IBM hopes to set ordering standard for retailers
Reuters Story - June 01, 1998 00:01
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By William Borden
NEW YORK, June 1 (Reuters) - International Business
Machines Corp. intends to set a standard for how retailers shop
to fill their stores and curtail "bad buying," which costs the
industry an estimated $170 billion in revenues.
IBM is introducing a service to the United States after its
debut in Europe for retailers to collaborate with suppliers
through the Internet for product development, purchasing,
negotiating orders, and online catalogs.
In turn, this gives retailers an opportunity to improve
profits in an environment that makes price increases difficult.
"IBM sees there is an opportunity to establish an industry
standard for business-to-business communication for sourcing
products," said John Wilson, IBM's director of supply chain
solutions. "We're offering a complete service solution, not
just software for sale."
Wilson said IBM is in a partnership with Mountain View,
Calif.-based QCS Corp. to provide the service that is
based on IBM's Lotus Domino technology. Improvements in
computer technology, such as cheaper memory and faster computer
chips and modems, make the system possible, Wilson said.
Eric Olson of Retail Systems Alert Group, a publisher of a
newsletter and promoter of retailing technology trade shows,
said, "Collaborative efforts between retailers and suppliers is
a hot trend right now."
Mary Tolan, a retailing consultant at Andersen Consulting,
said that the "bad buying" that the product is trying to combat
is not the result of ties between retailers and sellers.
"Bad buying usually stems more from not understanding your
customer and not understanding trends, Tolan said.
Much of her efforts toward helping retailers improve
profits stems from using technology to understand consumer
demand and improving allocation of products in stores.
"The improvements won't come from having a different sort
of electronic plumbing," Tolan said. "If you don't have the
discipline to have accurate purchasing orders or not having
buyers that know what to buy, having a new system won't help."
However, Tolan said, "IBM has a good reputation in the
retailing industry." Also, she said she'll "never
underestimate" IBM's marketing abilities.
IBM is rolling out the product to U.S. retailers,
following its adoption by retailers in Europe such as France's
Carrefour Supermarche SA and Promodes SA .
Carrefour, one of Europe's largest retailers, plans to have
80 percent of its supplier base connected through QCS within
the next two months, IBM said.
Retailers access the service through a QCS website on the
Internet and IBM would handle most of the hardware and software
and charge the retailers per transaction, Wilson said.
Many retailers are relying upon paper catalogs, telephones
and faxes to communicate with suppliers, Wilson said. QCS will
give merchants an opportunity to comparison shop on the
Internet as well, Wilson said.
Wilson said he expects IBM's technology to face competition
from either large retailers or other technology companies.
Tolan noted that IBM's system could face competition from
PanDesic, a start-up backed by Intel Corp..
"Ultimately, this will be a race," Wilson said. "IBM's
interest is to win that race and make that standard before our
competition does the same thing." |
