RICHMOND, VA. (02/07/2000) - Weidmuller's warehouse on the outskirts of Richmond is packed neatly to the ceiling with row after row of the manufacturer's terminal-block connectors, wiring gadgetry that goes into everything from washing machines to industrial-control equipment.
Last month, Weidmuller went live with a business-to-business e-commerce Web site that is changing how its wiring products get sold and shipped.
Before the e-commerce era arrived at Weidmuller, customer service representatives were back and forth on the phone with dozens of distributors, checking on shipment dates or the availability of parts. Sorting through faxed purchase orders, the sales representatives had to input purchase data into Weidmuller's enterprise resource planning (ERP) system.
The old style of customer management is giving way to Web-based commerce that lets Weidmuller's distributors buy from an online catalog listing the 10,000 electronic parts the firm sells in the U.S. The catalog is housed in an Oracle database that can be accessed over the Web and searched with the Saqqara StepSearch search engine.
Weidmuller's distributors can now tally purchases online based on prenegotiated, customer-specific prices. And distributors no longer have to call customer service representatives to check the shipping status of orders - that information is now available on the Web.
With its global headquarters in Detmold, Germany, and its U.S. office and warehouse in Virginia, Weidmuller generates about $550 million per year in revenue, one-sixth of it originating in the U.S.
Weidmuller competes against firms including Allan-Bradley, The Rockwell Group and Wage. Many of these firms have had Web-based catalogs up for more than a year, and it is not uncommon for the sites to give Web visitors automated technical comparisons of electronics parts from different vendors. Weidmuller uses CrossWare's cross-reference tool in conjunction with a Microsoft database.
Technical staff keeps these comparison spreadsheets up to date.
But among the firm's competitors, Weidmuller is the first to go beyond electronic catalog display and comparison and actually sell products online.
"There are multiple manufacturers making these terminal-block connectors, and the differences get less and less as they become more of a commodity," says Frederik Wenzel, chief financial officer at Weidmuller's U.S. headquarters. "So how do you differentiate yourself? Through customer service - and e-commerce can do that."
Although his CFO title makes him Weidmuller's official bean counter, Wenzel's engineering background has prepared him to understand the nuts and bolts of networking and the Web.
"With e-commerce, we can automate the key-entry function so there are fewer opportunities for error," he notes. "We as a company have to do everything and anything to be ready for e-commerce."
More than a year ago, Wenzel got senior management and IT staff behind the idea. Based on the enthusiasm the firm saw in its American division, Weidmuller headquarters in Germany gave the U.S. operation the go-ahead to be the first of its divisions to get into e-commerce. But the project had to be funded out of the U.S. division's profits. And while Wenzel and his IT team won't disclose exact cost figures, they don't argue that e-commerce for them is clearly a million-dollar baby.
It's a gamble Weidmuller believes will pay off down the road in productivity gains. The move is also a step the firm feels it must take to do business with distributors in a new way.
To start, Weidmuller made the decision to use J.D. Edwards' ERP software, running on an IBM AS/400, as the main repository for commerce data.
An alternative would have been duplicating database information for access over the Web, but "that's not real-time," Wenzel says. "We wanted a live interface with the system for the front end to communicate with."
J.D. Edwards' OneWorld software on the AS/400, accessed over Weidmuller's NetWare LAN, stores the terminal-block product and shipment information, and customers' pricing terms, credit limit and buying history. The system gets backed up continuously.
Weidmuller's Web development manager for the project, Anthony Pollock, says the J.D. Edwards manufacturing, logistics and financial software provides the features Weidmuller needs. Plus, the software maker has available scripted code for extending access to the Web.
Weidmuller's e-commerce technical strategy has been to give distributors a controlled view over the Web into the J.D. Edwards back-end system, letting them enter orders and check shipments, but restricting the distributors from seeing information about others.
"We limit what they can see internally," Wenzel says. The gatekeeper role is played by an Ironside Technologies Java-based software server that restricts what the distributor can do after authenticating his identity at the Weidmuller.com site. The gatekeeper also acts like an application server sitting between J.D. Edwards' back-end system and a Microsoft Internet Information Server users access from browsers.
After the distributor proves his identity through encrypted password and identification, Ironside's World Access Server downloads a 24K-byte Java applet to the distributor's Java browser. This applet lets each distributor make use of the sophisticated features of the J.D. Edwards software, such as inventing queries. "Our 200 distributors now have access to this," Pollock says.
Wenzel says when distributors first hear about e-commerce, "they have a heart attack, thinking you're cutting them out of business." While some of Weidmuller's U.S. business already comes from selling directly to big manufacturing customers rather than distributors, the firm is striving to allay the anxieties of the distributors. Weidmuller is focusing its first e-commerce efforts on its distributors, not the big customers that buy wiring components directly.
"But the key is to partner with the right distributors," Wenzel says. This means the ones willing to not only do business over the Internet but perhaps go further to automate the supply-chain process.
Wenzel is so convinced online commerce will make the process more efficient that the manufacturer is offering a 2 percent rebate on all orders placed at Weidmuller's Web site this year.
He seems to have no illusions about all sales moving to an e-commerce model overnight. "But we're ready to favor distributors doing e-commerce," Wenzel says.