Where partners meet
Channel management solutions strengthen external relations for Kawasaki, Fasteners West
By Karen Abramic Dilger, Contributing Editor -- Manufacturing Business Technology, 10/1/2001 12:00:00 AM
Managers at Fasteners West, a Santa Ana, Calif.-based distributor of fastening products, say they've made a big stride via the Internet. By taking part in a channel management network, they've gotten closer to their customers by getting closer to one of their key suppliers.
The supplier—Emhart Fastening Teknologies, a New Haven, Conn.-based manufacturer of assembly technology solutions and installation equipment—launched a Web-based network that allows Fasteners West to give end-customers detailed information about Emhart products, such as wire thread inserts. The network features a branded Web site for each distributor, an on-line product catalog with parametric-search capability, and other pre-sales functions that facilitate partner collaboration.
"We use the system to familiarize ourselves with products that will enable us to quickly and easily answer detailed technical questions from our customers," says Bill Butler, sales manager for Fasteners West. "Now we can talk intelligently with customers about additional tooling that may be required to install certain inserts. Also, since many customers don't know exactly what they need, they can access the site to identify products. They also can obtain part numbers and download technical documents or CAD drawings in the format their systems require."
The Web-based channel management system is powered by SmartLink, an e-commerce solution from I-Mark, Hartford, Conn. I-Mark offers sell- and buy-side applications, and specializes in servicing B2B manufacturers and their distributors. Some analysts refer to such systems as partner relationship management (PRM) solutions. Just as customer relationship management (CRM) systems address interactions with end-customers, PRM systems fulfill the needs of channel members.
PRM systems are an evolution of sell-side e-commerce solutions, but they involve much more than Web-based order management. Understanding the complexities of what constitutes PRM—as well as PRM's relationship to systems such as CRM—is important when trying to grasp the efficiencies these solutions can bring to manufacturers and their channels.
Why PRM?
It not only is realistic to extend pre-sales, sales, marketing, and service applications across the channel, but lucrative as well. In the high-tech industry, for example, the majority of revenues is generated through the channel, comprising nearly 70 percent of sales for many vendors, according to statistics from Aberdeen Group, a Boston-based information technology (IT) research firm. "If suppliers wish to retain partners and increase channel efficiencies, they need to provide increased service levels, from timely lead distribution to ongoing training and support," says Karen Smith, a senior analyst for Aberdeen. "Suppliers also need greater visibility into partner operations, and a better understanding of channel initiatives."
Companies implementing PRM systems should be prepared to face some resistance from partners who are averse to learning new systems or metrics, says Smith. "Partners already using a PRM system deployed by one supplier begrudge having to learn three or four different solutions to interact with each organization," she says. "Therefore, manufacturers must quickly demonstrate the system's business benefits to channel partners and make considerable efforts to aid application adoption."
According to Smith, PRM benefits include increased partner loyalty; improved tracking of lead generation programs and marketing funds; automation of labor-intensive administration tasks; forecasts and tools to ensure correct product configuration; and higher customer-service levels.
Core components
While vendors tend to focus on one or two key areas, PRM modules generally fall into the following categories: partner administration, lead distribution, channel compensation and forecasting, content/program management, reporting and analysis, training and knowledge repository, and market development funds management. Most solutions focus on pre-sales functions, although some suppliers are developing or acquiring aftermarket service functionality, such as warranty registration and returns tracking.
Channel management requires centralized order management, while simultaneously maintaining separate views for each partner. Manufacturers commonly install one central database for storing product data, pricing, and marketing program information, but personalize each view with partner-specific data, says Mike Morgan, a company vice president for fourthchannel, Columbus, Ohio, which offers sell-side e-commerce applications, including interactive selling features for quoting and configuration.
"Each partner has different price schedules and may use their own product terminology," says Morgan. "Our system's wizards allow users to configure rules that recognize a specific distributor entering the site, giving access to only the product lines they carry." Distributors also can set up a separate profile for end customers who bypass the manufacturer's B2B site and come directly to the distributor site for a branded view.
Since one company can play numerous roles in a network, fourthchannel's system is able to distinguish between these roles. For example, an order may include a note that indicates a manufacturer handles fulfillment tasks, while a distributor manages after-sales service.
"With PRM, manufacturers can add value to the channel by helping their partners put together quotes quickly, and getting configuration orders right the first time," says Morgan. "From the distributor standpoint, they have 24-hour access to the network, which eliminates frequent delays in responding to customers."
Channel buy-in
PRM's centralized order management makes it easier for users to monitor channel activity. "It is important to have one point of contact to service customers, particularly since many manufacturers have multiple production sites, and distributors offer fulfillment from various locations," says Mike Lackey, a senior director for Atlanta-based NetVendor. NetVendor specializes in sell-side order management functionality and sales process support, offering modules in catalog, configuration, and collaboration management.
Manufacturers may have to develop profit incentives for distributors to take part in a PRM implementation. "A supplier may offer marketing dollars to a distributor or reseller if they push more of the supplier's products," says Lackey. "Or, they could reward partners with discounts using a point system. However, suppliers must remember to follow up on their programs by tracking and evaluating partners. Manufacturers should ensure partners are not fulfilling leads with a competitive product."
Since implementing its B2B Web site in April, 2000, Kawasaki, Irvine, Calif., has attracted 1,150 participating dealers. The company's main business objective is to increase aftermarket accessory sales, including clothing, jackets, hard goods, or any other complementary item to motorcycles. "We knew from industry reports that we weren't getting the accessory revenue we should, but, along with that, we also wanted to support additional and repeat vehicle sales," says Roger Peterson, vice president of information systems for Kawasaki.
Unlike vehicles, accessories typically do not require complex preparation and setup and are commodity-priced. "Selling accessory items on-line not only is feasible, but gives our dealers a chance to forge ongoing relationships with new customers," says Peterson. "Our goals for the site are A for advertisement, B for branding and browsing, C for convenience, and D for dealer referrals. Since dealers represent our primary retail avenue, we want to reward them for sales."
On the network, end-customers choose a dealership to support the sale, and Kawasaki rewards the dealer with 60 percent of the difference between manufacturer-suggested retail price and dealer cost on every accessory sale. "The supporting dealer has no overhead costs, no additional marketing cost, and the benefit of being open for business 24 hours a day," says Peterson.
Kawasaki is responsible for inventory control, stocking, and fulfillment. The company maintains a 16,000-item product catalog, but dealers do not stock all available accessories. Customers use the accessory and repair parts catalog to view diagrams and identify part numbers for products. Dealers sign on to the B2B site with a user ID and password, and are presented with their own version of the catalog—which includes wholesale pricing—for viewing spare parts availability, and purchasing parts.
Although Kawasaki has seen a slight increase in total accessory sales, there is no way to determine how many sales are actually created at the dealerships' retail locations. "Although our Web-site traffic is low, our e-commerce sales have doubled this year versus last year, and sales to dealerships are moving ahead of last year," says Morgan. "Measuring ROI [return-on-investment] is difficult since we aren't able to accurately measure in-store sales of accessories or vehicles resulting from Web-site browsing. But we know these occur based on occasional feedback from consumers and dealers."
Working with CRM
The Kawasaki network is powered by software from Chicago-based Click Commerce, a PRM vendor whose solution includes pre- and post-sales functions. Relationship Manager, the company's base product, stores all contact data, profiles, and priorities as it serves as the core solution from which additional applications reside. "The system stores attributes of each relationship and details partner restrictions and allowances, such as deciding who can talk to whom, buy from whom, and fulfill from which locations," says Sarah O'Donnell, senior director of product development for Click Commerce.
Relationship Manager can run standalone, but typically is integrated with CRM or enterprise resources planning (ERP) systems. Click Commerce views PRM as a subset of CRM, but also sees a blurring of the lines between the types of systems. "Some companies combine functionality from both systems by using a CRM application for first-tier partners, and deploying a PRM system for downstream partners," says O'Donnell.
O'Donnell, who notes that Click Commerce's solutions include packaged integration points and additional enterprise application integration tools, says integration between PRM and CRM is important for those who want visibility into lead management, particularly when delegating new leads to appropriate partners.
Other more tactical reasons for integration between CRM and PRM may exist. "CRM files would need to be accessed for warranty requests or returns for damaged goods," O'Donnell says. "Notes would be made in the CRM system's customer record that product was damaged, and the PRM system would handle return-transaction processing."
Although PRM and CRM systems target two different user communities, they still share some similar functions and goals, including reduced administrative tasks, automated interactions, and service-level improvements. Many PRM systems build on the backbone of CRM applications—particularly rules engine, content directory, and knowledge-base capabilities—and add partner-specific features and functions.
The use of multiple systems for similar functions can lead to data becoming out-of-sync, says Scott Pulsipher, director of business solutions for Yantra, a Boston-based vendor of commerce management software, "If one partner is responsible for prospect generation, and another channel member actually takes the order, and a third performs fulfillment, who's customer should it be?" he says.
To support its B2B hub, Eastman Chemical Co., Kingsport, Tenn., is implementing Yantra's multi-enterprise order and inventory management applications to Web-enable its trading network and extend its market globally. Distributors are responsible for Eastman's smaller customers and orders, and for such tasks as break bulk and fulfillment, while larger volumes tend to be sold directly to customers. "We are evaluating our CRM processes to ensure we are getting value," says David Holden, manager of e-commerce applications and services. "Some of our partners may be able to take advantage of the lead generation, channel compensation, and promotions evaluations that Yantra's system offers."
PRM's impact
In the past, interactions with channel partners relied heavily on phone and fax communication, with little integration between partners' systems. However, with the emergence of PRM systems, manufacturers and their channels now have a Web-based means for collaboration, and automation of shared business processes. Integration between CRM and PRM systems, as well as analytical tools that evaluate data from customer-facing systems, may be the next steps in creating even more tightly knit channels.
| For more info: | ||
| ChannelWave www.channelwave.com |
Click Commerce www.clickplanet.com |
Cognos www.cognos.com |
| E.piphany www.epiphany.com |
fourthchannel www.fourthchannel.com |
i-Mark www.i-markinc.com |
| NetVendor www.netvendor.com |
Yantra www.yantra.com |
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