[From iSource Business, October 2001] Reinvention: That's the challenge Peter Provenzano faced when he took over the helm of his parents' Rockford, Ill., business in 1996. Originally named Pro Technical Products Inc. in 1987, the company began as a supplier of fastener parts to the aerospace and defense industries and later moved into the procurement of engineered components and spare parts for production. When he took the reins, however, Provenzano had a different vision for the company: supplying indirect materials through the Internet. So, he renamed the company SupplyCore.com with the goal of becoming a sort of uber-integrator for products ranging from computers to cleaners, providing everything from a product catalog to logistical services, inventory management and shipping. The firm's Web-based catalog now includes about 500,000 products.
Timing was everything. The Defense Department was just embarking on a major effort to streamline procurement and was looking for outside companies to enlist in the project. What happened? SupplyCore.com won a contract as one of five, prime supplier contractors for U.S. military bases. With that business under its belt, the company then turned its attention to commercial clients, which now include Caterpillar and Woodward. This year the company's revenues are projected at $70 million, up almost 40 percent from the year before.
iSource Business talked to Provenzano about enabled technology's promise, the roadblocks enablers and customers face, and what to expect down the road.
iSource: Where does enabled technology offer the greatest opportunity for companies?
Provenzano: The biggest opportunity is for technology to automate transactions, allowing companies to be able to plan better. That happens by improving the information companies are able to retrieve and then analyze.
iSource: How does that differ from the way things are today?
Provenzano: Take indirect materials, for example. One of the challenges most organizations face is that a lot of maverick purchases take place because procurement has become so decentralized and there are so many different vehicles with which to buy. You can do anything from using legacy systems to taking your own credit card and running down to the store. As a result, organizations have lost that data aggregate, that data history, and they're not able to standardize products across multiple facilities. That means they can't get volume discounts. Technology can dramatically change all that.
iSource: What other benefits are there?
Provenzano: The goal is to reduce operating costs, create efficiencies, reduce inventory carrying costs and ultimately reduce product unit costs by rationalizing the supply chain. Organizations that achieve those goals are going to be around for the long haul.
But we see the real benefit in integration. The idea of the integrated supplier has been around for a long time. For example, if you were an electrical supplier you would get all the electrical supply business for a particular company. So you would integrate all the purchases of that commodity. If you take it to the next level, however, then you have one supplier for all commodities. That means marrying procurement with material flow and management of those supplies that are purchased.
iSource: Where does the human touch fit in?
Provenzano: I do not think technology alone is the answer. There has to be a marriage of technology and service to really meet the needs of customers. Too many have tried just the technology piece. Technology can help automate transactions but that doesn't necessarily always solve the problem. There still needs to be someone at the other end of the telephone when the customer has an issue to address. There still needs to be someone to handle conflict resolution. And there still needs to be someone who can go out and identify products, when necessary, at the right price, and manage those supplier relationships. The technology piece doesn't answer all that.