomes quickly apparent when one checks out the shopping experiences that customers enjoy with the robust online stores www.grainger.com, www.llbean.com and www.landsend.com, said David Starr, director of eBusiness, McNaughton-McKay Electric Co. These sites are considered the gold standard in online shopping, and he said if IDEA’s efforts are to reach their fullest potential, members will eventually have to offer similar shopping experiences. Because each product item on these retail sites has enriched data, customers can search using a wide variety of parameters.

One of the reasons enriched data has been so elusive to date in the electrical market is the slow adoption of standardized product category descriptions. IDEA supports UNSPSC (United Nations Standard Products and Services Code) standards, and since the beginning of this year has offered a resource with these codes for IDW users on its Web site.

McNaughton-McKay Electric’s Starr said the standardized product classification system would prevent distributors’ salespeople from categorizing data on their own. "We don’t want our customer service people categorizing data on the fly," he said. "It turns into a nightmare." In contrast, he said the search capabilities that enriched data provides would give salespeople additional sales tools. "It would be nice to empower a customer service rep with all that search capability," he said. "With bad legacy data, they can’t find the product to sell it."

Darren Crandell, corporate operations manager, Wabash Electric Supply, Wabash, Ind., agreed with Starr and said bad data hurts his company’s operations. "When things work, they just fly through. When we get bad data, maybe a bad UPC code, the wheels fall off. We would rather get all of our data from the IDW. The fewer items our inside salespeople build on the fly, the better our life is."

Activant Solutions’ Steve Bieszczat, vice president of information systems and marketing, and Karl Preuss, national sales manager, gave presentations at the meeting on the use of synchronized product data in the auto parts distribution and retail markets, and offered insight into how it could help the electrical market. Bieszczat said the auto parts industry is "completely linked" and that a standardized product classification system enables distributors and manufacturers to track the replacement parts sold for every model year of every car. This allows them to track products’ life cycles and failure rates and ensures that distributors know which replacement parts to stock.

Preuss said A.C. Nielsen has tracked retail product sales data at stores for decades, but that once it became practical to install bar-code scanners at checkouts in grocery stores, retailers were able to analyze sales data on a monthly basis and track the movement of product down to the SKU level. Meeting attendees also got an early 2008 economic forecast from Don Leavens, vice president and chief economist, National Electrical Manufacturers Association, Rosslyn, Va. In the manufacturing sector, he expects commercial equipment (9.8 percent); heavy trucks (12.1 percent) and aerospace (13.8 percent) to show the greatest annual percent change in industrial production. In the construction market, he expects the manufacturing (8.4 percent); power (8.8 percent); and office (12 percent) markets to show the highest annual percent change in real value put-in-place.

In other news at the IDEA Electro EBiz Forum, Rioux announced the winners of the First Annual Richard Buzun Award for Leadership and Innovation: Sylvania, Danvers, Mass., and Viking Electric Supply, St. Paul, Minn. Buzun, who passed away recently, was the second chairman of IDEA and former president and CEO of Siemens Energy & Automation Inc., Alpharetta, Ga. The 2008 IDEA Electro E-Biz Forum will be held at the Gaylord National Resort Hotel near Washington, D.C., Sept 14-16, 2008.