This past October, bestroute.com President and Founder Michael J. Gambino participated in a panel discussion entitled "Leveraging the Internet to Streamline and Improve your MRO Purchasing Power," offered at the International Manufacturing Enterprising Technology (IMET) Expo by Penton Publishing.
The panel moderator was Lura Romei, Associate Editor of New Equipment Digest. Excerpts from Gambino's comments are presented here.
Q: (Romei): What do you... see as the weaknesses in MRO (maintenance repair and operating) procurement today? Do you see any weaknesses?
 bestroute.com's Louisville, Ky., distribution center. |
A:(Gambino): I think the weakness I've seen over the years in working with facilities is that... whether it's a national agreement or an integrated supply deal, many times the call and the decision are made at an upper level but the facilities haven't [completely] bought into how to operate, how to maneuver with that decision... the autonomy is still there, and in many ways needs to be, to keep the facilities going.
So, one of the weaknesses that I think I see is that if we go out with the plethora of Internet solutions, and there are hundreds and hundreds of different value propositions being thrown at you, it'll be hard to see what your corporation might buy into, and then, to circulate that into your facilities, and get proper buy-in, and whether it makes sense at the facility level.
Another thing is... if you see a value proposition out there, and if during a 13-floor elevator ride that value proposition couldn't be crystallized for you clearly by somebody, toss it off to the side... And there are some that, even though I live and breathe on the Internet every day, I simply can't grasp... if it's that complicated, it probably doesn't have that much chance of success. You should be able to do something faster, quicker, easier or solve a problem with the technology. If you can't, just let it go by the wayside.
Q:Okay... what tips can you share with us for making online procurement work the very best that it can? What do people do wrong that makes bottlenecks in the procedures?
A:I think one thing to think about... is how many of your companies are letting you really use the Internet and learn about the Internet? It's a tool that's worthwhile using... but it's being used inefficiently in some places and is getting a bad rap. [In many companies,] they're not letting their associates, their employees utilize it. And so, I guess what I'm saying is that, number one, do everything you can from a facilities standpoint to control Internet use and position it correctly, whether it's from purchasing, engineering and so on... to show that the tool has value for you, because it does.
[That being said,] hopefully there's also a way to do business with us Internet companies if you don't have access to the Internet. As an example, we take phone orders,... because if we pick a marketplace that's so huge and try to make it so small by making technology so complicated that we leave the marketplace behind, that would be bad.
Q:The procurement landscape is changing and consolidating, changing the focus... Where's it going? What are we buying?
A:The two things that I'd mention are, number one, as you begin to look at things on the Internet that might impact something internally, do your homework, do your due diligence, just like you would normally do. It's a process change. There's an awful lot spoken out there about how maybe three out of a hundred pure Internet companies might be standing a year from now... so there's going to be an awful lot of winnowing out... and value propositions that aren't going to take. So, do your due diligence, because to change any process within a company, it's got to be extremely well-funded...
And two, there is going to be an awful lot of combining, and it might show where the value proposition is strong. As an example, bestroute.com is a year-old company. We stock millions of dollars worth of goods. Our original partner is Hughes Supply, which is a three billion dollar plus distributor of electrical PVF, HVAC, plumbing around the country — and that's why we originally went to them vs. venture capital to support our efforts. Well, we became a subsidiary only recently... so there's a long-term future for some Internet entities who can team with longstanding companies who really know how to move product.
Q: Any case histories or success stories?
A: Recently, we got a call at 11:15 at night, not on the Internet, but through our people who are on pagers full-time... This customer needed unusual Burndy connectors to finish up a power plant job the next morning. We looked at our real-time inventory via the Internet, had a good supply of them in stock, the customer decided he wanted it shipped to arrive Sonic Air, and the connectors arrived at 5:00 a.m.
Now, those connectors represented $300 worth of material — sounds like very little — but not having that plant up on schedule would have cost a lot more money than $300 worth of Burndy connectors. A very simple story, but one that makes a ton of sense. And that one came through another distributor, another distributor who had the link out there personally and the supplier relationship to Burndy, but who also knew about our stock of tougher-to-source Burndy items. That's the type of thing that goes on every day all over the country.
MICHAEL J. GAMBINO is President and Founder, bestroute.com, 5790 Widewaters Pkwy., DeWitt, NY 13214; (877) 997-6883; Fax: (315) 449-4591; Web site: www.bestroute.com.
