IDEA Forum Focuses on Cost Savings

Sept. 13, 2002
Over 150 supporters of the Industry Data Warehouse (IDW) and IDX2 Exchange met in Pittsburgh at the IDEA Forum, Sept. 5-6, to learn more about these e-business

Over 150 supporters of the Industry Data Warehouse (IDW) and IDX2 Exchange met in Pittsburgh at the IDEA Forum, Sept. 5-6, to learn more about these e-business tools and to reflect on IDEA's accomplishments over the past year.

The Rosslyn, Va.-based IDEA, now four years old, has had a busy year. The company has added 11 new manufacturers into the IDW since April, and is now in the process of adding 18 more vendors. Over 30 more manufacturers are “in the queue,” and will be loaded into the IDW in the near future, said Mike Rioux, IDEA's president.

He also said the IDW now has over 1.3 million stock-keeping units (SKUs) in its database, and that 53 manufacturers are providing 68 percent of the data with direct electronic feeds. I2/Trade Service, San Diego, provides the remaining 35 percent of the vendors' product records in IDW.

During the past year, IDEA also terminated its agreement with WorldCom, which had operated the IDX electronic communications network, and inked a new deal with CCITriad, Livermore, Calif., to manage the IDX network. CCITriad, which has managed IDEA's IDW since its inception, upgraded the network, now called “IDX2.”

Despite all the changes this year for IDEA, its core mission remains the same since its inception in March 1998 — to give manufacturers the ability to update, maintain and control their own product data in a centralized industry electronic depot (the IDW); eliminate the data errors that often come with manual order entry; and offer members a dependable, low-cost electronic communications network (IDX2). While IDX2 has documented real-world savings over value-added networks (VANs), Rioux said at the meeting, “The value is the data in the IDW. The IDX is a bonus.”

Along with signing a new agreement with CCITriad for the IDX2 and ending its tumultuous relationship with WorldCom, IDEA also got a cash infusion from members earlier this year and a boost from an industry heavyweight. At this year's NAED Annual, Bob Reynolds, president, Graybar Electric Co., St. Louis, told electrical manufacturers that he expected them to provide their data through the IDW.

With these pieces in place, Rioux is now focusing on a major recruitment drive. The key driver in their strategy to get more companies to join IDEA and fully utilize the IDW and IDX2 is to document IDEA's proven cost savings. A recent survey of IDEA members by the Business Information Services (BIS) department of the National Electrical Manufacturers Association (NEMA) produced some findings that would seem to do just that.

In the BIS/NEMA survey, Dr. Brian Kropp, BIS' director, collected data from 30 IDEA manufacturers and 19 IDEA distributors on the cost savings that they have achieved with the IDW and IDX2. Two of the key findings were in the areas of the fixed processing costs per order, and the comparative error rates of the different data format for handling orders. According to the study, the processing cost of handling an order through the IDW was about 50 cents per order, compared to over $2.50 per order, for those handled by paper or fax.

Using the IDW also apparently cut down on order errors for respondents, who said less than 2 percent of the orders they placed through the IDW had errors, while over 10 percent of the orders sent or received by paper or fax had errors.

The BIS survey respondents also said incorrect pricing was the most common error in orders, followed by incorrect catalogs, invalid descriptions and incorrect UPC codes.

For more manufacturers and distributors to take advantage of IDEA's ability to slash data-error rates and cut the costs of handling orders, they will have to stop seeing electronic commerce as a separate discipline in their businesses, said Bob Ciurczak, director of e-commerce, Square D Co., Palatine, Ill.

“It's not e-business anymore,” he said. “It's just business. The ‘e’ will go away.”