PROGRESS OF E-COMMERCE IN THE

ELECTRICAL INDUSTRY

September 28, 2011

St Louis, MO

Progress of E-commerce in the Electrical Industry

• Transformative nature of technology in service delivery

• Results of the survey of Manufacturers and Distributors

• Inhibitors and enablers of Electrical Industry Solutions

• The role of Industry Standards

Transformative Nature of Technology

• Airline Travel

• Travel Agent → Internet Booking

• Restructuring of the Travel Industry

• Banking

• Bank Cards → ATMs → Internet Banking

• Changing role of Bank Branches

• ING Direct

• Healthcare

• Paper Health Records → Electronic Health Records

• PAC Files (Picture Archiving and Communications)

• Cost savings, Better Quality Healthcare, Outsourcing

Internet use by Contractors

Once a

week or

more

%

2 to 3

Times a

Month

%

Once a

Month

%

Every 2

or 3

Months

%

Every 4

to 6

Months

%

Once a

Year

%

Never

%

Research Buying Decisions 64 15 11 2 2 1 5

Stock Checks, Checking Order Status, or Catalogue Searches

67 10 8 2 1 1 10

Product Selection Tools /Configurators 58 13 14 2 4 3 5

Open Links in E-mail Newsletters 58 14 10 2 2 3 11

Download a Report, How-To Guide / White Paper

47 17 15 4 4 3 10

On-Line Ordering 46 10 14 5 3 3 18

Access Social Networking Sites for Business Purposes 29 10 9 3 3 2 45

Webinar Participation 9 5 15 8 6 8 49

Base: Those who used the web/Internet in past year (n=287). Excludes “don’t know/not applicable” responses.

5

Two-thirds of electrical contractors access the web/Internet weekly to conduct stock checks, catalogue searches, and research buying decisions.

Business Drivers of E-commerce Development

• Changing buyer behavior

• Changing demographics

• Customer service opportunities

• Improvements to operations

• Pressure on margins

• Competition

Distributor Survey - Questions

• Size of business

• Internet sales

• EDI transactions with customers

• EDI transactions with suppliers

• Info available on the distributor IT system

• What can suppliers do for distributors

Company Size

• 12% - under $25 Million

• 41% - 25 to $150 Million

• 47% - above $150 Million

Internet sales

• As a portion of total sales 10%

• By part # 100%

• By description 65%

• Configurator 12%

• Importance of internet sales 57%

EDI Transactions

• EDI with customers 12%

• EDI with suppliers 27% - 32%

• ERP info availability 56.5%

What stands in the way of internet sales?

• Proper product descriptions and a full catalogue of all

products or a portion of our products.

• Customer adoption & ease of getting data for our

ecommerce site.

• Attributed product information.

• Customers use web site extensively but phone-in orders.

What stands in the way of EDI with customers

• Standardization, customers’ comprehension of benefits.

• Cost benefit analyses do not warrant investment at this

time.

• Only large corporations are willing to use EDI.

• Customer capability, use with 220/9000.

• Matching issues.

What stands in the way of EDI with suppliers

• Supplier capabilities and willingness to implement EDI

• Availability of UPC codes on all products

• Supplier needs to be large enough to make it worthwhile

• Would like suppliers to pay half the cost of the setup of

EDI transactions; the supplier gets the biggest saving.

• Accurate data and differences in format

Info available on distributor ERP

• We have spent a great deal of resources on including

pictures, brochures, spec sheets, alternate products as

well as including items that go with the product. when they

sell teck cable automatically they get a list of teck

connectors they can include on the order. Just a prompt to

get a “a coke with those fries”

Non-monetary things suppliers could provide

• Data warehousing!!!!!

• Provide pdfs of all products that can then be used on our

ecommerce site for customers to view

• Better availability of images, descriptions and attributes

• Advise when there are price discrepancies

• Supply all price files in excel that include UPC codes

• Make all products bar coded

• Confirmations with accurate lead times

• Ship when promised

• Ease of order placement (stock checks, proactive delivery info etc.)

Manufacturer Survey - Questions

• Distribution channels - Electrical Wholesale, Retail

• EDI with Distributors

• Information to Distributors

• About IDW

EDI transactions with the distribution channel

• 30% of manufacturers do more than 30%,

• 40% of manufacturers do between 20 and 30%

• 85% do some EDI

EDI documents

• 85% use PO and Invoice

• 65% use order confirmation

• 60% use advance shipping notice

• 43% use additional forms

What stands in the way of EDI with Distributors

• Knowhow of EDI and resources dedicated to IS support

• Distributor readiness

• Systems capability

• Comfort level with fax transmission

• Currently, any Distributor that is EDI-capable has been

implemented.

• A desire to work together to improve accuracy

• Industry standard would make the whole concept much

more attractive

What would prompt you to populate IDW

• More information about IDW benefits and advantages

• Demand from our business partners

• Currently evaluating the advantages/disadvantages

related to IDW

• Need to meet customers’ requirements

• Greater acceptance from our customers regarding the use

of IDW

• To begin populating the IDW, we would need to see

requests from at least two of our distribution partners

• ROI

In what format do you provide product information to

distributors

• Catalogue 86%

• Excel files with pricing 93%

• IDW 38% 100%

• Familiar with Schema 57% 100%

• Data within 6 months 21% 100%

• Trade service 19% 100%

• Company website 69% 100%

Enablers of E-commerce

• Modern ERP software

• Reliable communications networks (VAN)

• Consensus on the business case

• Project management schedule

• Availability of technical assistance

• Consequences

The role of Standards

• Safety Standards

• North America - UL and CSA

• International - IEC, EN

• Product Standards

• North America NEMA,

• International - IEC, EN

• Quality Assurance - ISO 9000

• Environmental Compliance - ISO 14000

• Energy Efficiency Standards

The role of Standards

• UNSPC

• United Nations Standard Products and Services Code

• GTIN

• Global Trade Item Number

• IDEA IDW c/w Attribute Schema

• Industry Data Standard

The role of Standards

• Standards are required for good functioning of industry

• Standards need to be developed and owned by industry

• IDW is an extension to the existing set of standards:

• Provides a standard for the format and content of information

furnished by suppliers to distributors and assures accuracy and

synchronization of information.

• Provides a platform for third party APPS developers

Use of technology delivering customer service

• Business Decisions

• Enhance Customer Service Experience

• Reduce Operating Costs

• Create a Competitive Advantage

• Implementing an industry wide solution

• Requires a broadly based buy-in

• Project management approach

• On-going maintenance and support