Examining Extranets

Are distributors from Venus and manufacturers from Mars when it comes to manufacturer extranet offerings? Not at all.

For the most part, distributors and manufacturers share the same outlook with regard to what is and isn't useful in a manufacturer's private Web site.

Just think about how much communication methods between partnering businesses have changed over the last couple of decades. We have seen the addition of fax machines, cell phones, e-mail, the Internet, intranet and now extranet.

Today, extranets are becoming a popular means for business partners to exchange information; a distributor salesperson can go to a manufacturer's private extranet by entering a user name and password to access real-time information such as product availability, order status and pricing. Other useful information also may be included on a manufacturer's extranets.

For the most part, manufacturers and distributors are on the same planet when it comes to what distributors want and the type of information that can be accessed from manufacturer extranets. This article takes a look at what distributors want and what their suppliers offer via extranets.

What Distributors Want

Every touch point between manufacturers and distributors — such as technical support, order tracking, or even specials and promotions — represents a potential function for extranets to address. We presented a list of current and potential extranet functions to a cross section of distributors and asked them which capabilities they consider most useful.

The responses, shown in Table 1, were promising. The results show that distributors generally find almost all extranet functions helpful. Even the lowest rated functions were viewed as useful by more than one third of the respondents; more than half the functions were considered either useful or very useful by 80 percent of the distributors.

“The most commonly used functions for our staff are price, availability, order status and order entry,” said Pam Kovacevich, vice president of quality and training for Springfield Electric Supply Co., Springfield, Ill. She also said that carrier links, when available, are a favorite.

But, not all respondents agreed with Kovacevich regarding order entry. Distributor respondents were consistent in their views with that one notable exception. Order entry, a function near and dear to manufacturers, found distributor respondents evenly split between ratings of very useful and not useful at all.

What Manufacturers Offer

The discrepancy in distributor response regarding order entry might cause some to wonder if manufacturers (or even distributors themselves) understand what distributors want in an extranet. To evaluate how well manufacturer's extranet offerings were aligned with distributor's desires, we reviewed a number of manufacturer's private sites. The results are shown in Table 2.

Table 1: Distributor Ranking of Manufacturer ExtranetsFunction Very Useful Useful Somewhat Useful Not Useful Product Availability 100% 0% 0% 0% Order status 89% 11% 0% 0% Carrier Links₁ 78% 22% 0% 0% Promise Date 67% 33% 0% 0% Return Goods Authorization (RGA) 60% 40% 0% 0% Proof of Delivery₂ 60% 30% 0% 10% Net Price 78% 11% 0% 11% Invoice Review 56% 33% 0% 11% Expediting 56% 33% 0% 11% Rescheduling 33% 56% 11% 0% Catalog Look-up₃ 60% 20% 10% 10% Cross Reference 50% 30% 10% 10% Literature Order 20% 60% 10% 10% Drawing Approval 38% 38% 25% 0% Request for Quote 50% 13% 25% 13% Quote Review 38% 25% 25% 13% Credits 20% 36% 24% 20% Expedited Order Entry₄ 40% 10% 10% 40% Price File/Disk 38% 13% 38% 13% Standard Order Entry 40% 0% 20% 40% VID Status 17% 17% 33% 33% Sales Reports 11% 22% 33% 33% 1 — Carrier Links: The ability to click on the tracking number and be linked to the carrier's shipment status site. 2 — Proof of Delivery: An online replication of delivery documents including the name of the person who signed for the delivery. 3 — Catalog Look-up: The ability to enter a partial catalog number in the availability function and have the site suggest possible matches. 4 — Expedited Order Entry: Orders for air shipment.

Manufacturers and distributors are certainly on the same page with respect to product availability. This function, which received the highest usefulness rating from distributors, is the only function available on every manufacturer site we reviewed.

Product availability and order status, the functions ranked first and second by distributors, are the functions most commonly offered by manufacturers. “When distributors can check stock or the status of an order online, they save a phone call,” said Dave Holloway, vice president of marketing for Cooper Crouse Hinds, Syracuse, N.Y. “Distributors use CHORUS (the Crouse Hinds extranet) to save time.”

Although manufacturer's extranet offerings are generally in line with distributor's desires, there are some distributor needs that manufacturer extranets aren't meeting. Some of the discrepancies result from difficulties manufacturers face in delivering the functionality. Carrier links, proof of delivery, and promise dates all fall into this category.

While most manufacturers provide carrier links to parcel carriers (UPS and FedEx), we only gave credit in this category to manufacturers who provide links to their truck line carriers as well. In general, these links are more difficult to establish.

Table 2: Manufacturer Extranet OfferingsFunction Distributor Rank Percent of Manufacturers Product Availability 1 100% Order status 2 91% Carrier Links 3 18% Promise Date 4 27% RGA 5 9% Proof of Delivery 6 0% Net Price 7 91% Invoice Review 8 18% Expediting 8 0% Rescheduling 10 0% Catalog Look-up 11 55% Cross Reference 12 45% Literature Order 13 9% Drawing Approval 14 0% Request for Quote 15 0% Quote Review 16 36% Credits 17 9% Expedited Order Entry 18 36% Price File/Disk 19 27% Standard Order Entry 20 55% VID Status 21 9% Sales Reports 22 9%

Proof of delivery (POD) is closely related to carrier links, and, once again, the parcel carriers lead the way. Few LTL carriers capture the same “signed for” field that UPS and FedEx do. Easy-to-use links to carrier POD documents are undoubtedly in our future, but they are still difficult to deliver today.

Promise date, or expected ship date, is often difficult to implement due to a lack of accurate information on the manufacturer's business system. Manufacturers and distributors alike recognize that this information must be reliable before it is of any value.

Although some functions are difficult to implement, return goods authorization (RGA) and invoice review don't fall in that category. Based on their popularity with distributors, we would expect more manufacturers to begin offering these functions.

Manufacturer Extranets: The Secret Weapon

All distributors involved in the study indicated that their inside sales and purchasing staffs use manufacturer extranets regularly, but the manufacturers indicated that a very small percentage of distributor queries are answered via extranet.

The explanation for the discrepancy is the degree of use. Almost all inside sales and purchasing professionals use some manufacturer extranets sometime. We have not, however, encountered anyone who uses manufacturer extranets as a primary means of communication with a majority of suppliers.

“Even though we check stock and order status via the Internet for several of our larger suppliers, we've only begun to scratch the surface of what we can do,” said Bob Courcy, director of operations for Rexel's Southeast region.

Awareness is often the biggest issue preventing distributors from making the most of manufacturer extranets. The typical inside salesperson uses two or three different sites regularly even though 15, 20 or more of his or her suppliers offer extranets. Inside sales and purchasing staff cannot make use of tools they don't know exist.

Manufacturers, for their part, usually rely on their sales force to spread the word. Extranet services are not always prominently mentioned on the manufacturer's Web sites either. In fact, there are several manufacturer sites that don't mention extranet offerings at all.

What's a Distributor to Do?

In many instances, a manufacturer's extranet represents an opportunity for a distributor to save time and money while providing customers with a higher level of service. Extranet access can be an invaluable lifeline late at night or on the weekend when regular customer service channels are closed.

Distributors should consider these steps:

• Identify extranet offerings

  Systematically determine which of your manufacturers offer extranet services and which functions they support. Information about the manufacturer extranet sites that we are aware of is available at www.supplier-info.com/mfgs.
• Share extranet information with all office staff

  Accounts payable may want access to the sites that support invoice review. Even information about an extranet belonging to a manufacturer that does a relatively small amount of business with your organization may be very significant to an individual inside sales representative.

• Get a password for all manufacturers

  There are many reasons to not provide every member of the office staff with passwords for all manufacturer sites. The administrative effort required to do so and the resulting difficultly in keeping your proprietary information secure are two obvious reasons.

  It may be worthwhile, however, to ensure that the person staffing your after-hours hotline has the broadest access possible. You may also want to assign a person or a team to evaluate the offerings and provide the rest of the staff feedback on which are the most useful.

• Give your manufacturers feedback

  Manufacturers are constantly working to improve their extranets. They would love to hear from you about new functions or changes to existing functions that you would find useful.

Distributors and manufacturers share a common objective for manufacturer extranets: better service at a lower cost. By identifying where these tools make the most sense in your business and helping your suppliers enhance their offerings, you can move closer to meeting that objective.

Ken Hoover and John Haluska are co-founders of Supplier-Info Inc., a business dedicated to unlocking the potential of manufacturer extranets. You may contact them at (901) 751-6711 or [email protected].