With a new strategic plan in place, IDEA looks to a future with new challenges, new competition and new opportunities for driving costs out of the electrical channel.
Often, it's the things you seldom notice that turn out to be the most fascinating. Electrical people get this. To most, infrastructure like road lighting or a switch on a wall is part of the background, and they give it no thought unless it fails. But when you get down into the wires and switches and connectors and over-current protection and power quality, it can begin to seem like the most important thing in the room. Maybe that explains why so many people in the electrical supply channel get so worked up over data.
If electrical systems are infrastructure in the built environment (which itself is infrastructure), and the supply chain is the infrastructure bringing electrical components to the market, then an organization such as IDEA is the infrastructure that supports the infrastructure behind the infrastructure inside the infrastructure.
IDEA's offices in Arlington, Va., are a hotbed of data and ideas about data, one of a very few such hotbeds in the electrical industry, and unlike any other. Here, you'll find people like Beth Badrakhan. “Beth loves data.” Several people said that in the course of one sunny October morning at the edge of the nation's capital.
“The cool thing about data is that it always tells a story,” Badrakhan says. “When you look at data and you start to analyze it, whether you're looking at data that distributors have downloaded or that manufacturers have sent us to be uploaded, you can really get a good idea of what their intention was in making that data available to their customers, and you also get an idea of what they were doing to create that data.”
Badrakhan is IDEA's IDW data manager, the person at the front line addressing one of IDEA's most urgent and persistent challenges. She's the one who helps electrical manufacturers find the reasons their data doesn't flow cleanly into the more than 200 fields of the product descriptor database in IDEA's Industry Data Warehouse (IDW).
To IDEA, the organization created by the industry's distributor and manufacturer associations to facilitate the flow of product and pricing data through the electrical supply chain, getting the right data into the right slots is one of those small matters on which all the world depends. It's a bigger challenge than you may think.
“When I came into the channel, I naively thought, ‘Well this shouldn't be that hard,'” recalls Bob Gaylord, who took over as president and CEO of IDEA a year ago. A retired Brigadier General in the U.S. Army, Gaylord thought he could bring his military background — and its emphasis on standardization — to bear on the industry's data problems. “In the military…I know what the uniform du jour is going to be. But here, all the manufacturers see things with just a tweak difference, and all the distributors see things differently because there's all different types and sizes of distributors.”
Gaylord's assignment is to lead IDEA in the next phase of its development and further expand its ability to drive cost out of the electrical supply chain. Doing so means finding the common ground among the data needs of all those different suppliers and distributors and finding ways to meet those needs.
He took the position at a critical and contentious time in the organization's history. A proposal to form a joint venture with Trade Service Corp., San Diego — the electrical industry's oldest supplier of product data — had just been voted down by the IDEA board a few months before, and IDEA's 10-year agreement with Trade Service to share data was due to expire or be renewed very soon. This was causing heated discussion throughout the electrical industry's back channels, which was compounded by acrimony over the way Gaylord's predecessor — Mike Rioux, who had been IDEA president eight years — was let go. (For more on this period in IDEA's history, see “Data at a Crossroads” in the Jan. 2008 issue of EW or at www.ewweb.com.)
One of Gaylord's first initiatives at IDEA was to launch a comprehensive strategic review that would lead to the creation of a new strategic plan. This hadn't been done since the National Electrical Manufacturers Association (NEMA) and the National Association of Electrical Distributors (NAED) came together to form the Industry Data Exchange Association in 1998 (the words behind the acronym have since been dropped). The two associations share joint ownership of IDEA, and IDEA's board of directors is made up of five manufacturers and five distributors.
The strategic planning process began last March. On July 20, IDEA and Trade Service ended their data-sharing agreement to go their separate ways, meaning there now would be two major entities competing to provide product data to the electrical industry. In September, at IDEA's annual E-Biz Forum in Washington, D.C., the IDEA board approved the new strategic plan.
Now IDEA has a fresh new mission. On the way to defining it, Gaylord found time to study some history: “I discovered that there was a good idea in 1997 and 1998, and I discovered that in my judgment there were some visionaries back then who had it right,” he says. “They recognized that there's a better way of doing business. They were locked into paper transactions that were costing them money, not only because of time but the number of people they had to devote to doing it. If you're going to have that many people on the payroll, ought they not be doing something that contributes to the bottom line a little bit easier and a little bit better? They thought this data synchronization and e-commerce thing was the way to go and I think they got it right.”
The threats that IDEA's founders were responding to are not now what they were then. Alternate channels such as big-box home centers were stealing share from electrical distributors all across the country with loss-leader pricing, but they've proven unable to displace distributors among their core base of professional contractors and have little to offer large industrial and commercial customers that are electrical distributors' bread and butter. The rise of communications and commerce over the Internet brought fears of whole supply chains being “disintermediated,” but thanks in part to efforts such as IDEA, distributors have been able to turn electronic data interchange (EDI) and other e-commerce technologies to their advantage.
IDEA's new strategic plan sets a course for building on that original vision and adapting to the changing challenges in the supply chain. There are three parts to IDEA's new mission, and conceptually they stack in a way that resembles a pyramid. At the top is e-commerce, the key process for driving cost out of the supply chain. Supporting that is data synchronization, which includes both IDW and the IDX value-added network, together forming a data synchronization platform for the industry. Under it all lie the standards, the industry's more-or-less democratic process for deciding how data will be formatted and passed among trading partners.
“We'll be looking at different measures that reflect the three strategic goals that the board gave us,” says Gaylord. “That is, a data synchronization platform that people use, so you've got electronic business coming in and going out. Second is developing a customer-service orientation and developing e-commerce solutions to help drive costs out of the channel. The third is the reinvigoration of standards as a business unit. If you don't have standards, you can't have data synchronization. If you don't have data synchronization, your e-commerce is maybe an e-mail.”
In its pursuit of these goals, IDEA faces some significant challenges and equally significant opportunities that will shape its future, perhaps for the next 10 years. First among the challenges is overcoming the perception that its original mission should have been completed by now.
One thing is striking about gatherings of the electrical industry's data-heads such as the E-Biz Forum. Certain conversations never go away. There are always distributors clamoring for better, cleaner, more enriched product data from their manufacturers, and manufacturers clamoring back that precious few distributors are using the data that's available to them. This exchange of data among trading partners was the underlying reason for IDEA's creation, and the issues behind it still prove problematic.
In a broader sense, Gaylord suggests this never-ending quest for content and participation is inherent in the kind of “social service” IDEA provides. “If I were given a mission statement in the military, you get it done,” he says. “A mission statement in most for-profits, you get it done. But a mission statement in a social-sector environment, often because the issues that you're dealing with are so enormous, the likelihood of getting it accomplished is slim, so what you really try to do is further that mission. You try to move it as far as you can as fast as you can.”
Nick Manzo, director, account management, and Lily Saad, director, business development, led the plan's development with the help of a strategic consultant from outside the electrical industry. Their research started with a competitive analysis. “Then we did an environmental scan where we interviewed board members, current customers, potential customers, IDEA staff, and got a lot of feedback and figured out where we want to be and where they want us to be,” says Saad.
They heard a lot of the same comments from the people they interviewed: “Fix the IDW.” Not that IDW is broken, necessarily, but the data flowing into and out of it continues to produce errors. This undermines the value of the whole enterprise, and is one focal point for the business plan that will implement the strategic plan.
That's where Beth Badrakhan and her team of data quality experts come in. The fact is that most of the manufacturer customers are constantly working to transmit better, cleaner data all the time, and to set up their systems to sustain the flow.
In Saad and Manzo's research, the quantity of data in IDW proved to be as important as the quality. Distributors wanted as many of their trading partners in the system as possible. Therefore data sourcing became another major initiative for IDEA under its new strategic plan.
Tom Guzik, director, IDW/IDX solutions, estimates that the end of the partnership with Trade Service meant losing about 400,000 product records from a total pool of about 2 million SKUs in IDW. Guzik got a data-sourcing department going quickly, and since July IDEA has been able to restore about half that pool through direct agreements with the manufacturers. That includes most of the electrical manufacturers who supplied IDW through Trade Service. The rest are primarily from outside the industry. “Those are companies that are either not electrical or not part of any sort of affiliation, so they were never IDEA customers or tied to NEMA or NAED. That (partnership with Trade Service) provided an easy way to get that data because the distributors needed it and wanted it. We won't go out and get all the rest unless the distributors want it.”
The other side of the coin, getting more distributors to use IDW, is not a central concern. IDEA now has 388 distributor customers and 200 manufacturer customers uploading and downloading data from IDW. That's not significantly larger than the numbers of early adopters. Some in the industry look at these numbers to gauge IDEA's progress, but such numbers can be misleading, says Gaylord.
“I want people to be comfortable becoming a customer of IDEA when they feel it's right for their business. And there are those who, today, it's not right for their business,” Gaylord says. “They may not be EDI enabled, they may not have the capacity within their organization today to do e-commerce and to do data synchronization. And if they're not ready, why would they become an IDEA customer? I'm not as concerned about adoption rates as much as I'm concerned about how we figure out current ways and new ways to drive costs out of the channel.”
The end of the strategic partner agreement with Trade Service did more than delete a chunk of records from IDW. It created a new competitor for IDEA, a competitor with a long history and name recognition synonymous with electrical industry pricing data. (For a profile of Trade Service and its plans for the future, see “The Dawn of a New Data Era,” in EW's Sept. 2008 issue or online at www.ewweb.com.)
The result will be some healthy competition, in Gaylord's view. “I would think there's room in the channel for both,” he says. “I have great respect for Tony (Dubreville, Trade Service's CEO). He's a gentleman who grew up at Trade Service, essentially, so he certainly has a good feel for the channel and the issues. I have a lot of respect for what he's trying to do with Trade Service.
“Tony and I started doing the discussions on, ‘Can we continue this data-share agreement that had been going on for 10 years? We both recognized that the contract itself was not a well-developed contract for today's environment. It, in and of itself, would not be what we would want to continue with. As hard as we both tried, it just did not seem to be advantageous to continue the data-share agreement. And we decided to move on.”
The greatest loss from the split, more significant than the product data Trade Service had been feeding into IDW, is the loss of the rights to include proprietary Trade Service commodity codes in the data stream, Gaylord says. Many distributors use the Trade Service codes in many aspects of their businesses, and those codes are now available only from Trade Service.
For some of the ways distributors have used the Trade Service commodity codes, there are alternatives — UNSPSC codes for categorization, obtaining pricing directly from the manufacturer, and so forth.
Ultimately, though, it's up to the customer, Gaylord concludes. “If a company chooses to stay with commodity codes and that makes sense to them, then they ought to stay with commodity codes.”
Gaylord sees the split as creating opportunities for both parties. “The split, I think, gives us the opportunity to look at the entire array of the channel, going down to potential contractor solutions and such, without having the issue of getting in someone else's turf — a trading partner's turf. Neither one of us now need to look to the side and say ‘What do you think?' It frees us both up. As all companies do, we'll each level off into our sweet spot and perform very well. And there may be an area there in the future where we may find a nexus point where we can work together in a limited way. Tony and I have talked about that, and you never know.”
Perhaps the most significant change in the organization's structure as a result of the new strategic plan is to elevate IDEA's standards organization from a support function to a primary business unit. Not that the value of standards was ever underappreciated within IDEA, among its board, its customer base or staff. Standards were what brought IDEA into being in the first place — it was conceived by manufacturers and distributors working on EDI standards through a NEMA technical committee. But the change is a recognition of the central role standards play in the organization's identity. Its work on international data standards is a key differentiator in the increasingly competitive electrical data market, and more importantly it plays the central role in IDEA's drive for channel-wide cost savings.
“In my mind, we will get true data synchronization when, as an electrical device is being created, a product manager back there working that product will give that item a fingerprint or a slice of DNA, and that fingerprint or slice of DNA will follow it throughout the entire supply chain, down to the end-user,” Gaylord says. “But it starts with standards throughout the entire supply chain, because if you don't have standards you can't do data synchronization and if you don't have data synchronization you can't truly do e-commerce.”
At the center of the electrical industry's efforts to define and develop data standards sits Mary Shaw, director, standards. Former IDEA President Mike Rioux used to refer to her as “chief cat and squirrel herder,” a description she repeats with a laugh. She's been involved with data standards since her 14 years at Panduit Corp., Tinley Park, Ill., and she has also worked at the international standards organization GS-1.
Shaw loves standards the way Badrakhan loves data, though it hasn't always been that way.
“When I first took on the UNSPSC project back in 2004, I hated every day of it for like the first three months,” Shaw says. “But by the third month, when the first phase ended in November when I submitted those first changes to UNSPSC, I didn't want to stop.”
Making standards a business unit within IDEA establishes the importance of standards to the organization's mission. Standards development is a messy, contentious, time-consuming process requiring a lot of work from many very busy volunteers from companys throughout the channel. Shaw coordinates this work, trains new standards committee participants on the nuances of the documentation and represents IDEA and the U.S. electrical industry in international standards meetings, among countless other jobs. The new strategic plan includes building up a staff to handle more of the burden.
The story of data in the electrical industry is a story of collaboration in the midst of fierce competition, especially in the standards committees. This spirit of cooperation among competitors has impressed Gaylord since his arrival last year. He points to the example of Tammy Miller, chief executive of Border States Electric, and Todd Kumm, CEO of Dakota Electric Supply, whose headquarters sit less than a mile apart in Fargo, N.D. At home they're fierce competitors, but both have been serving in top posts within NAED for years. “There is a unifying sense of purpose that drives them toward something they believe is better. You've got to give these folks credit for what they're able to set aside. There's a very collegial environment there.”
Looking at the broader picture of IDEA's role in the electrical industry over time, Gaylord sees many reasons for his team and their supporters in the industry to be proud of what they've accomplished.
“Over the years, I think there's been enormous progress,” he says. “In the channel we have a tendency to beat ourselves up, I think unjustly so. There are other channels that look to the electrical channel and say ‘you guys are really doing this stuff right. Can you help us figure out how to do this thing?' It takes not only resources to do data synchronization and e-commerce right, but it takes behavior, and it takes an attitude, and it takes risk.”
Gaylord and the IDEA staff have the attitude, and now they have a very clear mission. “If it doesn't help drive cost out of the channel, that should not be in our sweet spot and that is not something we should be engaged in.”
How long does it take you to run a hundred miles? Most of us have no idea. Bob Gaylord can do it in about 22 hours. He does it several times a year.
“At my age, I enjoy them better than shorter and faster runs like marathons,” he says.
Ultra-marathons have a meditative quality, he says. “It's an almost transcendental type of an experience because there are times when you're so far out of body and thinking ‘Look at that guy who's shattered and blown away down there, I wonder how he's doing that?'”
The willingness to totally exhaust himself and keep going when nobody thinks he can, to where it's truly mind-over-matter, is just one example of the unique mix of life experience and interests Gaylord brings to his role as president and CEO of IDEA.
He came to IDEA after having retired in January 2005 from a career in the U.S. Army, where he rose to the rank of Brigadier General. His last command in the Army was as senior public affairs officer, in which he was the primary spokesman for the Army during the the invasion of Iraq and the first few years of the war. He was the first U.S. spokesperson in Bosnia in 1995 after the Dayton Peace Accords.
Gaylord rejects the suggestion that his current assignment, leading the electrical industry's data efforts, may be a bit less exciting than what he's seen before. “They're different. I'm not going to prioritize one over the other. Because a lot of people's livelihoods and businesses depend on what we're doing here today and what we will do tomorrow. I'm certainly not going to take this any lighter than I have any previous position. There's a lot of people out there who depend on what we're doing and trying to do.”
Gaylord and his wife, Donna, live in a bustling house with their daughter Elise and her husband, their two granddaughters, Skyler, 9, and Nastasja, 3, and an adopted daughter, Haley, 3.