PWS' e-commerce project pays back in one year

When presenting to customers most are left speechless about the power and information that the system now places in their control.” So says Kevin Gay, marketing manager for PWS Distributors. He’s actually talking about the initial phase of his firm’s recent e-commerce project with IT consultant Ironside Technologies. As part of its website, PWS now has a web commerce area, TradeZone, that lets customers place orders direct over the web, view their order status and check their account details. It’s relatively simple stuff, but it’s working extremely well. Established 25 years ago, PWS has 140 employees in all and is based in Newton-Aycliffe near Durham. The company supplies components for the manufacture, assembly and installation of kitchens (trade supply not consumer retail). It handles everything from sinks, taps and flooring to doors, hinges and decorative fittings. In fact there are 6,500 inventory lines in all to cope with, and more than 3,500 customers. The firm operates from one site and concentrates its sales on the UK and Ireland, and Gay says he expects to turn over £35 million this year. But the Internet means different things to different companies. For PWS, two years ago, it meant having a website that simply supported the product sales catalogue. Like many other businesses there was no website strategy at all to begin with. “A few of us got together and wrote a white paper for internal circulation really. We knew there was a lot of hype out there two years ago, but we felt we had to do something to improve our website and service to customers,” explains Gay. “What we decided to do was open up another trading channel over the web, but also share information with customers about order status, technical data, accounts information and the like.” PWS also carried out a survey of its customer base in 1999 to test whether it was ready for web trading. “The results were mixed,” says Gay. “Some were ready, some weren’t. Some even gave us positive answers in the survey but have since failed to use the system at all.” But the company decided to press on with the project and started to look for a suitable software vendor. Gay and a work colleague visited several IT exhibitions and trade shows but found a common problem. Gay explains: “We were surprised to find that most vendors at the time [1999] were not able to offer us a true B2B [business to business] solution. They couldn’t offer us a system that would leverage our current business systems [ERP] that we were quite happy with.” PWS has an ERP (enterprise resource planning) system from JBA (now Geac), System21, that pretty much runs its entire business. “We looked at JBA initially, but felt they were too focussed on ERP systems rather than e-commerce software. So we went for best of breed in the end, Ironside’s IronWorks software, that was already configured to integrate with System21,” he explains. Live in seven months PWS first met Ironside in November 1999, and signed a contract in March 2000. Within seven months the software went live, in time for one of PWS’ trade shows. And it didn’t cost an arm and a leg to implement. Indeed, according to Gay it’s already (after almost one year of going live) paid for itself. “We spent about £140k on software and training, another £20k on infrastructure and hardware [a web server, new firewall and an ISDN line].” TradeZone links directly into the heart of PWS’ business. With id and password protection, customers have access to live information about products, technical details, manufacturing specification sheets, prices and discounts, stock availability and order status. They can also read new product announcements, view links to complimentary products and even create quotations. “Of our 3,500 clients, 650 are using TradeZone already. But we’re being realistic. We don’t expect to suddenly get lots of new customers over the web. To start with, we’ve concentrated on making our ordering process more efficient, and to an extent, we’ve already made good progress here. “And providing another means of conversing and transacting with us suits many of our customers but doesn’t detract from our existing operations. Indeed it enhances them by freeing up our sales admin staff and allowing more attention to be paid to traditional methods of ordering, such as the telephone.” PWS normally takes about 600 orders each day over the telephone. Gay estimates that this was costing the firm £2.50 per order: that’s about £300k per year. But he expects to get at least half his customers ordering over the web in the next year or so. “We’re already saving £2.45 for every order we receive over the Internet,” explains Gay. The sums really make sense. If PWS only reaches 300 orders per day over the web, that’s still an annual saving of £180,000, enough to cover the cost of the project. But there must have been problems implementing the software? “There was a bit of customising to do between the ERP and IronWorks software. The Ironside adapters coped with 90% of the issues I suppose. The real issues were about translating the business processes, ie what we do on a daily basis, into the e-commerce software. We had to spend some time re-thinking our carriage prices over the web. We had to develop pricing algorithms before we could go live with the software, then beta test them with five of our clients.” And Gay has got plenty of advice for other companies looking to take similar steps into e-commerce. “There’s lots of internal people issues to deal with. I would say companies need to make sure they educate and keep their employees fully aware of what’s coming. You also need to think about business processes carefully before selecting software. And don’t rely completely on consultants: you have to push them into the areas you want to go.”