Thoughts on the NAED Technology Benchmark Report
Earlier this week, the National Association of Electrical Distributors released the results of their 2013 Technology Benchmarking Survey. According to the NAED, the stated purpose of this survey is to:
1. Benchmark technology implementation
2. Identify Technology issues and challenges faced by NAED members
3. Identify areas where NAED can facilitate improvement.
As it turns out, about 100 NAED members of various sizes responded to the survey.
The full report can be accessed here.
Since the readers of my blogs know I am a fan of benchmarking, it should come as no surprise to anyone that I dove right in and began to examine the findings of this survey.
What struck me about the results were that the top 4 most important technology issues as defined by the survey results were almost entirely about the same thing… data. They’re not talking about “Big Data” that you read about in the press. Big Data in that sense is all about analyzing transactional and operational data to increase efficiency, drive strategy, and uncover new trends and opportunities. No, they’re talking about good old master data and pricing information that describes and categorizes the materials that are sold in those transactions. They are talking about the data necessary to conduct business.
Since so much effort has been put into improving data quality, why is it still an issue?
One answer is related to sales scenarios in the areas of eCommerce and mobility. Even though initiatives around data quality are paying off by reducing the number of operational problems on the back end, the customer is getting more and more exposed to the data, so it is coming under more scrutiny and needs to be more “consumer grade”. Only a few short years ago, almost all wholesale customers made their purchases at the counter or over the phone where it was the responsibility of the highly trained sales agent to help the customer determine the appropriate material for their needs. Today, however, there is an undeniable trend of placing that responsibility on the customer himself as more and more wholesale distributors enable online quoting and ordering.
This trend is unstoppable too because the ecommerce channel offers so many benefits to distributors. It allows for 24×7 ordering, which can increase sales, or it can be presented as a lower cost to serve alternative to those customers who are identified as profit destroyers which can improve overall margin.
The overall numbers are still small for many. The survey shows that only about half of the respondents allow for online ordering, and only about 5% of their customers buy online in a typical month, but that’s changing. Leaders like W.W. Grainger are seeing over 30% of their sales come online and the story of Google and Amazon Supply (who have 100% of their sales online) entering the industrial market is well told. So we can see what’s possible.
The time to act is now, though. As one CIO told me, “Even though our customers aren’t really demanding it, we don’t want to get caught with our britches down. But data quality issues are still holding up other projects”.
So while the benchmark survey at first glance seems to be saying that the most important issues are about data, it seems to me that they are really about enabling ecommerce.
Matt Petersen is the Industry Value Advisor for Wholesale Distribution at SAP America. He is a wholesale distribution technology expert with over twenty five years of international experience in enterprise software including the last ten years focusing on the Wholesale Distribution industry. When not focusing on that, he’s practicing his putting.