News

American Fastener Journal, September 2007

There was a time when sourcing between one distributor and another required several lengthy phone calls and a lot of back and forth about price and availability. Meanwhile, the customer waited hours -- or even days -- to find out if they could get the product they requested. This scenario not only lacked efficiency, but also did little in the way of providing value to customers. Enter Internet trading networks.

Internet Trading Networks Defined

Internet trading networks enable groups of distributors to source product from one another with minimal disruption to their daily routine and at speeds customers can appreciate.

The concept is fairly simple. Rather than pick up the phone and call trading partners, distributors can log into a secure Web site to check price and availability. They can even place the order and have it direct shipped to the customer. Best of all, of this can be done in a few minutes.

Answering the Item Code Dilemma

One of the problems with early trading networks is that to be effective, distributors had to use the same item codes -- something most distributors loath. Advanced Internet trading networks use a rationalized catalogue to allow distributors to maintain their own item codes.

For example, two distributors sell the same flat-head screwdriver by Manufacturer X. Distributor A uses item code slotdriverx, while Distributor B calls it X-driver-flat. Rather than change their item codes, and the rationale behind them, when joining an Internet trading network, both distributors can have their inventory rationalized against the network's database. Now if Distributor A types in a search for slotdriverx, the network will know that it is the same product as X-driver-flat from Distributor B and neither distributor will ever know the other's item code.

Advanced Internet trading networks offer a catalogue of tens of millions of items, making it easy for distributors to rationalize their inventory.

Making Friends

One thing that often prevents distributors from joining an Internet trading network is the fear that they will lose control over who can see their inventory. A well-managed network eliminates this concern by allowing distributors to set rules and establish trading partnerships.

Advanced Internet trading networks allow distributors to determine who can see their inventory, how much inventory they want to show, and at what price -- and vary the parameters from trading partner to trading partner. This way a distributor can block a competitor from accessing of his or her information while allowing someone else limited use.

This setting up of partnerships enables distributors to expand their offerings without adding additional warehouse space. For instance, a partnership with a janitorial distributor would enable an industrial distributor to offer his customers cleaning supplies without the worry of storing chemicals. Conversely, the janitorial distributor could benefit from offering his customers toolboxes that could be kitted by the industrial distributor.

Dumping Dead Stock

Perhaps the most valuable use of Internet trading networks is the reduction of slow-moving, or dead, stock.

Built on the premise that one man's trash is another's treasure, what one distributor can no longer sell might be very valuable to another.

Using the same rules established for trading partners, selling dead stock on the network benefits both the seller and the buyer. The seller frees up precious warehouse space and reduces carrying costs while the buyer gets product he needs at a discounted price.

Individual or Group Membership

Distributors can join Internet trading networks either as individuals or as part of a buying group or association. Both have merit.

Internet trading networks that are open to individual distributors provide the potential for cross-industry partnerships and give distributors a broader range of choices from which to source product.

Group-sponsored Internet trading networks ensure that every member is a trusted partner and that someone will have the exact item you are looking for.

Whether you join an Internet trading network as an individual or part of a group, you can be assured that membership will benefit your inventory, your customers, and ultimately, your bottom line.

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