Bringing the Benefits of e-Business to Suppliers

REDMOND, Wash., Nov. 6, 2001 — Like many companies, Wilson Supply made its product information available to customers online. Until recently, however, customers went offline to purchase their products.

Wilson, a US$1.1 billion company, offers some 88,000 maintenance, repair and operations (MRO) items for petroleum, refining and industrial customers in 66 countries. Mark Chellis, Wilson’s vice president of e-Business, said customer inquiries from the online catalog were often taken by phone or by fax. Orders had to be manually entered into Wilson’s enterprise resource planning (ERP) system for processing and fulfillment. The administrative burden this put on the sales force kept productivity down.

“We wanted to provide our customers with the ability to place orders and get information without calling,” Chellis said. “This would reduce transaction costs and free up our local representatives to sell more products by allowing them to focus on those activities that add greater value for our customers.”

This burden, and its accompanying inefficiencies, led Wilson and Microsoft to cooperate a year ago on a supplier-focused e-business initiative. This initiative led to the creation of the Microsoft Solution for Supplier Enablement, a flexible integration of servers and applications that allows suppliers to sell effectively through multiple online channels. Built on the Microsoft .NET Enterprise Servers, the system enables suppliers to link and automate their order processing and fulfillment to customers using any technology platform or application, making the supply/procurement process much more interactive and streamlined.

Robert Hylton, lead solution manager for Microsoft’s .NET Enterprise Solutions Group, said the Microsoft Solution for Supplier Enablement has two primary objectives. “Firstly, we want to empower the supplier, which means providing the tools suppliers need to show customers not just part numbers and prices, but the products’ true capabilities and competitive advantages,” he said. “Secondly, we want to enable suppliers of all sizes, solving business problems no matter how big or small the company, and seamlessly scale as companies grow and their technology needs become more complex.”

Results from the initiative’s first year show significant benefits for both the supplier and its customers. Chellis said Wilson expects cost per transaction to drop as much as 20 percent. And exchanging order information directly between Wilson and its customers’ ERP systems means the customer’s costs are reduced as well.

“Customers really like the ERP-to-ERP connection via BizTalk 2000, along with our Web site, which enables them to immediately get the information they need at any time,” Chellis said. “These capabilities allow us to actually help customers and suppliers reduce costs, which in turn helps Wilson to win even more new business. I’ve been meeting with potential customers a lot lately — they’ve been excited by our ability to help them reduce costs, and have shown a real eagerness to give us their business.”

E-commerce Often Overlooks Suppliers

The fact that many companies put their sales teams through such administrative toil is a quirk in the evolution of online business-to-business (B2B) buying and selling. As long as there has been B2B e-commerce, virtually all systems and applications designed for the purpose — including e-procurement and marketplaces — were built primarily to address the buyer’s objectives in electronic purchasing.

Yet in Microsoft’s discussions last year about e-business systems with Wilson and 1,800 other supplier businesses, the feedback was that very few systems took the supplier’s viewpoint, much less provided them with measurable benefits. Hylton said suppliers’ needs simply are not met by buyer-oriented technologies.

“What it boiled down to was that suppliers have unique objectives and challenges, and they’re almost always different than their business customers,” Hylton said. “For one, the suppliers’ objectives center on how they can sell more effectively and at a lower cost, rather than how they can streamline the purchasing process. This includes improving the ways they make their products and services available and how they take orders electronically. Second, they want to be able to differentiate those offerings and their company throughout the entire process. Third, they want to achieve these benefits by leveraging their existing technology investments, such as ERP, customer relationship management (CRM), and supply chain applications, rather than having to replace them. Lastly, all suppliers needed the ability to achieve these objectives with multiple customers from the same application, realizing that they had little control over the technologies that each customer uses.

“We were told over and over that nobody out there was making a system that delivered on these requirements,” Hylton said. “Even most ‘supplier enablement solutions’ still take the position of just helping buyers get more suppliers connected to their systems, rather than offering suppliers the ability to sell more effectively electronically. Even buyers often profess their need to have ‘great’ suppliers to achieve their purchasing objectives, not just ‘connected’ ones.”

The online business-to-business market has grown significantly, with the Gartner Group reporting that transactions totaled $433 billion in 2000, almost double the total in 1999. This boom is despite the fact that half of the participants — the suppliers — were given the short end of the technological stick. And according to Hylton, the more companies Microsoft spoke to, the clearer it was that Microsoft could help suppliers and boost those numbers higher.

“A lot of what suppliers said they needed were sales and integration features,” he said. “We realized that we could already provide many of these features through our .NET Enterprise Servers. Then we tied it all together with some additional supplier-centric functionality, thereby creating a single solution that very strongly addresses the unique needs suppliers said they had. Plus, it’s faster and more effective for suppliers to implement a single solution designed to do what they need, rather than see if they can get the same functionality from a collection of parts.”

The result was the Microsoft Solution for Supplier Enablement, a combination of several Microsoft server products — BizTalk Server 2000, Commerce Server 2000, SQL Server 2000, and the BizTalk Accelerator for Suppliers — plus supplier-focused functionality and guidance, and end-to-end customer support. It interconnects the myriad elements of a supplier’s existing internal systems, and allows a business to create and manage custom catalogs, with custom products and pricing for each customer. It provides the ability to manage electronic relationships with multiple customers, a fully automated order management system, and more.

The solution includes pre-built integration with major procurement and marketplace standards including cXML (Ariba, Clarus, VerticalNet, etc.) and xCBL (Commerce One, SAP, etc.). Businesses can also use the solution’s visual tools to rapidly add support for additional standards and for custom applications they may be using such as EDI.

Flexibility for a Wide Range of Customer Needs

Suppliers also find the system’s flexibility important. Equilon Lubricants, a Houston-based business unit of Equilon Enterprises LLC, supplies motor oil, coolants, antifreeze, and other petroleum products to Shell and Texaco distributors and retailers as well as large industrial customers. Larry Koenig, Equilon director of e-business, said the company’s varied customer base created challenges for its online catalog.

“Our customer base ranges from local neighborhood garages up to Fortune 10 industrial companies,” he said. “We need a solution that manages a wide range of products for a wide range of customers. We had to implement an effective Web-based e-commerce system that could enable dynamic catalogs, multichannel trading, and integration with back-end systems.”

Working with technology consulting partner Cap Gemini Ernst & Young (CGE & Y) and Microsoft Consulting Services (MCS), Koenig’s team implemented the Microsoft Solution for Supplier Enablement in less than three months, despite the slim IT resources common among supplier businesses. The result: Not only could Equilon Lubricants quickly begin doing online business with its customers, but it also gained immediate connection to hundreds of e-marketplaces and thousands of e-procurement sites. As the company continues to grow, Equilon can easily and cost-effectively add additional supply chain and customer relationship management functionality.

The Microsoft solution, which also provides added layers of security with digital signatures, allows Equilon Lubricants to integrate its business transactions with an existing SAP system on the back end, cutting order-entry times by more than 50 percent. Koenig said it’s still early to quantify business benefits, but he expects the automation to save Equilon Lubricants about 10-15 percent over the cost of telephone transactions.

Koenig said the Solution not only provided mapping between the Microsoft platform and the purchase order interface (by Ariba), but also dramatically reduced development and integration time.

“The solution helped us reduce the amount of development as much as 70 percent in hooking up our first customer,” Koenig said. “It let us build business rules into the system quickly and relatively inexpensively. It was a very pleasant process.”

Many Suppliers to Many Buyers

Johannesberg, South Africa-based BidVest has taken this solution one step further. BidVest is a conglomerate is invested in companies operating in the fields of distribution, service and trading, which encompasses light manufacturing. Its initiative is a strategy to provide BidVest customers with an easy-to-use, centralized portal to procure goods and services supplied by the 750 BidVest entities. also provides a platform for BidVest’s trading companies to maximize the benefits of e-procurement. is built on the Commerce One marketplace platform, leveraging the Microsoft Solution for Supplier Enablement.

“Using the system, our various businesses are able to enter multiple markets rather than just one,” said Philip Katz, managing director of the initiative. “Suppliers can immediately trade through both global and local networks.”

Katz said BidVest has only used the system since July, but benefits are already showing. “We can offer customers real-time, current trading information,” he said. “The system enables the customer to get up-to-date information out of the supplier’s system and published onto our Commerce One platform. Using the Solution for Supplier Enablement, we’ve eliminated a third party from the catalog publishing process, and allow the supplier to control his own destiny and information.”

Katz said he expects the solution will reduce transaction costs to suppliers by a third, and reduce publishing turnaround time from five working days to one. He said deployment and integration was also painless.

“Firstly, we received fantastic support from Microsoft,” Katz said. “From a technical point of view, it was a relatively simple process. Once we got connectivity going, bringing more suppliers into place was far simpler than it had been in the past.”

Hylton said Microsoft has continued to add features and functionality in the year since the initiative began. He said catalog publishing directly to multiple customers’ procurement systems is now push-button simple. The system also now includes native support for multiple remote shopping standards, Remote Shopping allows two applications (customer and supplier) to interact with each other in a personalized way, providing a richer experience for both sides involved while remaining within the business rules established between the two companies. Supporting multiple remote shopping standards allows suppliers an interactive and differentiated way of presenting both simple and complex offerings to customers, including ways to expose the supplier’s brand and the most up-to-date pricing and product information.

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