That's when Prime Advantage came knocking. About two years before, Prime had recruited Randell to be a founding member of their consortium, which offered pre-negotiated discounts to participants and organized buyers and sellers of raw materials; components; maintenance, repair and operations (MRO); and other services and supplies. Since about 80 percent of Randell's total spend went to purchase the stainless steel needed to make its refrigeration equipment (the company won't say how much that comes to), signing on with a cooperative that promised to reduce costs seemed a good idea. It also didn't mean a big change in the way purchases were made. While payments were done electronically Randell paid Prime, which in turn paid suppliers orders were still put through the traditional way, through fax and phone. What Prime now proposed was an online B2B system through which all transactions between Prime's 182 buyers and 58 suppliers would be conducted over the Web.
Just what the doctor ordered? Not exactly. In fact, the initial response among Caltagirone's nine purchasers was decidedly lukewarm. The reason: Prime's proposal would actually mean more work for purchasers, who would have to input purchase orders into their new system and then, a second time, on the Web site. We had worked long and hard to get this system up. However, they weren't open to adding on new work, says Caltagirone. What they needed, he realized, was a system that better integrated Prime's with Randell's. And Prime responded that they could work with Randell to make that happen.
What he didn't know, of course, was that accomplishing that feat required more than a little rejiggering on Prime's part. Plus, the company planned to do a similar job for all of its buyers. Each member had a different system, and we had to develop a way to format and translate the data so any supplier could receive it, says Louise O'Sullivan, Prime's president and co-founder. That meant working hand-in-hand with each buyer to tailor the links to their internal system.
After about four months, Prime had revised technology that was ready to go. The next part was easy: Prime's representative John Kochavatr and Randell systems administrator Jim Touchtone teamed up to do the integration; in just two days, it was completed.
How does it work? Randell purchasers create an order and transmit it electronically to the supplier either through fax, a traditional electronic data interchange system or directly to a computer, depending on the supplier's setup. Prices are at a discount, negotiated by Prime. For direct materials like steel, Randell also can go to a protected area on the Web where special rebates are listed. It all takes a few seconds, compared to the hours, or even days, of the old, error-prone system in which purchasers would fax or phone orders, crossing their fingers that it got there and then waiting for an acknowledgment to be sent back.
While the system has even further reduced costs Caltagirone won't reveal the amount he points to overall increases in the efficiency of the operation as the most important benefit. We get more done in less time, he says. Purchasers devote more attention to productive tasks like analyzing costs, choosing the best products and controlling inventory, rather than spending an inordinate part of the day with the busy work of order processing, he says.
And that's not the end of the story. Caltagirone might extend the purchase order interface to non-Prime suppliers for a fee. He's also considering ways to include independent reps and customers. And, he's planning on extending the capability to another Dover-owned manufacturing company, DovaTech; Caltagirone became DovaTech's information technology director in January. Our goal is to gain a competitive advantage in our industry, to offer something other manufacturers aren't able to, he says. From the look of things, he's well on his way there.