With a developer in place and a new association to keep things moving in the right direction, the electrical industry is taking the lead in electronic commerce.
According to the conventional wisdom, what's happening shouldn't be. Electrical distribution is assumed to be a mature, unremarkable industry, slow to react to change in the larger world. Even within the industry, there sometimes prevails an attitude that the industry's decades-old structure is the way it's supposed to be-distributors, manufacturers and reps have well-defined roles and time-honored antagonisms-and anything new risks destabilizing the whole market. Yet here's a group of distributors and manufacturers who not only have chosen to set aside their differences and work together, they're doing so on a project that puts electrical distribution at the forefront in the very progressive arena of electronic commerce.
Last month, the joint steering committee overseeing development of an industry data warehouse (IDW) ended months of speculation and announced that CCI/Triad Systems, Livermore, Calif., will develop and maintain the IDW. The committee also announced the establishment of a new association to manage the IDW project and to carry the concept forward.
The National Association of Electrical Distributors (NAED), St. Louis, Mo., and the National Electrical Manufacturers Association (NEMA), Rosslyn, Va., who together got the IDW ball rolling in late 1996 by establishing the joint committee to pursue the project, have passed the baton to a new not-for-profit membership association, the Industry Data Exchange Association (IDEA), which will manage the IDW and related electronic commerce matters for the industry. The National Electrical Manufacturers Representatives Association (NEMRA), Armonk, N.Y., also supports the initiative.
The new association's goal is to have the IDW in place and fully operational by March 1999, with a ramp-up phase leading up to that date.
IDEA's board of directors will have equal representation from manufacturers and distributors, which is reflected in the roster of officers: David Crum, president and chief executive officer (CEO) of Crum Electric Supply Co., Inc., Casper, Wyo., is chairman of IDEA; Clyde Moore, president and CEO of Thomas & Betts Corp., Memphis, Tenn., is vice chairman; Jay Platt, president of Platt Electric Supply, Inc., Beaverton, Ore., is secretary; and Thomas J. Malott, president and CEO of Siemens Energy and Automation, Inc., Alpharetta, Ga., is treasurer.
The creation of a separate association was necessary to manage the development costs and ongoing costs of the project, Crum says. Funding for the project will come from members of IDEA, many of whom have already been cultivated by NAED and NEMA. Fees for membership will vary according to a company's size. Distributors and manufacturers will pay on the same scale, Crum says.
The associations say they have secured enough commitments from manufacturers and distributors to fund the IDW's development. IDEA will carry on that crusade to gather supporters through a marketing committee that will stage seminars and meetings to educate manufacturers and distributors about the data warehouse and solicit their participation.
At press time, IDEA was still negotiating a contract with CCI/Triad for its services developing and maintaining the data warehouse itself. IDEA also reached an agreement in principle with Trade Service Corp., San Diego, Calif., to provide support to distributors and manufacturers wanting to use the IDW.
CCI/Triad emerged from the field of three finalists as the clear choice in almost every area the technical committee considered, Crum says. The other two finalists were Trade Service and IBM Corp., Armonk, N.Y. CCI/Triad is a software developer and provider of management information systems with extensive experience in the automotive aftermarket and the hardlines and lumber industries. The company developed and maintains a proprietary data warehouse that has become a standard in the automotive aftermarket, says Dirk Heartman, project manager for CCI/Triad, who is overseeing work on the electrical IDW.
"They (the technical committee) evaluated technical capabilities, help desk capabilities, past experience, commitment to the project, and many other things to make the decision," Crum says. "They said that in almost all areas Triad stood above all others. We are very excited that one of them stood out as much as it did."
Triad Systems' president, Chad Schneller, expressed hope that the data warehouse project would help improve the electrical industry's supply-chain management practices. "We are excited about working with IDEA and Trade Service on the electrical industry data warehouse," he says. "It represents a significant industry milestone in reducing operational expenses and improving supply chain management. Both NAED and NEMA are to be applauded for their leadership role in developing a standard method for storing and communicating product information across a diverse community of distributors and manufacturers."
Once the contract is in place, CCI/Triad will begin building the robust Oracle database system and developing the framework for "populating" or filling out the database. This development involves the creation of "data-scrubbing rules" by which the system will evaluate and either accept or flag for attention any bit of data it receives, says Heartman.
The first phase also includes development of the communications infrastructure that will allow manufacturers, reps and distributors to access the data. The goal is to make sure users can connect in a secure fashion, cheaply and reliably, Heartman says. Part of the plan is to create an industrywide "extranet," which is a separate, secured network that functions on the principles of the Internet.
The system incorporates technology that CCI/Triad has used before, but will incorporate new ideas as they emerge during the development phase. "This really is at the leading edge," Heartman says. "Other industrys are not doing this." Even more exceptional than any of the technology involved is the electrical industry's collaborative approach to building a data standard, he adds. "You really can't find a benchmark to measure this against. It's very difficult to get a group consensus just among distributors. To get both manufacturers and distributors working together is very progressive."
The involvement of Trade Service, which has provided pricing information and other data services to the electrical industry for several decades, is intended to help smooth the transition from the way business is done today to the way the IDW's backers envision it will be done in the future. Trade Service will help manufacturers convert and prepare their data for use in the system and will help distributors extract and make use of the data they need.
Trade Service has had an occasionally antagonistic relationship with NAED over the association's electronic data efforts in the past, and the fact that the company is involved at all is, for some in the industry, a sign that times have changed. "There was always the recognition that we needed to transition from the way we were currently doing it to the way we envisioned it being done," he says. "In that regard, as long as Trade Service was willing, there was always a place for them, and we're very happy that they've chosen to be an alliance partner in this project."
Trade Services' inclusion was important and is part of a larger lesson the industry has learned, through its electronic commerce endeavors, about working together, Crum says. "We've really learned what we as distributors and manufacturers can truly accomplish by working together."
Once the data warehouse is in place, the industry will have an opportunity to push the boundaries of electronic commerce even further. The computer network that will support the IDW may eventually be of more value to the industry than the data warehouse. "One of the great advantages that comes out of this, even beyond the data warehouse itself, is the communication network that will be developed and set up to communicate product data," Crum says. "There's no reason that should be limited to product data. However, the focus right now is on data communications, so that we understand what our focus is. If you start putting video or audio or other transactions across this network, it would require an increase in bandwidth."