From paper to electronic catalogue management

"We reckon moving to an online product catalogue has delivered savings into six figures,” says Alistair Wiggins business development director of hose maker Pirtek UK. “And we’ve reduced admin costs, improved customer service levels and maintained margins.” Pirtek is a global business with an annual turnover approaching £600 million. The European headquarters is based in London and this acts as the central buying office for all its 80 UK distributor branches. The company has more than 350 service vehicles in all, on-hand 24 hours a day, seven days a week to service its growing customer base. The firm’s traditional core business is the supply of hoses and hose assemblies for the repair of large construction machinery for local government and the construction industry. But the market is changing. In the last few years customers have started to demand a more convenient service. After all, a simple hydraulic failure on a large piece of construction equipment at an inconvenient time can be enormously costly. This demand, plus major technical innovation, has created a new service concept at Pirtek – on-site hose replacement. Wiggins explains further: “We have over 6,000 products to manage here. We buy parts in from all over the world and store them at the London headquarters. We then distribute these to our hose centres around the UK which then assemble the appropriate hose, often in the back of the service vehicle at the customer’s site, for the client.” But why did Pirtek decide to go online with its product catalogue in the first place? Wiggins: “Three years ago, our customers were asking for some kind of online service and catalogue for our product range. And because some of our competitors were already providing this, we simply had to react fast.” But that wasn’t the only concern for Pirtek. “We were spending £10,000 per year on producing paper catalogues for customers, especially our target market which was the OEMs [original equipment manufacturers],” he adds. “Trouble was the buyers in these companies were employing strict policies of procuring online or outsourcing the procurement function altogether. At this point we realised we needed an online catalogue for our products and met with Reqio to scope this project.” Wiggins says the company never really considered any other vendors because it already had a relationship with 3S Electronic Publishing, which was producing technical CD-ROM products for engineering companies. But Pirtek held off for 18 months while 3S went through some changes: the firm became known as Catalyst in 1999, only to change its name again to Reqio last year. So for the last 18 months, Reqio has helped Pirtek create its online product catalogue. And the results are very encouraging. “Reqio understood what we were trying to achieve and spoke our language – they didn’t blind us with IT speak or flashy web design! “And they helped us with technical difficulties like how to graphically represent the internal bore size of one of our hoses, and how to cope with the different tax legislation in each US state to facilitate multi-currency transactions,” says Wiggins. But what’s really impressive about the new online product catalogue is its in-built intelligent navigation system. Customers can search or browse through Pirtek’s product range, but are guided through a decision-making process to reach the part or assembly they require, answering carefully-prepared questions about bore sizes, pressure and the like. “This cuts down errors in parts ordering and ensures that the customer selects the right product every time,” explains Wiggins. “Initially though, we were conscious that this might drive down order value and make cost the only criterion for purchase. But this hasn’t been the case, we’ve actually increased our margin on each transaction.” Personalised content The catalogue has been ‘live’ for a couple of months now and Wiggins says the company already receives more than 200 orders each day from its distributors. The catalogue is also personalised depending on who the user is. Clearly, different distributors need to see different discounts and prices for their customers as well as stock information. Pirtek is using Reqio’s Catalogue Manager software that helps create and maintain a single catalogue of product content from its existing internal systems and sources. Only one full-time member of staff is needed to manage and update the web catalogue. “The software has a SQL Server based product data repository for managing our internal product content,” says Wiggins. “That’s images, text, configuration data, animations and even CAD files.” But the software isn’t completely integrated with Pirtek’s own back-office systems. The firm uses Sage’s Enterprise software for financials and procurement, but eventually wants to have this fully integrated with Reqio’s software. “This would mean our distributors would get a comprehensive ordering, fulfillment and payment service. And at the moment we have to quote standard delivery times to customers on the website – it’s not looking at our actual, live stock levels.” When asked about return on investment, Wiggins estimates that the payback will be just one year. “We spent about £100k on Reqio software, but we’re already seeing benefits,” he continues. “Our average invoice value before the online catalogue went live was about £100. Through the website it’s increased to £700. It’s all about having products in one place for the client to select and purchase. We’re selling complimentary products to customers now because they have it all in a single location. “We’ve reduced our incoming telephone enquiries by 50%. And customers don’t need to phone us with general technical queries now. These have been eliminated, they can get it all from the website now.” But for Wiggins, the real bonus has been the improved customer service level, which he admits is difficult to quantify. He cites an example: “For an investment of just £200, we’ve developed a “phone me” button on the catalogue. It’s a comfort factor for them,” he says. In fact, this inventive piece of technology was developed to enable a user who is unsure at any stage of the search-and-select process, to request help from one of Pirtek’s sales assistants over the phone. Users click the button, enter their details (including telephone number) then wait a few seconds for the Pirtek phone back to dial through to the phone on their desk! Clearly, manufacturers and their suppliers can all benefit from good content management and developing searchable e-catalogues. And while it may not mean thousands of new customers all start noticing your product immediately, it could mean your order processing function becomes a lot slicker and more cost effective than it used to be. But there are other reasons to adopt content management software. Perhaps your OEM customer wants you to provide your product catalogue in a certain format (eg Ariba, CommerceOne or SAP) for its online private (or public) trading exchange or for a procurement website. This alone will force, and has already forced, many manufacturing suppliers to invest in suitable product catalogue software. Who can help you through this pain barrier though? There are many software vendors to choose from: in the manufacturing sector, vendors such as Requisite, SAQQARA, CatalogA, TSI Powerdata, ActiveIntranet, Documentum and Aspect (now part of i2 Technologies) to name but a few. The real issue though is selecting a vendor that has real knowledge of the kind of products you’re selling. Are they complex manufactured items you want to include in your catalogue (ie rich product content) or simply stationery items, office supplies or volume spare parts? CatalogA, for example, assists suppliers by giving them a toolkit to manage their own product data internally for submission to websites. Vin Murria, md of CatalogA comments: “The problem for Internet trading exchanges thus far has been the lack of software support for the supply-side businesses. We’re helping manufacturers to create and maintain multiple online product catalogues.” No suppliers, no ROI She finishes with a strong message for OEMs considering online trading exchanges: “No suppliers, no content, therefore no e-commerce and no ROI.” Another up-and-coming software vendor, SAQQARA, whose motto is “you can’t buy what you can’t find,” also focuses on the manufacturing sector. It has about 80 corporate customers worldwide, 15 of them in Europe, but this client list is growing fast. It’s already helped companies like Honeywell, Alcatel, AMD, 3M, Lincoln Electric, ICI and GE with their content management needs. Sam Jacobs, alliances director Europe, says: “Our solutions start around the 100,000 Euros mark [£60,000] but we can provide help for SMEs too – we can host the site for them for a monthly fee.” There is however one aspect that connects all these vendors. They all readily support a standards body called the UNSPSC (Universal Products & Services Classification). This particular system, however, tends to be broad in its coverage of engineering parts rather than having real depth. At present it has a shallow hierarchy of four levels of engineering data. Problem is, it just isn’t enough to describe the more complex manufactured parts. Good news is there are alternatives out there. Findlay Publications’ FCS software can certainly help here: it has a greater depth of engineering data, some 15,000 classified parts and 12,000 UK suppliers. The strength of the UNSPSC standard though is its openness and wide acceptance. Roger Dean, European director of ECCMA (Electronic Commerce Code Management Association), a body set up to manage the UNSPSC, explains further: “Our codes are international, open and are created by a democratic process taking place over the Internet, ensuring that no dominant influence prevails.” RosettaNet, another standards body in the electronics sector, is a non-profit organisation (www.rosettanet.org) that’s seeking to implement standards for supply-chain transactions on the Internet. Vendors like SAQQARA and CatalogA support it and can cross-map suppliers data to this standard. This is another one to watch closely. Created in 1998, the group includes companies like American Express, Microsoft, Netscape and IBM, and is working to standardize labels for elements like product descriptions, part numbers, pricing data and inventory status. It hopes to implement many of its goals through XML, a mark-up language that lets programmers classify information with tags. Finally, some advice from industry analyst Forrester Research. In a report earlier this year entitled “Managing Content Hypergrowth” it urges companies to manage their product content with end users in mind. This means focussing on four key steps: identifying attributes so that content isn’t missed by users; defining content hierarchies (ie someone has to tell the search engine that a search for ‘hand tools’ should bring back ‘hammers and saws’); enforcing tagging when updating content; and creating feedback mechanisms for continuous improvement.