Link up to Automate...
Denis:
In case y'all missed it.
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I2 Technologies Inc
LINK UP TO AUTOMATE THE SUPPLY CHAIN -- THROUGH SUPPLY CHAIN AUTOMATION, DISTRIBUTORS CAN ACT AS VIRTUAL WAREHOUSES FOR THEIR VARS
Nov. 06, 1998 (VARBusiness - CMP via COMTEX) -- Someday, an end user will fire up his browser, log onto the Internet, surf to a reseller's Web site, click in an order and have the whole purchase ripple seamlessly through the reseller's back office. It will then go to a distributor's mainframe and out to a warehouse where it will be picked and drop-shipped directly to the end user with the reseller's label on the package.
We haven't reached that day yet, but it's not far away, says Steven Horowitz, vice president for client services at Tech Data Corp. in Clearwater, Fla. Horowitz predicts seamless supply chain automation between resellers and distributors will appear in approximately a year and a half, enabling distributors to act as virtual warehouses for their resellers.
"We still have decisions to make during the next 12 to 18 months before we finally arrive," says Horowitz. "The supply chain re-engineering the manufacturers are doing is enabling a lot of resellers to make decisions about where inventory is held in the channel, so resellers are out there evaluating the options as we speak, and are considering adopting some form of virtual warehousing.
"We have resellers of various sizes who serve a number of different marketplaces," Horowitz says, "but what we're seeing at this point is that most of our resellers are attempting to further automate their relationships with end users, regardless of who that end user is."
With virtual warehousing, resellers can treat hardware and software stocked by a distributor as if it's their own stock- moving the costs and headaches of maintaining a physical inventory back up the supply chain.
Though they may meet in the middle at some point, two separate pieces of the computer supply chain are now being automated: the upstream supply chain that feeds manufacturers and the downstream supply chain that passes through distributors and resellers to end users.
On the upstream side of manufacturing, software from vendors such as I2 Technologies Inc., Irving, Texas, is enabling manufacturers to "gain competitive advantage and velocity," says Dan Balan, I2's director of global strategic marketing.
But the supply chain automation effort that most directly affects resellers is on the downstream side of manufacturing, especially from distributors to resellers. Software from companies such as Sagence Systems of Newport Beach, Calif., an affiliate of Garg Data International, enables resellers to automate their relationships with distributors and cut dozens of time-consuming and costly steps out of the ordering process.
If a reseller today wants to buy something for a customer, the customer calls up and gives the reseller the requirements. Someone answers the phone and takes them down. Then the reseller calls around to multiple distributors to compare prices and configurations.
Charles Granville, president of Sagence, says, "If you try to get bids from multiple sources, it's a very lengthy process with lots of people involved. Once you place an order, you've got to take the information and get it into the back office accounting system. It's manpower-intensive and time-consuming."
Granville's company, however, has a product in beta, TechBuy, that eliminates all those steps, automating the relationship with a distributor such as Ingram Micro Inc., Santa Ana, Calif., to such an extent that resellers, he claims, can treat the distributor as a virtual warehouse.
"Under our new scenario, the customer can get online over the Internet through the reseller's system, hit a button and place an order, " Granville explains. "The order goes directly into the back office accounting system, which does the credit approval and can actually go off to cybercash and make the transaction."
The system automatically has the order picked in an Ingram warehouse and drop-shipped directly to the customer with the reseller's return address on the shipping documents.
The reseller makes the sale, but the distributor has the headaches and bears the cost of warehousing and shipping.
TechBuy software currently works only with Ingram Micro's mainframe, but Granville says plans are in the works to interface with multiple distributors.
While Ingram has turned to a third party to develop and sell the software that automates the reseller/wholesaler connection, Tech Data is developing its own TDInterAct suite of tools in-house. "We have an API [Application Programmer's Interface] toolkit, which provides real-time price, availability and information to end users," Horowitz says. "And we have a Web customization toolkit that enables any reseller who has a home page to provide end users with the ability to search the catalog, check price and availability, place orders and get other information online."
Tech Data's system currently runs the order by the reseller to check compatibility and other issues, but Horowitz says the next deliverable will allow "seamless order entry" from end user to Tech Data, using a Web-based configuration tool, TDExpert, for online custom configuration.
At some point, supply chain configuration may force resellers to make two tough decisions: whether to scrap their current back-office systems in favor of systems that allow full automation of the entire sales, ordering and accounting process, and second, whether to get in bed with a single wholesaler for full automation.
"Theoretically, they could have similar relations with other distributors," says Michele Cate, senior director of electronic commerce product management for Ingram. But Cate believes that if a reseller installs TechBuy and takes full advantage of the system, it will be much easier to place orders with Ingram than with the competition.
The trade-off may be worth it, however. As Cate says, "Most resellers have pretty significant expenses associated with warehousing goods, so if they go to a just-in-time or virtual warehousing model, they can realize pretty significant savings."
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