From S3 to S4

An Arkansas company pushes the envelope

[From iSource Business, April 2001] Southern Marketing Affiliates (SMA) is a 37-year-old farm equipment distributor based in Jonesboro, Ark. The company has just 55 employees, but it stands in the middle of a network that links some 300 suppliers to about 2,000 local dealers in 15 states in the South and Southwest.

In May 2000, the company announced that it would use a solution from dChain Commerce to establish an online marketplace called SMA Link. The e-marketplace allows SMA's dealers to place orders over the Internet and to establish their own online storefronts to sell directly to their own customers. The net effect has been to expand the catalog offerings available to SMA customers by large numbers.

More importantly, SMA can designate which items it will ship out of its own inventory and which orders it will redirect to its suppliers for fulfillment. SMA can also elect to use what dChain refers to as the sell-source-ship-ship (S4) model, under which the suppliers ship orders to SMA for subsequent reshipment to the customers.

Because SMA is linked electronically with the back-end systems of its suppliers, to the customer, the whole process is transparent. This means that a customer can go through the SMA Link site to place or track an order without realizing whether the supplier or SMA is handling the products.

While the S3 model is new to the company, S4 is simply an Internet-enabled version of how distributors, such as SMA, have always worked and allows them to fulfill the traditional role of the distributor. The distributor does play a viable role in the supply chain process in terms of having a relationship with the people who use the parts, says Michael Rainey, vice president of research and development at dChain Commerce. There needs to be a person in the middle who caches the supplies that are needed for quick delivery, that has those relationships [with customers] and can handle returns, that deals with the credit issues of those individual dealers, and that can insulate the manufacturers and major suppliers from those types of issues. 

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