The effective use of information technology is becoming a strategic differentiator in the channel as supply-chain management becomes more complex.
EBN sister publication InformationWeek, in its recently published annual list of 500 technology innovators, ranked two of North America's leading distributors-Avnet Inc. and Marshall Industries-among the top 10 corporate users of IT for improving business processes and creating new markets.
Avnet was ranked eighth and Marshall 10th among 500 U.S. companies with $1 billion or more in annual revenue. The selection of two distributors for this list is significant, according to analysts, because it signals the distribution industry's unique ability to use technology to facilitate a build-to-order business model and take inventory investment out of the sales channel for both suppliers and OEMs.
Distributors' traditional role as middlemen positions them to use technology to pool demand from customers' MRP schedules, then feed the information back to parts manufacturers and achieve "an absolutely clear view, by part number, of three to four months of demand," said Steve Ashley, first vice president of Milwaukee-based brokerage firm Robert W. Baird & Co. Previously a distribution-industry analyst, Ashley follows information technology for Baird.
On the OEM side, Ashley said, the information customers receive from distributors about price, availability, and logistics enables them to automate their inventory turns with real-time information that's at their fingertips 24 hours a day.
According to both Avnet and Marshall, their investments in IT are designed to enable them to compete globally and provide maximum connectivity to everyone in the supply chain.
Avnet started viewing technology more strategically about six years ago, when it began planning a campaign to become a global distributor, said Tony DeLuca, senior vice president and director of global operations for the Phoenix-based company.
"Our dream," he said, "is to enable a customer anywhere in the world to call Avnet anytime and have inventory information accessible no matter where it is, then ship it to a customer anywhere, in their local language."
Over the past few years, Avnet has invested roughly $100 million to support this goal, and is working toward developing one common infrastructure-both network- and software-based-that will support all the various business processes in the distributor's far-flung territories.
While conceding the difficulties involved in having disparate computer systems "talk to each other," DeLuca said Avnet has a portfolio of programs on the drawing board, one of which is a global data warehouse that would allow Avnet to put information from a variety of its internal systems into a common information repository that could be used both internally and externally.
Another initiative by Avnet includes expansion of its electronic-commerce capabilities via the Internet, intranets, and extranets.
For Marshall, the aim of its $40 million technology investment has been to provide maximum connectivity to the entire supply chain at the minimum cost, according to Robert Rodin, president and chief executive of the El Monte, Calif.-based distributor.
"The goal was to let technology cannibalize some functions to allow people to use the technology to provide more demand creation for suppliers from customers," Rodin said. Specifically, the infrastructure at Marshall supports a laundry list of applications that reduce costs, decrease the number of transactions, increase the company's efficiency, and benefit customers.
Programs include sales-force automation tools; a global, companywide phone bank; and a materials-management system that loads bills of materials in a variety of formats into a computer system and quickly outputs a bid for rapid processing.
Both distributors said it's impossible to calculate specifically what they've reaped from their technology initiatives. At the very least, they agree that having a sophisticated IT infrastructure is a prerequisite to competing in the global marketplace.