Technology Today: 6.30.2010 (Guest)

Posted by TED Magazine on Wednesday, June 30, 2010

Busting the Net Pricing Quandary, Part 2

A 3-part series on solutions, challenges, and the progress of automating net into stock pricing.

by Sonia Coleman

As the electrical industry continues to automate, one of the most frequently discussed topics is developing more efficient processes for transmitting net into stock pricing. As discussed in the first part of this article, cost savings can be mammoth. However, issues still surround file capabilities, security, and implementation. In this section of the article, we’ll hear feedback from manufacturers and suggestions from distributors on how to successfully tackle this issue.

According to Bob Gaylord, President and CEO of IDEA, distributors and manufacturers are looking for a global solution to an individual issue.

 “Everyone is looking for one silver bullet that doesn’t exist. It doesn't exist and won't likely exist because there are too many variables on how one transmits and receives into stock pricing,” he said. “The basic issue is how do individual trading partners—an individual manufacturer and an individual distributor—want to transfer and communicate their net into stock pricing? Technologically, there are many different ways to make it happen.”

Data Preferences

Of the distributors interviewed, most indicated that their preferred method to receive net into stock pricing is the EDI 845 direct between trading partners, bypassing Industry Data Warehouse (IDW). Some preferred downloading their data from IDW. But the overwhelming desire was to remove manual intervention from the process.

“In a perfect world, we would get our data in such a way that we wouldn’t have to touch it twice, through IDW or an EDI function,” said Drew Esce, Operations Manager for City Electric Company in Syracuse, N.Y. “But if you are only going to get half the data that you need, then you’re still fighting half the battle.”

Wallace prefers IDW for his net into stock pricing. “If the data flows from IDW, it pipes directly with no human intervention. If a manufacturer changes prices, they might forget to send you a new price sheet, and you end up with discrepancies in your system. If the data is in IDW, it flows directly into your business system.”

Manufacturer Perspectives

Although implementation is the largest challenge for distributors, manufacturers still cite resources, security concerns, and added cost as the reason why they aren’t transmitting their net into stock pricing data through EDI or IDW.

“We all want to cut costs in our supply chain, and we want more automation. But not everyone can automate. We have to support 5-6 different formats in order to get this pricing out to our market,” said Stacie Braffet, eCommerce Supervisor, IDEAL Industries.

IDEAL Industries prefers to transmit its net into stock pricing through EDI 845 and isn’t currently using IDW. Braffet said that IDEAL would consider implementing IDW for its net into stock pricing, but that she’d still have to provide answers to “the security question, who’s going to utilize this, and how many net prices we have for them.”

Eaton’s distributors can access their net into stock pricing online on a CD, through its secure extranet, or through EDI 845 direct between Eaton and the distributor.

“The way we are currently transmitting the data is safe and secure, plus we can ensure that the correct distributor branch gets the appropriate pricing,” said Tamie Janocsko, Channel Operations Manager at Eaton.

Eaton doesn’t support EDI 845 via a Value-Added Network (VAN) or IDW for net into stock pricing, although it does offer standard stock information in IDW. Eaton supports IDEA, but has security concerns on who has access to the data in IDW and would prefer better mapping of the data to the branch level.

IDEAL’s Braffet encouraged the industry to work together to improve automation, “All three parties—distributors, manufacturers, and software vendors—need to come up with a creative solution to make this happen in the industry and gather enough buy-in to encourage everyone to participate.”

Exploring Motivations

Sandy Rosecrans, President of City Electric Company in Syracuse, N.Y., said it’s key to find what motivates manufacturers and provide an incentive.

“I’m sure it’s expensive for manufacturers to implement the process to give us automated net pricing. How are the manufacturers getting sold on the idea? It’s important to figure out a way that will make both sides happy,” she said.

For example, Rosecrans said that when manufacturers wanted distributors to implement EDI for purchase orders, it was mostly a benefit to the manufacturers. As a result, some manufacturers offered distributors incentives to implement the EDI purchase orders.

“It has to be a give and take,” Rosecrans said. “Now the shoe is on the other foot, and this is something that the distributors need more than the manufacturers. Since most of the benefit is for the distributors, then we need to say, here’s what we’ll do for you. Now we need to figure out what that carrot is so the manufacturers will jump on board to restructure their database into the EDI format instead of sending out files manually.”

Ron Schlader, IDEA Chairman and Vice President of Operations & Quality at Crescent Electric Supply in East Dubuque, Ill, pointed out that motivation follows priority.

“It’s a top down kind of thing; when leaders make it a priority within their company to automate sending and receiving data, then they put the resources in place. It’s important to keep pushing this issue with manufacturers and software vendors, encouraging others to implement the standards and get the software in place to make this happen,” said Schlader.

To read more feedback from distributors and manufacturers on “Busting the Net Pricing Quandary,” watch for part 3 of this series in July. 

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Sonia Coleman has been involved in electrical industry issues for over a decade. She serves as a freelance writer and communications & web consultant. She can be reached at scoleman@colemanunlimited.com .