Efficient communications with your suppliers is critical to effective inventory control. So some marketers have taken to communicating with suppliers through an extranet, a private network that uses the Internet to securely share relevant company information or operations with suppliers, vendors, partners, customers, or other businesses.
Since launching its vendor extranet in October 2000, $11.6 billion cataloger/retailer Office Depot has been able to hold down its own inventory levels, as well of those of suppliers, says spokesperson Lauren Garvey.
“The vendor extranet provides suppliers with password-protected Internet access to monitor specific data, such as products specifications and company guidelines,” Garvey explains. “It streamlines the communication between Office Depot [which also mails the Viking Office Products catalogs] and our suppliers. By supplying our vendors with information electronically, we are ensuring that the information flows faster and more accurately.”
Delray Beach, FL-based Office Depot’s application development team designed the extranet inhouse. Before the extranet, Office Depot met with suppliers regularly to gave them inventory information.
Similarly, Dodgeville, WI-based Lands’ End Corporate Sales, the $140 million business-to-business arm of $1.3 billion apparel cataloger Lands’ End, is rolling out an extranet so that it can share inventory data with suppliers. (Lands’ End already offers extranets to corporate clients such as Merck Pharmaceuticals, enabling them to log on to their own password-protected Internet site, where they can order merchandise and check on inventory status.)
John Manzer, manager of e-commerce for Lands’ End Corporate Sales, says that the Lands’ End IT team has spent 1,500 hours working on its extranets so far. While he won’t disclose exactly how much Lands’ End is spending on the system, Manzer says that the cost is “in the six figures.” Lands’ End uses software from Ariba to support the extranets.
Manzer won’t say when the supplier extranet will go live. But in addition to exchanging inventory data with suppliers, Lands’ End may use it to share company product guidelines and specifications with its vendors.
Better for b-to-b?
B-to-b marketers like Office Depot and Lands’ End Corporate Sales are more likely than consumer catalogers to benefit from using extranets to communicate with vendors, says Bill Wilson, president of Boyerstown, PA-based DM Transportation Management Services, which manages the transportation of goods from suppliers to fulfillment centers.
Generally speaking, b-to-bers have from a much longer selling cycle than consumer marketers — a full year rather than just a season, Wilson says. That goes hand in hand with their having a more consistent product line, which can benefit from a sophisticated reordering capability.
In contrast, consumer catalogers may make one-shot purchases of fashions and gift merchandise depending on the season. “A consumer cataloger may have picked up 450 units of a special product at a trade show,” Wilson says, “and once they’re gone, that’s it.”
For now, most catalogers — b-to-b and consumer alike — still communicate with vendors by telephone or via e-mail regarding quantities and specification requirements. Wayne Teres, a Framingham, MA-based operations consultant, speculates, “The smaller players are waiting to see the benefits of extranets.”
Or perhaps some catalogers simply don’t want to make the up-front investment in an extranet right now. For instance, Gary Savage, purchasing manager for medical and surgical supplies marketer Moore Medical, says the New Britain, CT-based cataloger opted instead to install inventory management package E3 Trim to help it maintain balanced inventory levels among its four fulfillment centers.