E-FILES: E-comm exposes infrastructure

Exposure to the outside world is old hat for international engineering/industrial supplies company, Blackwood Group.

http://www.blackwoods.co.nz

Exposure to the outside world is old hat for international engineering/industrial supplies company, Blackwood Group.

"Been there, done that" is the response of New Zealand manager Dan Carman, when asked about how e-business has left companies uncovered as they open up their infrastructure to both suppliers and customers.

Carman says Blackwood Group started down this road 15 years ago when it realised strategic alliance partnerships were the way of the future.

"It's all about integrated supply, supply chain management and total system cost management. For us we've had open relationships with our selected partner customers for over 10 years."

It was over a decade ago that Blackwood Group decided to change the way it treated its customers and rationalised the process.

"It changed the relationship from the customer beating the supplier over the head with a stick to sitting down and working out our common objectives - streamlining supply; reducing costs and adding value so that we both win.

E-business is simply another facet of this, says Carman. "E-business assists with the objectives of vendor rationalisation, inventory rationalisation and reduction and process streamlining. But e-business is just one of the tools we use."

Carman says if the company hadn't gone down this path some years earlier, the prospect of opening up the processes now would have been problematic. The new culture of procurement, which e-business facilitates, is a totally different culture to the old "ordering and purchasing" practice of the past.

Even a cursory look at the Blackwood Group business demonstrates why opening up the procurement process was a logical step. J Blackwood and Son was founded back in the 20th Century but has a 21st century profile now. The Smithfield, New South Wales-based company has a $800 million turnover selling engineering, industrial, electrical, safety, power transmission products and metals and bearings internationally.

Founded in Sydney in 1878 it has been in New Zealand since 1993 and has four sites around New Zealand employing 130 staff.

Its Web site hosts 300,000 products and 15% of business is received via e-commerce. A customer such as BHP can place between 300 and 400 orders a day while another may just want a single cordless drill.

Carman says starting the process of change was a daunting prospect. "It was a quantum leap from how we'd been doing business for 70 to 80 years."

He says part of the process is educating the customer."A guy at the coalface might not see the benefit of this kind of strategy to the whole company. But it's no longer about the individual price of a hammer or spanner - it's about the total cost of procurement."He, for instance, might think he's doing the company a favour by ringing round suppliers, finding a hammer four cents cheaper, raising an individual purchase order on a vendor and going out and picking it up. He may have saved four cents but it could mean the company has to spent $150 in total cost because it hasn't got the right relationship with its selected partner vendors."

Internet based procurement at Blackwood Group sees customers place orders directly online with the aid of an account number and login. Orders are integrated straight into the mainframe and the first Blackwood's sees of them is as picking slips in the store.

There's also a CD-ROM catalogue for individual PCs and intranet sites which can be customised with part numbers and pricing.

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