New Coke. Supermodel-themed restaurants, B2Ball things that sounded great in theory but in practice hit the mat harder than David Spade wrestling Steve Austin. The big difference is that, unlike the first two, B2B has a world of potential. The realization of that potential has a lot to do with how well brick-and-mortars can enable other brick-and-mortars using technology unavailable anywhere but cyberspace. In light of the reality shock that recently hit the e-commerce world in general (anybody still high on Pets.com or drkoop.com?), implementation of this enabling might turn out to be an electronic acid test for companies everywhere.
This Won't Hurt a Bit
At first glance, Pacific Bearing, a Rockford, Illinois-based manufacturer of self-lubricated, linear-motion bearings, might not seem like the prototypical enabler. Thrust and sleeve bearings, die set bushings, square bearings and the like might make the Home Improvement crowd salivate, but they lack the plug-and-play simplicity of some B2B niches. It's one thing to place an order for 10,000 batteries online; it's quite another to specify a new hydraulic cylinder that lets Caterpillar throughput more bulldozers. But this 17-year-old company is a good case study of seamlessly moving from theory to practice.
When Bob Schroeder, CEO and founder of Pacific Bearing, decided to launch an e-business site in November 1999, he chose Atlanta-based NetVendor as provider of most of the technologies. NetVendor brought with it a major commitment to helping companies such as Schroeder's enable the enablers. According to Stuart Smith, manager of public relations for NetVendor, We always say that we help our customer by really helping our customer's customers. We do that by making it easy for them to order the products that they require. And all the benefits of trading through the Internet certainly allow manufacturers and distributors to improve existing sales, service and distribution channels; to access worldwide customers 24 hours 7 days a week; to increase acquisition and retention of current and new customers; [and] to collaborate with these customers online.
NetVendor's expertise and Pacific Bearing's commitment made for a potent combination that was necessary to overcome a lot of obstacles. Schroeder says, When we decided to launch this site, there was a lot of talk about disintermediation, and in the realities of manufacturing businesses, disintermediation is really not a viable alternative. We make product in relatively large quantities, and we do not have fulfillment capabilities to unit quantity of one. That's not our core competency. So we have to have distribution companies that can distribute to unit quantity of one. And the question that we had was, How can we launch an e-commerce site and embrace our distributors and allow orders to come into our site and then be ultimately fulfilled by the distributors?' That was the first component of it. We were very aware that the distributors were very concerned about the trend of, or let's say the media hype, that the distribution companies were obsolete.
To overcome any potential reluctance on the part of its business partners, Schroeder's company took pains to stress that this step in business evolution was more than just technology, it's a business relationship. In addition, the fact that his site could serve as a painless experiment for e-commerce newbies was a big selling point, according to Schroeder. We realized that we were one of the first sites to go live. And when we approached a company, we said, Why not use us as a beta site and as a model of what you would expect of e-commerce sites in the future?' So as other people come to you and state, We want to create these links, we want to have e-commerce,' you can say, Yes, here's our business set of rules. This is what works for us.'
Using its partnership with NetVendor, Pacific Bearing was able to make the transition from a traditional company into a functional e-business fairly simply. Changes were made on the fly, because what the company needed from e-business wasn't totally clear when the e-venture started. Also, what Schroeder's team thought they needed and what their distributors told them they needed ended up changing the specs of the their site. Actually, when you talk about the Internet model, the Internet brings another set of tools to the brick-and-mortar companies, says Schroeder. Now, one of the areas that became very clear is that there was a need to solve engineered problems, because in the power transmission industry, a large number of our sales have to do with an engineered or a configured solution. If you're not able to solve that electronically, there is really no need for your site.
Mr. Spock, Engage Configurator
Schroeder's company had been interested for several years in automating their design processes and bringing that automation to the sales side of their business to supply those much-needed engineered solutions. This automation quest took a quantum leap with the use of NetVendor's technology, particularly the futuristic-sounding configurator. And not just any configurator would do. Schroeder states that the configurators on the market when he made the jump into e-commerce weren't able to handle the engineering needs of his customers. We ended up having to have an engineered design configuration tool created with a state-of-the-art toolset and then employed some really bleeding-edge experts in this technology. There was a collaboration there between Pacific Bearing, NetVendor and the supplier of this toolset.
According to Smith, the configurator, with its engineered-to-order capability, allows a company to collaborate in terms of what it needs to purchase, a key factor in enabling. This improved design capability is where Smith believes e-business is heading. It's moving to This is exactly what I want, and I want it now,' he relates.
Schroeder says that his company is already seeing the tangible benefits of this technology. Now that the configurator is fully operational, users can access Pacific Bearing's Web site, custom design a part and have the blueprint from this part back in 60 seconds, resulting in a reduction in the selling cycle of one to two weeks. This streamlining translates into time and labor savings down to the labor component, a cost-savings saturation that is vital, he says. That's the only way that cost savings are really going to be eked out of the brick-and-mortar companies today.
Schroeder gave a concrete example of how a company such as his can enable another brick-and-mortar using the Internet and its intrinsic advantages. Let's say there's a line problem at the Mercedes plant in Alabama, where the maintenance guy has a recurring problem with a piece of equipment. The maintenance guy strikes up a conversation with his local rep, saying, I've got this problem. How do we fix it?' The traditional way would take weeks or months to look through different options, try different technologies, maybe experiment with some solutions before they finally arrived at something that's an improvement. That maintenance or design or plant engineer is directed to the Pacific Bearing Web site, checks out the configurator and sees that by designing in a different type of shaft, maybe with some different customized aspects, he can control that whole process himself.
Strength in Relationships
Schroeder stresses the necessity of maintaining established relationships even as companies move into e-business. If a company, let's say a Ford Motor plant, has a relationship with a business, then they have these strategic alliances where they supply all of the power transmission needs. It is inconceivable that that relationship would be supplanted by an e-commerce purchasing solution. The distributors and the people will always be there.
In a very short time, Pacific Bearing has supplemented and enhanced their main focus without disturbing their established business relationships. As the enabling tools available for any size company become more readily available and accepted, the potential for exponential growth in the enabling field is great. Whether this enabling turns out to be just a refinement (albeit a sweeping one) in the e-business field or a disruptive technology that actually forces even reluctant companies to make far-reaching changes in their business models remains to be seen. But whatever the outcome, savvy businesses will take a long, hard look at enabling. There seems to be little chance that this synergistic approach will turn out to be the Internet equivalent of Betamax cassettes.