Relationships Can Flourish by Going Online
Automate workflow without compromising customers, irking employees or vexing vendors.
They say the road to hell is paved with good intentions. Well, that's where businesses could be headed if the transition to online management isn't carefully thought out—and rolled out. And if companies don't parlay their time saved through automation into enhanced personal service, they could end up taking some serious heat.
According to Tom Cutler, president and CEO of Ft. Lauderdale, Florida-based TR Cutler, the biggest mistake a company can make is to forget that people are at the heart of online management. Everyone in the loop—customers, employees and suppliers—must benefit.
"There must be a return generated from an online environment for its recipients and the business it represents," said Cutler. "Content must be developed within a community framework for the successful generation of business-to-consumer, business-to-business and business-to-employee activity."
Customer retention is also key to effective online management, he added, particularly in the printing sector. If a Web-based service interferes or conflicts with long-established face-to-face relationships, then it becomes a deterrent rather than a reason for doing business with the company.
According to Cutler, the first step to preventing this is to sit down and think.
"Distributors need to ask themselves where the company is today, where it needs to go and what they should do to get there. Then they must proceed in a sequential, methodical fashion," Cutler said.
Cutler explained that this typically involves having a gap or needs analysis performed by an independent consulting firm. "Consultants will come in and spend about three days interviewing the key players and then present their recommendations. The needs of purchasing, accounting, sales and management have to be integrated before any online management system is implemented," he said.
The consultants will also evaluate how the company's data is captured, stored and exported. It is this piece, said Steve Wakefield, president and CEO of Sword Microsystems, Huntsville, Ala., that ultimately supports and drives e-business.
"We perform what we call a point analysis of the company's internal process or infrastructure," explained Wakefield. "This is to determine if order status, shipment tracking, inventory and pricing data are readily obtained from a central electronic source."
While inbound e-business services, such as orders and quote requests, may be doable via a swivel-chair interface—someone typing data from one system into another—Wakefield noted that outbound services, such as order status, shipment tracking and available inventory, require an on-demand solution. "Non-automated processing can actually cause e-business transactions to cost more than fax, phone and mail transactions," he said.
For example, Wakefield had one client who needed to provide online shipment tracking with direct links to UPS, FedEx, Airborne and other carriers. However, the shipping program was not integrated with the order management system and the tracking numbers were simply written on the paper order form and filed.
Without this integration, someone would have to constantly round up all of the shipped orders and type the order number and associated tracking number into a special tool on the Web site.
"Obviously this is prone to errors and not very efficient or timely," said Wakefield. "Integration links the data to the central server immediately upon shipping so it's available for the Web system to query upon customer request."
Another of Sword Microsystems' clients managed inventory for several large companies, issuing releases regularly and replenishing inventory as scheduled. The largest company wanted to electronically ex-change forecast data with the client in order to compare usage and production schedules. The problem, explained Wakefield, was that production schedules were being maintained by three different schedulers in various forms of Excel, and the production status was only available by walking back to the press and asking for it. "Since the data needed to exist in a single, consistent manner and location in order to be accessible via the Web upon request, standardization and central management needed to occur before the e-business interfaces could be provided to the customer," he said.
Wakefied stressed that it is the overall business strategy more than a specific technical solution that allows e-commerce to streamline business, cut costs, accelerate turnaround and expand markets. "I'm not saying distributors have to invest millions," he continued, "but they shouldn't build a house without a foundation. E-business is more like the bricks and mortar, or the fixtures, rather than the foundation."
So just how much should companies expect to invest in e-commerce? Wakefield responded that cost is determined by many factors, such as the size of the company and the customer base, the number and complexity of transactions, types of services offered on an e-commerce site and the internal integration necessary.
"For a mid-sized distributor, the price could range from $10,000 to more than $100,000 including software, setup, training, implementation and integration services. I know of large manufacturers whose systems range from a couple hundred thousand to more than $2 million," he said.
He added that additional costs may be required for hosting, maintenance and support, transaction or other fee-based costs, credit-card processing and data extraction fees.
Wakefield advised companies to make sure the e-commerce solution is an integral part of the business, enabling customers and their data to be securely locked in. "E-commerce is meant to increase cost savings. If the e-commerce provider ceases operations, distributors don't want their profits jeopardized," he said.
While e-commerce can offer major benefits, implementing it involves a great deal of teaching and some major adjustments for everyone. Cutler warned that people will be resistant, adding that it's important to logically anticipate this reaction and figure out how to get past it. "Make sure the new system doesn't take the company from inefficiency to harried and crazy," he cautioned.
A well-executed rollout takes an average of 90 to 180 days. "It's very similar to a political campaign," Cutler explained, "with methodically planned-out periods of enthusiastic communication to circumvent ill will. Regularly communicating progress such as workflow improvements and increased profits promotes positive attitudes."
Within six months, the system should be in place and operational. But how does improved workflow efficiency impact the distributors role within the value chain?
While the '90s environment was process driven and focused on improving manufacturing, Cutler noted that the focus is now shifting to public relations and marketing education. With a trust-based relationship already established, the distributors, as consultants, can help customers reexamine what's working and what isn't and offer solutions for meeting objectives.
Said Cutler, "Teaching and educating clients about techniques for greater response rates, multiple response mechanisms, cross-channel promotions, public relations integration, client referral discounting and customer satisfaction assessments will greatly expand the core print order to a wide variety of other products and services needed within the industry."
It will be important for distributors to fully understand the nature and culture of the customer. "For instance, said Cutler, "some people will be fine waiting a week for a product while others will say, 'I need it by 5 p.m. today.' The more high-tech the company, the more emphasis there will be on tracking and internal goal-setting.
This is personal—culture cannot be programmed in. This is where technology may fall down—and why the distributor and customer relationship is so critical."
Cutler observed that people have gotten over much of their initial skepticism concerning e-commerce and technology. "Technology is axiomatic," he said. "It saves time and money and allows for a level of customer responsiveness heretofore unknown."
Cutler acknowledged that automation is essential in a competitive marketplace and stated that manual operations will keep companies so mired in simple production that they won't be able to provide added value to customers.
According to Wakefield, while the world isn't moving toward electronic business at the pace predicted during the dot com hype era, it is happening.
"On average, print distributors should achieve online transactions of 10 percent to 20 percent of orders within the next 18 months, with possibly 40 percent achievable online within four years," said Wakefield. "Different business models will drive these numbers significantly higher or lower."
By Maggie DeWitt