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September 27, 1999

E-Business: Making It Free, Perfect, And Now

Distributor uses IT to provide instant satisfaction to customers

By Bob Violino

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arshall Industries, a distributor of electronic and industrial components, knows that electronic business will be key to its success going forward. But technology initiatives at Marshall--the highest-ranked company in this year's InformationWeek 500--go well beyond aggressive use of the Web to transform its business.

"The marketplace and every customer in it wants everything free, perfect, and now," says Robert Rodin, president and CEO of the El Monte, Calif., company. "We are always thinking about how technology facilitates meeting those objectives to provide instant satisfaction for the customer. IT is one of the few areas where you can cut costs and increase benefits at the same time."

An Ambitious Project
The company's most ambitious technology undertaking is called Marshall's Agreement to Coordinate Resources and Organization, or Macro, a worldwide effort to speed and improve information exchange and streamline processes across Marshall's supply chain. The project consists of IP networks that link several hundred component suppliers, distributors, and customers such as original equipment manufacturers.

Macro provides access to Marshall's enterprise resource planning system, data warehouses, E-mail system, and Web sites, so employees and business partners can get to the data they need. "It allows anybody who needs information within the supply chain to connect through private, encrypted extranets," Rodin says. "So a supplier rep in Boston can see right away that the demand forecast for a component has changed, or a customer can change an order more simply."

Rodin and Jha caption Macro has automated supply-chain rules, such as how an order change moves through different companies in the chain or which managers need to approve changes at certain dollar amounts. As a result, Marshall has cut the time it takes to get a product from a supplier to a customer from an average of 25 days to five days, says Raj Jha, director of E-commerce.

As a part of the Macro effort, Marshall has during the past 12 months extended capabilities such as inventory management and product demand forecasting to its business partners, Jha says. Information such as buying trends, pricing, and expected demand for components or assemblies is gathered from a variety of sources, including notebooks used by Marshall's sales force, and stored in data warehouses.

"Through Macro, we've positioned Marshall as the supply-chain coordinator," Jha says. "Everyone wants to know what's the value add from a distributor. If we provide inventory management and other services, the customer can focus on its business and let us worry about managing the supply chain and the fulfillment of parts."

Higher Web Profile
Marshall is aggressively establishing a stronger presence on the Web. Consider the rapid-fire rollout of the following three initiatives: In May, Marshall launched Spotmarket.com, an online auction site; in June, the company joined RosettaNet, an independent organization that promotes common E-business processes for IT and elec-

tronic components; and in July, it introduced a video phone feature to its online 24-hour customer service, which lets customers interact with service representatives and lets those reps "push" Web pages and specification sheets to customers' computers.

Also during the past year, Marshall created a Web site that allows engineers to download design software. In addition, the company expanded its Internet broadcasts to support new languages.

E-Business Bonanza
Rodin says Web sales and other E-business ventures account for "hundreds of millions of dollars" of Marshall's total sales, although he declines to give a specific figure.

Marshall's success in E-commerce attracted the attention of another distributor, Avnet Inc., which in June agreed to acquire Marshall in a transaction valued at about $830 million.

The merger is expected to be completed next month, Rodin says. Avnet, itself one of the most innovative users of IT (No. 14 in InformationWeek's list), places a high value on its use of technology, he says. "We've each continued to see IT as a strategic imperative, not as an expense."

The two companies' IT departments will cooperate to develop a unified IT strategy and to combine platforms "wherever it makes sense," Rodin says. Meanwhile, Marshall will continue pursuing IT initiatives such as developing new ways to better manage its supply chain and create new Internet services such as portals.

Says Rodin: "IT is providing many new business opportunities. These are exciting times."

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