Distributor Technology Comes Alive in 2005
After a two- or three-year hiatus, jan/san distributors began to invest in business technology again in 2004. Now, as distributors move into 2005, software designers and vendors say that this already looks to be a banner year for technology — especially for business.
“We can see that distributors are going to have a world of opportunity in 2005 when it comes to technology,” says Bob Hestenes, national sales manager for Step 1 Business Products, Newbury Park, Calif. “Software is more user friendly, warehouses can be run more efficiently, and the wireless revolution continues, unabated.”
But before examining the newest and hottest technology resources now available for business, distributors must first evaluate the status of their current capabilities, says Ed Mazer, CEO of Stanpak Systems, Suffield, Conn. “I think that there are a number of distributors out there who have obsolete software, who really need to think about upgrading. The products might have served their needs 10 years ago, but now they aren’t able to do what good systems do.”
Technology solutions that have been unveiled for 2005 might help jan/san distributors who have fallen behind the technology curve, but — more than likely — those distributors need to take incremental steps toward modernizing their operations. “Usually, you can’t move from the cart and horse to the jet plane,” says Mazer. “First, you’ve got to move to the car and then work your way up. I’m not saying that they shouldn’t look at the newest offerings, but the first step is knowing the drawbacks of your current technology.”
RF vs. RFID
An example of Mazer’s jet plane analogy is evident in discussion about Radio Frequency (RF) warehousing technology for distributors. In the past few years, Radio Frequency Identification (RFID) tags have been widely debated — in part, because Wal-Mart is requiring RFID tags from all suppliers, increasing the overall demand for the tags. RFID tags allow warehouse workers to scan entire pallets of products, but the technology is still largely unproven. Conversely, general RF technology — the technology category that RFID is a part of — has proved to be useful for a host of other warehousing technology solutions, says Mazer.
“Radio Frequency can do so many things for distributors, especially in the warehouse, and I think you’ll see a lot more of them starting to take advantage of those applications in 2005,” says Mazer. Automatic locators (to find inventory quickly and efficiently), cycle counts, real-time inventory tracking and product forecasting are all available via updated RF programs that will be available to both large and small distributors in 2005.
“In the past, RF was really only for the huge, multi-regional distributors, but now the mid-sized and smaller distributors can take advantage of it,” adds Mazer. “All the [sales and inventory] information can be accessed through RF terminals, which look like guns that are carried in holsters by warehouse employees. It’s easy: They just scan products or pallets with the terminals, and all the information goes to the central system.”
The new RF warehousing “guns” offered by Stanpak are part of an overall shift that is occurring on the technology side of the jan/san industry. Software designers are spending more and more time improving the warehousing applications, as distributors attempt to make each turn more efficient.
“In order for distributors to grow in today’s market, they have to address their warehouse technology options,” says Mazer.
Margin compression is one of the big reasons that warehousing and inventory is being scrutinized more carefully than ever before by jan/san distributors.
“We are in an inflationary mode — and this won’t come as a surprise to any distributor — but I call it ‘profit leakage,’” says Adam Waller, president of DDi System, Sandy Hook, Conn. “Costs go up, and distributors can’t respond quickly enough to raise their prices.”
Frequently, manufacturers let distributors know well in advance that prices will go up for certain products at specific times. “A paper manufacturer, for example, might tell its distributors that there will be a three-cent hike in paper towels starting January 1,” says Waller. “Unfortunately, warehousing and inventory inefficiencies — as well as bookkeeping inefficiency — keep distributors from letting their customers know about the hike in time, so there’s profit leakage.”
Last year, DDi introduced a distributor software program called Margin Manager, which keeps distributors ahead of price hikes handed down from manufacturers. “It’s a program that we started providing in 2004, but we can see that it’s going to really take off in 2005,” says Waller. “It enables distributors to get in front of those price changes by automatically notifying end-user customers a few months before every price hike.” When end users learn about price increases early, they usually respond better, he adds.
Tech Helps Customers, Too
Just as customers appreciate advance notice of price hikes, they also appreciate it when a distributor helps their cleaning staffs function more efficiently.
“The big thing that I’m running across from distributors for 2005 is that they want a software program that will help their customers analyze a facility,” says Scott Smith, owner of Rimrock Technologies, Billings, Mont.
Slated for release this year, Rimrock has developed a program that does just that. “It’s not accounting software — it’s entirely new,” says Smith. “The distributor asks all kinds of questions: What kinds of equipment are they using? What hours are being worked? What are the shifts? How much square footage is being cleaned? Then he plugs the information into the software program.”
After all the information has been placed into the program, distributors are able to print high-quality mini presentations that give exact details about the facility, including how much time certain procedures should take.
“This program really isn’t even for sale yet,” says Smith, “but so many distributors have been asking about it, we are allowing people to download part of it off our website, www.rimrocktech.com. The entire program will be available later in the first quarter of 2005.”
The Native Language
Although jan/san distributors are faced with more and more technology options from a variety of software vendors, there’s still one software giant whom many have come to either love or hate: MicroSoft.
“The truth is that a whole generation has really grown up using MicroSoft, so it’s like their native language as far as computers go,” says Hestenes. “The work force — the young people who are getting hired now — aren’t as comfortable with character-based programs — programs that don’t use a mouse.”
At the ISSA trade show in New Orleans last year, Step 1 unveiled its newest MicroSoft enterprise system for distributors, which helps manage accounting, warehousing and sales.
“People loved it,” says Hestenes. “One distributor asked me how much training is involved. I told him none. He wondered how that was possible, until he actually started using the program. Then he said, ‘I can see why there’s no training — it’s so easy to use.’”
Website Ease Arrives
Internal software programs aren’t the only applications that are becoming more user friendly. Distributor websites, which are really external sales tools, are also making strides in the industry, says Larry Wells, owner of Universal Dynamic Solutions (UDS), a technology marketing firm in Branchburg, N.J.
“A lot of people still think that any neighbor’s kid can put up a website, but distributors need to promote their company with a quality site that targets specific audiences for specific purposes,” says Wells.
In the late 1990s — and even up until last year — most jan/san distributors thought they needed a website, no matter who designed it or what it was for. Today, distributors don’t just want any website; some want a website to attract new customers, while others want one that will help retain current customers.
UDS has created a website program that will allow distributors to provide links to customer-specific product catalogs.
“Distributors really want to be able to create catalogs that are personalized for each customer, and this allows them to do that,” says Wells. “They can adjust the pricing, highlight specific product lines and make it available to only certain customers.”
Universal Dynamic Solutions has experience as a printing company, which makes catalog design easier, according to Wells. “It’s much harder for the Internet people to learn how to put together physical marketing aids that work well,” he says. “We really come from a print background, so we know how to put together a high-quality brochure or catalog that will be a resource for end-user customers.”
Wells’ vision is that such dynamic catalogs will not only be for customers — via the Web — but also for distributor sales representatives to take with them on sales calls. This is especially beneficial in the jan/san industry, where prices frequently vary by customer.
In most industries, a product retains the same general price, regardless of who the customer is. However, in the jan/san industry, distributors often adjust prices for specific customers, says Wells. For example, a mop might be $10 for one university, but only $8 for another university only a few blocks away. One reason for this: some business is won by being the lowest bidder.
“With so many price changes and adjustments to keep track of, it’s great for distributor salespeople to just grab the product/price catalog for Customer X, and know that the accurate numbers are there,” says Wells.
Computers Will Get Smarter
Perhaps the biggest change on the horizon — though it probably won’t be fully realized in 2005 — is the advancement of computerized communication between various companies in the supply chain.
“Over the next few months, we’re really focusing on software that will allow the various computer systems from manufacturers, distributors and end users to all share information and be compatible, regardless of what kinds of computers they’re using,” says Mazer.
Mazer’s company, Stanpak, is developing a program called XML Web Services, that will allow different computers, which were previously not compatible, to talk with one another and share vital information. This will be especially helpful with sales orders, and also with shipping and delivery instructions.
With so many improved applications for distributors, technology suppliers are banking on more technology spending from distributors in 2005. “This year is going to be a big one for jan/san distributors when it comes to technology spending,” says Waller. “They want to grow, and we can help them.”
IDC Predicts Big Linux Jump by 2008
IDC, Framingham, Mass., an international group of business technology analysts, recently reported that Linux revenue for desktops, servers and packaged software will exceed $35 billion by 2008. “That’s a lot of money, even by Bill Gates’ piggybank standards,” wrote Steven Vaughan-Nichols in January issue of eWeek magazine.
Linux is a computer language that is based on Unix, the major written code for most business computers. Linux has been discounted by business technology analysts, but the IDC report shows that it could be a serious rival to Unix in the future.
Antispam Law Unconstitutional
Durke Thompson, a trial judge in Montgomery County, Maryland, recently ruled that the state’s antispam law unduly discriminates against out-of-state commerce, a restriction that is generally prohibited by the U.S. Constitution.
Thompson’s decision was based on a lawsuit that a Maryland business brought against a New York company, First Choice Internet; Thompson ruled that the lawsuit be dismissed because the company “did not intentionally direct their e-mails” to Maryland residents.
“There’s no way for a person to know where the e-mail is going,” said Andrew Dansicker, a Baltimore lawyer representing First Choice Internet. “Until there is, it’s not fair to be passing statutes that penalize people for sending an e-mail.”
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