Integrated Supply Network vice president speaks out.
Describe some of the technology that ISN uses internally, and as part of its e-commerce capabilities.
We have an HP UNIX box running an old ERP system. Because we own the code, we can implement new technology opportunities as they present themselves ... assuming they meet our return on investment (ROI) requirements. We also have a small, flexible EDI software solution called Softshare. Finally, we use a warehouse management system (WMS) from HighJump and do RF bar coding.
If you compare to the typical auto parts distribution center, we wouldn't have anywhere near the technology they have. The tool and equipment business is significantly different because auto parts distributors have a fairly captive audience; most have their own stores, so they buy in bulk and ship in bulk using their own trucks.
The tool business is roughly 7% of the aftermarket. Our business is much more each-driven, rather than case or pallet driven.
Given that you mostly deal in low-volume shipments, why bother with bar coding?
We went to WMS and bar coding to reduce errors. The number one and number two mistakes of any tool distribution center are likely "wrong quantity" and "wrong item." A WMS system and bar coding helped make sure the right products got into the right box in the right quantity. We went from about 95% accuracy to 99.5%
What do you think are the major obstacles to technology adoption in the aftermarket?
Technology adoption requires standards. Standards require industry collaboration. In the end, these standards create a fairly level playing field. In past AAIA Technology Standards meetings you'd hear comments from companies like: "I don't know if I can give you that information because my competitors are in the room and I don't think it's in my best interest for them to know what I'm thinking." Recently, this mindset changed to: "I don't care if we level the playing field. There is a real benefit to these standards and I need to support them!"
Most big box retailers also made money on their EDI transactions. They have been slow to take up connectivity that was no longer fee based, even though it gives them roughly the same information. They also didn't want their competitors understanding their "specially required" proprietary data elements because it gave them information that others didn't have. Quite frankly, I can understand that concern.
How has e-commerce technology improved your business?
I'd say that it has absolutely improved our business even though, quantitatively, I couldn't tell you how much. I can tell you there are no typographical errors in electronic orders. In other words, we don't have to worry about misunderstanding what they sent us. We didn't miss-ship or write down their information incorrectly. And to that end, we are able to take on a larger number of orders, with a smaller amount of staff involved.
However, the customers who trade electronically typically place smaller orders at a higher frequency than the call-in customers. So it's a double-edged sword.
