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Extranets and tire dealers

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Extranets and tire dealers

Part one

The first of a two-part series on extranets focuses on what domestic tire manufacturers are doing with their dealers in mind.

In summary: If you aren’t checking tire availability online, if you aren’t checking tire prices online and if you aren’t ordering tires online, you’re in danger of falling behind the technological curve. If you haven’t yet embraced the “technical revolution” (which some call the second industrial revolution), tire buyers may force your hand.

Many of them already research tire purchases online, and they’re an impatient lot. Tire buyers expect to walk into your dealership and hear you say, “Yes, I have the tires you want, at the price you want.” If you can’t tell them what they want to hear, they’ll shop elsewhere. In a heartbeat. For them, instant gratification takes too long.

If this sounds like the end of the story it is. But don’t be alarmed, the beginning and the middle of this story are more than reassuring. Why? Because life in the trenches is just about to get a lot less complicated.

The extranet and you

Michelin North America Inc., Goodyear Tire & Rubber Co. and Bridgestone/Firestone Inc. have moved state-of-the-art technology into your tire dealership; in a word, extranet! If this is a new word for you, get used to it. Extranet technology is going to play a monumental role in changing the way you do business.

This is good news that will speed up the process of virtually everything you do everyday. Before we’re through, we will look in on individual tire suppliers and their extranets, including a quick look at what Continental General Tire Inc., Cooper Tire & Rubber Co. and Yokohoma Tire Corp. are doing.

First, however, we suggest that you huddle with one or all of your tire suppliers. You need to understand how to conduct your tire business on your supplier’s extranet, if it has one. You must also learn that doing business online is all about saving time and avoiding mistakes. Maybe most importantly, you need to find answers to the following three questions from your suppliers on a day-to-day basis: Do you have the tires I need? When can I get them? How much do they cost?

Did you know that you can order tires from your dealership or your family room? Or check previous order status, manufacturing dates, shipment dates, tires on backorder and their status and the name of the carrier designated to deliver your tires right down to the trailer number and precisely what is on that trailer? If you don’t, you will soon understand how it works.

The Big Three

In lay terms, an extranet is part of a company’s internal intranet. An intranet is a private network reserved strictly for internal, employee use only. For example: Michelin has an intranet and Michelin has an extranet. Tire dealers are invited to view its extranet online, but they cannot view or access Michelin’s intranet. The three largest tire manufacturers have extranets that are, or soon will be, accessible over the open Internet.

Put bluntly, tire dealers will only be interested in accessing a company’s extranet. At Michelin, that would be BIB NET, the name given to the French tiremaker’s dealer extranet. At Goodyear, the extranet name is XPLOR and at Bridgestone/Firestone, it’s ENTIRENET.

Created specifically for dealer use, these extranets are powerful business tools for tire manufacturers and tire dealers alike. By simply keystroking in a user identification and access code provided by your supplier, you’re online. Those worried about security can rest easy. At all three companies the use of various security platforms such as VPN (virtual private networks), encrypted data, password protection and firewalls are in place.

Michelin and BIB NET

Michelin formed dealer focus groups in 1995 and 1996 to help design its extranet. “They helped design BIB NET,” says Tom Hall, manager, electronic commerce development, for Michelin North America. “The final result is a dealer-biased system with the functionality, look and feel our dealers wanted.”

It’s a process that continues to this day, according to Hall. “In fact, we are in the process of rebuilding BIB NET top to bottom in the U.S. with newer screens, newer graphics, more functionality. Our system, which began when a 28/8 modem was considered fast, is now five years old and ready for an overhaul.

“Michelin is also adding open Internet access to BIB NET, which should be operational before the end of 2000. That means that Michelin dealers can now access BIB NET via their own Internet Service Provider (ISP).” Hall says for those dealers who are using a broadband service, “online time will be extremely fast.”

Michelin reports that 500, or nearly half of its 1,200 “bill to” dealers, are now using BIB NET. “In another 24 months the vast majority of tire dealers will be doing business on the extranet,” he said. “If they aren’t online by then, their long-term chances of survival will not be good.”

Ordering tires online is at the heart of BIB NET. “We have made very certain that a dealer can build a full tire load and have those tires delivered on their normal weekly/multiple shipping schedule,” says Hall. “The upshot of this means dealers who are online can operate with very thin inventories, and that’s a money saver.”

Functionality. “Many of the phone calls we receive at the call center have to do with the following question: ‘Do you have the tire or tires I need?’” says Hall. Here’s how BIB NET answers the question.

After logging onto BIB NET and pulling up the inventory inquiry screen, dealers are asked to keystroke a Michelin part number or their own part number if they have one. If they don’t know the number, the system will help search for it by brand, size, tread design and series.

Entering, say, an 11R22.5 XZA2 pulls up the status of that heavy truck tire size from the dealer’s primary distribution center (DC). If a dealer sees that only 49 of the 280 tires he needs are in stock at his primary DC, BIB NET continues the search. If the remaining tires needed are located in a secondary DC, the dealer is notified on his inventory inquiry screen. He sees where the tires are located and that they are available to him.

At this point, the dealer can pull up the “Order Entry Screen” and submit his order. Just as quickly, he can see his printed invoice price (after all discounts), FET, the order total and the date of the order. BIB NET also allows the dealer to verify the price of a tire he bought a year ago. This helps in settling claims on tires that have been sitting around for a while.

“By utilizing Michelin’s tire inventory management system (TIMS) the dealer can automate the reorder function,” says Hall. “In this way, TIMS, working with BIB NET, improves order fill rate to the dealer’s customers while reducing the dealer’s inventory.

“To complete the process, the dealer can see on the screen the movement of tires leaving Michelin DCs.” Another screen Michelin calls the “Advanced Shipment Notification” screen provides a shipment view. “A dealer often uses this screen twice a day because he wants to know what left the DC at 8 a.m.,” says Hall. “If he checks again at 4 p.m. he will know what has left the DC since his 8 a.m. check. The ASN also tells him who the carrier is (Yellow Freight), it shows him the bill of lading, invoice price, the Yellow Freight trailer number and precisely what is on that trailer. It’s a never-ending, automatic process that only requires a tire dealer’s OK on the automatically created order before it is submitted.

“We have gotten so good at doing this that a dealer can take a tire order at the front counter, look at the BIB NET ‘Inventory Inquiry’ screen and see if the tires the customer wants are available from the local DC. Even if the dealer doesn’t have the tires in his inventory, he can see that the tires are in the DC, order them in real time and receive them later in the same day or the next. In other words, he can sell tires he doesn’t physically have.”

Michelin recently completed an interface between its BIB NET electronic ordering system and ASA Tire Systems’ TireMax and TirePro business applications software.

Goodyear and XPLOR

Goodyear launched XPLOR in 1998, two years after Michelin launched BIB NET. Even so, Goodyear reports that 1,600 of its dealers and all 950 of its company-owned stores are online XPLOR users. Further, the company says it is experiencing double digit user growth every month.

Goodyear will upgrade its software soon, a decision that will allow XPLOR users to order Goodyear, Kelly and Dunlop brand tires online. There is also an aggressive plan in place to sign on 800 more dealers before the end of 2000, and faster processors have been added over the last six months to improve screen call-up time and screen-to-screen speed. The Akron tiremaker also is looking at ways to add more functionality to its national account XPLOR feature. Like Michelin, Goodyear started with its dealers, 75 of them, who worked with Rick Godic, manager, extranet systems, North American Tires, and his crew by telling them what functions they wanted, what kind of speed they demanded and the look, feel and ease of use they needed.

Functionality. There are elements built into XPLOR that do not exist in BIB NET. One of the most noticeable is the “tire dolly” icon that appears on XPLOR’s order entry screen. Those familiar with shopping on the Internet will compare the tire dolly with the familiar “shopping cart” used on many sites.

The Goodyear system tells tire dealers what tires are available, which are on backorder, and when the tires on backorder are going to be manufactured, right down to actual production dates.

XPLOR stores 90 days worth of invoices. A dealer can retrieve his as long as it has been generated within the last 90 days, or he can do a search. He keys in his invoice number and he will see a presentation. Or he can key in a date range, March 1 through March 10, and see all of his invoices during that period. He also can print out his statements for full review.

Godic says the price the dealer sees when placing an order may come in at a lower number on his invoice because Goodyear may have a “one to 25” lot price and an “above 30” lot price. If a dealer orders 30 tires, XPLOR automatically invoices at the 30-lot price, which would be lower than originally shown on the screen.

XPLOR also can help with sales promotions. “In the old days a sales promotion was mailed at the end of February for a sales contest being held in March only,” says Godic. “Often, these mailings would not arrive at a dealership until sometime in March, a fact that immediately cut down the amount of time the dealer had to react to the promotion, to order tires and to take advantage of pricing opportunities.

“On XPLOR, we can announce a sales promotion at the end of February and the dealer will see it the same day. Now he has a full 30 days of selling time, compared with maybe just 22 days under the old system. It’s all done in real time.” Goodyear also adds a small flashing indicator on the screen to alert the dealer about special pricing programs on specific tires. Again, Michelin can do the same, but not with as many bells and whistles.

“We have also built in e-mail functionality that lets a dealer click onto any of the following departments: advertising/merchandising, consumer relations, a co-op hotline, credit department, government sales, product service and the XPLOR help desk in Akron, to name a few,” says Godic. “In this way, the dealer is in constant contact with people who can help.”

What remains a problem for tire companies trying to sell their extranet solutions to dealers is the reticence of dealers to accept new technology. By their own admission, some dealers interviewed by Modern Tire Dealer have said they probably have been too slow to react (part two of MTD’s look at the extranet, the dealer perspective, will appear in November’s issue).

“This is probably no different than the temporary resistance to computers observed in the early 1980s,” says Godic. “Once a dealer becomes accustomed to doing business on XPLOR he will not want to go back to doing business the old-fashioned way. That is also why we prepared a 45-minute training video, a 150-page training manual and why we invite dealers to use our call center to help them get answers to their questions about using XPLOR. We’re with our dealers every step of the way.”

BFS and ENTIRENET

Bridgestone/Firestone (BFS), which so far has shown itself to be the most unhurried of the major tiremakers in the extranet race, introduced ENTIRENET in 1998. But the company has recently accelerated its efforts.

In January 2000, ENTIRENET got a whole new look. Extensive use of color, attractive screens, easy to use protocols and navigation ease make this extranet pleasant to use. It was also restructured into five main categories, including order management, products, marketing and sales support, national accounts and training. The order management function allows dealers to check order status (what has been shipped vs. what is on back order).

At the same time, BFS began an order entry pilot program. Three major BFS dealers were selected as pilot program dealers. “These dealers could order heavy and medium truck tires online, check tire availability and tire pricing,” says Lori Jones, manager, electronic commerce for BFS.

By July, BFS added passenger, light truck and agricultural tires to the pilot program mix of tires that could be ordered online, through ENTIRENET.

The number of pilot dealers nationwide was expanded from three to 10 (all with multiple locations) and the total number of ENTIRENET users to more than 1,100.

Functionality. Jones and her staff also introduced a new template system to the pilot program dealers in July. “Think of it as a standing order with a lot of detail already filled in for the dealer, based on his buying patterns and the types of tires ordered on a regular basis,” she says. “These buying patterns are saved to the template and the dealer simply adds or subtracts from the template as he sees fit. It’s just a matter of a few keystrokes.”

Within ENTIRENET, the “Marketing and Sales Support” features are divided into three sections targeting “Consumer,” “Commercial” and “Off Road” dealers.

On the commercial side, ENTIRENET offers a monthly magazine called News Reel and a flex-fund program in which BFS sets aside a portion of money from a dealer’s purchases to be used to service the dealer.

Among ENTIRENET’s strongest elements is its national fleet account feature. “If a customer comes into a dealer’s store and identifies himself as a national fleet account customer in need of two tires, the process begins,” says Jones. “To make sure the national fleet account will honor the transaction and pay the bill, the dealer needs to know what the national account requires. Because requirements change often, ENTIRENET is updated just as often to reflect current requirements.”

“We will continue, for now, to publish a large national fleet account directory for those dealers who cannot yet connect to the Internet, even though the day we mail it out, it is obsolete,” says John Lampe, president Bridge-stone/Firestone Tire Sales Co.

“But on ENTIRENET, when a national fleet account announces a change in its requirements, we will simply keystroke those changes into our ENTIRENET national fleet account directory and everyone is current. It takes place that quickly.”

Jones and her staff also added more functionality to ENTIRENET over the summer, including a co-op ad program that provides online monthly statements.

“We are also running a pilot online marketing program for our passenger and light truck tires and are in the process of planning a marketing program for our OTR tires,” she says.

Also up and running is a “Winner’s Circle” screen that is part of a goal attainment program for dealers doing a good job of selling BFS passenger tire products. “This is a bonus-type of program that lets a dealer check his status in the program at any time,” says Jones.

“To keep our extranet interesting, we also use non-tire people to review the sometimes stodgy language we all use in the tire business. If they can’t understand what we’re trying to say, maybe our dealers will have a tough time also.”

ENTIRENET exclusives also are built in that will help it stand out as the competition heats up. For example, a dealer who logs on to ENTIRENET can link to Dell Computers (you’ll see the very noticeable prompt) for information regarding the Dell Technology Purchase Program. BFS realized that dealers may need help in making hardware and software decisions so the company teamed up with Dell to help dealers purchase the right equipment for their dealerships.

If you want to schedule a training seminar in a city near you, log onto ENTIRENET to see what seminars are available and where. When you’ve made your decision, simply keystroke in your name, the names of any employees you’re bringing plus the city and seminar you want to attend. It’s that easy and you’re booked.

Still, Jones and Lampe, are pressing hard. “This isn’t an issue of financial investment on the part of the dealer because, other than a monthly ISP fee, there isn’t one,” says Lampe. “Rather, it’s an issue of staying even with consumer expectations. They are already online and they expect us to be online and our dealers to be online.... Our hope is that dealers become Internet and extranet literate now.”

Continental AG and COC

Ken Dumitru, director, operations for supply chain management at Continental General (CG), says his company is targeting an extranet pilot program sometime in the first half of 2001. Important to this effort will be the link between CG in the U.S. and its parent company, Continental AG, in Germany, which already has an extranet in place in Europe. That relationship should serve to speed up CG’s entry into the extranet race in this country.

According to Dumitru, Continental AG calls its European extranet COC (for Continental Online Contact). Continental AG expects to have 1,500 European dealers signed up before the end of 2000 and is considered an extranet leader on the continent.

While some of what COC offers European dealers will find its way to the U.S., some of it won’t translate properly to the marketplace here. Nevertheless, what COC offers its dealers is interesting.

Functionality. COC users see a traffic signal on the tire order screen. A red light indicates the tires they want to order are not available from either the dealer’s primary or secondary shipping source. A yellow light indicates the tires requested are not available from the primary shipping source, but are available from a secondary shipping source.

In this case, shipment may be delayed by a day. A green light indicates the tires are available from the primary shipping source and the order can be submitted online.

Other COC screens are like their American counterparts. There is an order entry screen, an order status screen and a screen to check the status of co-op advertising programs. The names and functions are familiar. But COC surprises with another screen that invites e-mail contact with the corporation and includes phone numbers and fax numbers.

Other COC screens include a technical customer service screen. Here, a dealer can ask a performance tire question such as, “I have an issue with a Z-rated tire (perhaps irregular wear); please give me online feedback.”

The COC dealer also can access Continental AG tire fitment guides, technical literature and tire service bulletins, among others. Also available is online marketing information that notes how many new cars were built, new vehicle registrations and where Continental AG advertising will appear on TV.

More to come

Now, a quick word about the extranets from Cooper and Yokohama. At Cooper Tire in Findlay, Ohio, the story is different. Pat Brown, vice president communications, says that Cooper Tire has taken several initiatives toward establishing an extranet at some point in the future, but none exists now.

“Our interest in exploring this area is centered on our ability to offer more satisfaction to our dealers, and they aren’t clamoring for us to develop an extranet at the moment. For now, we will continue to electronically link ourselves with our dealers through our electronic data interchange (EDI) system. That has recently been restructured, something that has made life easier for us and our dealers in ‘real time.’”

In the same breath, however, Brown says Cooper Tire cannot and will not ignore the importance of an extranet because of the speed and accuracy it can ultimately provide. But because Cooper Tire always has been extremely close to its dealers and relies heavily on human relationships, “we want to be absolutely certain that before we turn to an extranet B to B, we won’t lose ourselves in the world of technology and wind up not achieving our goals.”

Dan King, director of marketing for Yokohama, echoes the Cooper philosophy. “All of our order placement with our dealers is done via EDI systems,” he says. “We do not have a B to B extranet because we don’t believe dealers are comfortable with doing e-commerce business right now. So we are moving with our dealers, doing what they want.”

But that doesn’t mean Yokohama isn’t looking at its own extranet. “We keep looking at e-commerce and analyzing the benefits of an extranet,” says King. “We will keep the idea in front of management and we will not let our guard down.”

With Continental General on the move and Cooper and Yokohama pondering the wisdom of following suit, the importance of the extranet to all major manufacturers appears clear.

But these extranets are designed for you. So the sooner you boot up, the sooner you’ll get a good look at your future and the future of your industry.

Part two can be found under “features” in November 2000.

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