Customers In Demand - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

IoT
IoT
Feature
News
11/15/2001
04:15 PM
50%
50%

Customers In Demand

Demand planning can help suppliers know their customers better

Disintermediation is a boring word that got people really excited during the heyday of the dot-coms. It referred to the Internet's ability to cut middlemen out of the sales process, allowing a manufacturer to deal directly with its end customers. Prognosticators foretold of the eventual demise of the third-party channel at the hands of disintermediation.

They were wrong. Disintermediation's devotees overlooked the market dynamics that created-and sustain-the sales channel. They also downplayed the importance of channel partners' selling expertise and knowledge of the customer.

Today, most suppliers are acutely aware of their dependence on the sales channel. "When you have a third party that you're selling your product to and that party touches the end customer, you're really at their mercy," says Richard van Rensburg, senior manager for E-business at the avionics unit of Honeywell International Inc., which had $25 billion in sales last year Some suppliers and original equipment manufacturers hope to build relationships with their end customers while still working closely with resellers, distributors, and retailers through collaboration and automated business processes by using a new breed of technology to add efficiencies and cut costs on all sides of the equation.

The software emerging to satisfy this collaborative need is classified under the broad term of demand-chain management. "When you get right down to it, demand-chain management is how you manage your direct and indirect channel relationships," says Louis Columbus, a senior analyst at AMR Research. Columbus says demand-chain management attempts to unite several sales and supply-chain initiatives, such as demand forecasting, demand planning, and customer-replenishment programs.

Corporate interest in demand-chain management technology is reflected in projections of the Yankee Group, which predicts that sales of software used in channel- and partner-relationship management will increase from $90 million last year to $1.25 billion by 2005. The technology is an outgrowth of online catalog applications that let channel partners place orders online and which direct end users to distributors and dealers. Such implementations let suppliers gather information to establish sales trends related to specific products or vertical industries that could lead to production changes.

Symbol Technologies Inc., a $1.5 billion-a-year manufacturer of wireless bar-code scanners and other hardware, is using online catalog and sales software from Comergent Technologies Inc. to develop an extranet for its channel and direct salespeople. The Comergent software incorporates analytic capabilities to help make use of the data generated. "We can see what types of companies are interested in what kind of products, so some inferences can be made," says Judy Murrah, VP of sales information systems. The test system has about 100 users and is scheduled to go into production early next year to more than 1,000 users.

Several other vendors also are attempting to extend E-commerce applications to channel management and demand planning in innovative ways. Entigo Corp. last month signed on Carrier Corp., a $26.6 billion-a-year air-conditioning manufacturer, as a customer for its newly developed warranty claims management application, which lets manufacturers and channel partners submit, automatically approve, and track all claims online. Also, Entigo said last week that it has licensed analytical technology from SAS Institute Inc. and will resell the technology as part of its product suite next year. The company believes customers will want to analyze the data gathered in product returns and warranty use to improve quality and features. "Everyone realizes they're spending an exorbitant amount of time and money on warranty issues today," says Mark Demers, VP of marketing and business development.

Haht Commerce Inc. last week released version 7.0 of its demand-planning product suite, which includes sales, catalog, and order-management applications. The upgrade includes business-intelligence software that analyzes Web-site use and information entered by service desks and sales representatives to monitor performance of the business process and spot trends in customer behavior. Haht, which recently secured $17 million in venture-capital funding from Granite Ventures and other firms, specializes in the chemical, consumer products, and discrete manufacturing industries.

Honeywell's avionics unit is looking to its retail channel to help boost its $2.3 billion in annual revenue. Bendix/King is the brand name for the instrumentation Honeywell manufactures for small-craft cockpits, including voice recorders, flight-management systems, and collision-avoidance systems. To serve its dealers, service centers, and the end customer-pilots who own their own aircraft-Honeywell avionics has created an extranet, BendixKing.com. Pilots can check product catalogs, find a dealer or service center by ZIP code, and even request a quote from a dealer, who will contact the customer either via E-mail or telephone. To get closer to the customer, Honeywell has added a Pilot's Club that offers chat rooms to talk with colleagues or discuss product use with Honeywell experts. The Pilot's Shop even sells jackets, sweatshirts, sport shirts, flight bags, and other goods with the Bendix/King logo.

The Honeywell site provides services that make it easier for dealers and service-center reps to sell Bendix/King products. Honeywell lets dealers place orders through the company's custom-built, mainframe order-entry system and get immediate confirmations. Retailers also can check on price, promotions, product availability, and check delivery and shipping status.

Honeywell tracks pilot usage on its Bendix/King site, recording the services they use, the dealers contacted, and their product inquiries. When a dealer or service center logs on, Honeywell monitors their usage, too, such as purchases and requests for quotations. All the information is gathered in a monthly report that's distributed to sales and marketing department and their executives.

BendixKing.com was built using Entigo's catalog and order-entry applications. It has an Oracle database running on BEA Systems Inc.'s WebLogic application server, and Honeywell uses an iPlanet Web server. Since launching the site last year, Honeywell has reduced customer-service calls by 30%, van Rensburg says.

In September, Honeywell launched another extranet, MyFlite.com, that leverages the technology used for the Bendix/ King site but is tailored for regional airlines and business customers with aircraft fleets. The site is available to a dozen customers, and Honeywell plans to roll it out to 180 more in January. The site offers the same features to larger customers as it does to the smaller dealers and service centers but also includes tools for collaborative product design. For example, engineers from Honeywell and Brazilian aircraft manufacturer Embrarer have used the tools for online design of cockpits. The tools enable engineers to track tasks and milestones, share documentation, synchronize revisions to drawings and documents, and assign tasks.

Lincoln Electric Co. in Cleveland sees its use of demand-chain tools from Click Commerce Inc. as a way to get its sales force to spend more time working with end customers-showing them how to operate the company's welding products-and less time checking the status of orders. E-business manager Jim Appledorn conservatively estimates the new system will let the company's 180 sales representatives, all trained welding engineers, spend 10% more time on meaningful customer relations-which could translate to a 5% increase the company's $1.06 billion annual sales revenue. "We can take those highly trained technicians and have them focus on technical relationships rather than answer simple questions, which now can be handled on the Web," Appledorn says.

Lincoln Electric began rolling out Click Commerce tools last month, along with an electronic catalog using software from Saqqara Systems Inc. Though it hopes to provide online sales to its distributor network sometime next year, using the Click Commerce and Saqqara tools, the company has no plans to sell directly to end users over the Internet. Lincoln only sells directly to large manufacturers, such as General Motors Corp. and Caterpillar Inc., which purchase quarter-million-dollar robotic welding systems, among other tools. Lincoln Electric generates 90% of its U.S. sales through 1,000 distributors as well as retail chains such as Lowe's Cos. and Home Depot Inc.

Lincoln Electric's Web effort isn't focused on commercial transactions but on providing its distributors with information they need. "We're using the Internet to augment the traditional ways we support our channel partners," says George Slogik, E-business development manager. "Our customers don't want to order online." That was the buzz with the dot-coms, he says, but when the dust settled, the company saw it wasn't what its distributors wanted.

Still, employing Web technology to conduct business-to-business-to-consumer commerce is a goal of Lincoln Electric managers. "We want to find a way to get to the end user by coming up with a reasonable way to accept orders and hand them off to distributors," Appledorn says. "We're looking for a valid model." For instance, many Lincoln Electric dealers provide warranty and repair services to end customers, and the company is developing tools it plans to make available next year that will let those users submit warranty claims over the Internet. Lincoln Electric is looking into software to let distributors and end users diagnose problems with welding equipment online. It also sees the Web as a platform to provide product training to both distributors and users.

Only about 5% of Lincoln Electric's U.S. distributors have signed up for the Internet services, but the company expects many more to do so in the coming months. At the moment, distributors using the Web system must log into an extranet accessed through Lincoln Electric's home page. But the company is piloting a program that uses XML technology that would link individual distributors' systems with Lincoln Electric's back-end systems.

Though Lincoln Electric has few direct dealings with end customers, company managers nonetheless hope the Internet could provide a channel for the company to learn more about them. "It's a keen interest to us," Appledorn says. "We're always looking for ways to learn more about the end users." New tools promise to let suppliers and manufacturers act on that interest and improve the flow of information and business across the entire sales and support channel.

--with Eric Chabrow

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
State of the Cloud
State of the Cloud
Cloud has drastically changed how IT organizations consume and deploy services in the digital age. This research report will delve into public, private and hybrid cloud adoption trends, with a special focus on infrastructure as a service and its role in the enterprise. Find out the challenges organizations are experiencing, and the technologies and strategies they are using to manage and mitigate those challenges today.
Slideshows
What Digital Transformation Is (And Isn't)
Cynthia Harvey, Freelance Journalist, InformationWeek,  12/4/2019
Commentary
Watch Out for New Barriers to Faster Software Development
Lisa Morgan, Freelance Writer,  12/3/2019
Commentary
If DevOps Is So Awesome, Why Is Your Initiative Failing?
Guest Commentary, Guest Commentary,  12/2/2019
Register for InformationWeek Newsletters
Video
Current Issue
Getting Started With Emerging Technologies
Looking to help your enterprise IT team ease the stress of putting new/emerging technologies such as AI, machine learning and IoT to work for their organizations? There are a few ways to get off on the right foot. In this report we share some expert advice on how to approach some of these seemingly daunting tech challenges.
White Papers
Slideshows
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Sponsored Video
Flash Poll