Eliminating the middleman was going to be the key to huge profits as everyone could use the Web to find what they wanted. Distributors were no longer necessary.
Swagelok, a manufacturer of fluid system components, ignored the trend and instead focused on its existing system of distributors, looking at ways to use technology to improve those relationships.
"We decided to go against the grain," says Tom Gubanc, director of e-business and IT planning at the company with $100 million-plus in revenue. "We decided to stick to our business model and strengthen it through technology.
"One of the projects we felt we needed to have from a competitive standpoint was an e-store. We evaluated where the Internet was going and decided we needed a site and application for our end customers to select and order fluid system components. What made us unique was our integration of our distributors into the Swagelok corporate system."
The e-store is integrated and maintained with the corporate back office systems. But when a customer from anywhere in the world enters an order, it doesn't go to the corporate office. Instead, it is sent to the most appropriate local distributor.
"It is a true integration from our Web store to the distributor's business system, where it is serviced and processed locally," says Gubanc.
A customer service rep at the distributor is alerted to the order and validates the information submitted for accuracy.
"If it's not accurate, the rep can catch the mistakes and save the customer a headache," says Gubanc. "They might have keyed the wrong quantity or part number. The customer service rep can correct it and continue with the order as quickly as originally intended."
By centralizing the e-store and order system at the corporate office, the firm achieved standardization in the distribution chain and distributors didn't have to spend the time or money to set up their own sites. That further cemented Swagelok's commitment to its distributor network.
The company also utilized its existing EDI technology to create the e-store, so it saved money by not having to start from scratch. It added product information, including CAD drawings, to the site to help customers serve themselves.
The results have been well-received.
"We set our expectations low initially," says Gubanc. "We thought we'd only get C-grade customers, universities or labs. That has all held true, but it has greatly exceeded our expectations of volume that's coming through there. We have also gotten some new customers from the site.
"We have seen a trend of more product information being accessed off of Swagelok.com and more activity in the e-store. We had 6 million hits in October, which is pretty substantial."
Feedback from site users and distributors has been positive, and Swagelok implements suggestions made by both to keep improving the product.
"The nice thing is it helps our distributors, which helps us," says Gubanc. "We are basically reducing our supply chain costs. It's a benefit for our distributors for not having to make a sales call on a C-type customer and still get the sale.
"The positive comments from the distributors really get me going because it shows we are making a difference with the program. It's really adding value." How to reach: Swagelok, (440) 349-5855