Second of two parts
The second of this two-part series on extranets focuses on extranets from the tire dealer perspective.
Trying to measure the acceptance of extranets among independent tire dealers wasn't as easy as we thought it would be. It breaks out this way: Those dealers who rely on a supplier's extranet every business day praise the service, those who have extranet service but don't use it much have some reservations, and those who haven't yet signed on to receive extranet service prefer doing business as usual.
Yet all three classes refer to extranet business-to-business communication (or B to Bs, for short) as the future of the tire business. Does that translate into confusion among suppliers and dealers about the wisdom of conducting business via extranet? No! This is nothing more than a short delay until everyone gets aboard. Doing business online is the way all tire dealers will ultimately conduct most or all of their business dealings with suppliers.
The following six independent tire dealers talked about their experiences with extranets, including those created by Michelin North America Inc. (BIB NET), Goodyear Tire & Rubber Co. (XPLOR) and Bridgestone/Firestone Inc. (ENTIRENET).
A ringing endorsement
Dan Light, chief financial officer for Belle Tire Distributors in Allen Park, Mich., is already living life in the future and has been for some time. For him, Michelin's BIB NET has become as comfortable as an old pair of jogging shoes even though many of his peers have yet to call up a single extranet screen. Here's his take.
"Three or four years ago, we were experiencing a 55% fill rate from Michelin. Today, our fill rate from Michelin stands at 90% to 95%," he says. "Working with Michelin, our system has been tied to a TIMS (tire inventory management system). In this way, we provide information to Michelin daily, but only the information we want Michelin to see.
"In other words, we provide 'sell out' information (Michelin product sold by Belle Tire to its customers) to Michelin. This allows Michelin to do a better job of forecasting our tire shipment needs and, in effect, serves as our ongoing automatic order entry process. We look at the order before it goes out and may add or subtract from the order. Then a simple keystroke submits the order."
Here is how the system works. First, Belle Tire is firmly connected to Michelin via BIB NET. Advanced shipping notices are downloaded at Belle Tire, from which a "receiving record" is created. "Our BIB NET and TIMS system recognizes the inventory that's being shipped and holds this information in the system until the tires show up," says Light.
"When the shipment arrives, usually the same day or the next, it is manually checked for discrepancies. If there are none, a keystroke is made to accept the order and the work is done. If there has been a shipping mistake, a few additional keystrokes are made to make the credit adjustment."
Best of all, Belle Tire store managers, all 60 of them, can check tire availability online with the Belle system from their front counters and make real-time decisions to sell tires before they have taken physical possession of them. "That's because BIB NET's ASN screens are real time and accurate," he says. "A Belle Tire purchasing manager can check tire availability online and submit the store manager's order immediately.
"Just as quickly, he can see that those tires are now committed to him. So if he submits an order for tires before noon on Monday, those tires will show up at our stores before noon on Tuesday. In this way, a store manager can be confident about setting up appointments and going ahead with the sale.
"It used to be that tire manufacturers focused primarily on making lots of tires," says Light. "Those tires sat in warehouses while dealers who needed those tires had no easy way of knowing what tires were available or at what price. This put the tiremaker in the unenviable position of having to sell tires at very attractive prices to dealers at the end of the month to get rid of inventory.
"Now, because of the information I make available to Michelin and vice versa, they have become a 'just-in-time' supplier and a more consistent pricer. That's good news for me because it means I can buy tires today at the same price I paid for them yesterday. No longer must I wait until the end of the month for a good price. Thanks to BIB NET, I can order anytime during the month -- and do."
In Light's opinion, the electronic transfer revolution is based on customer satisfaction. "All of us in the tire industry today face slimmer margins, bigger volumes and better distribution. Further, competition is fierce. We must have the tires the customer wants when he wants them. We must also be able to offer those tires at a competitive price, and we must be consistent in offering this kind of service to our customers."
A 21-year veteran at Belle Tire, Light says Michelin also has become more of a sales-based organization than they were before BIB NET. "To that, add what may be the most important ingredient: improved communication. BIB NET has evolved into a tool that has allowed us to conduct our business more efficiently.
"At Belle Tire we consider ourselves to be a seller of tires and wheels, the place to turn when you need tire/wheel service. Our success, our reputation is based on delivering what we promise. BIB NET helps us in that regard.
"No longer are we held up by voice mail, and we aren't put on hold. We take care of business on BIB NET according to our schedule and our way of doing business, not Michelin's. They react to us, and we work together at making it happen. I believe that those dealers and manufacturers who can work together at improving each others efficiency level will be the winners in the battle for customers and distribution control."
Extra extranets
Mueller Tire & Brake in Cleveland, Ohio, uses both BIB NET and Goodyear's XPLOR. According to Scott Mueller, who runs Mueller Tire along with his brother, Dean, BIB NET has transformed Michelin into a lean, mean sales machine.
"We have had BIB NET for three years and have come to use it for just about everything," he says. "If I have a business question that needs an answer at 10 p.m., I get it in real time."
Pat Gorey, Mueller Tire's computer and e-commerce manager, echoes Scott Mueller's thoughts. "BIB NET offers us speed, accuracy, eliminates errors and simplifies the way we do business," he says.
Mueller Tire is enjoying better fill rates, more inventory turns and no longer must maintain as much inventory as it did prior to BIB NET, according to Gorey. "These are solid business reasons for us to appreciate BIB NET and what Michelin has done to make life easier for us and for them."
He says BIB NET allows him to handle national account billing and warranty work in a way that improves the accuracy of each transaction while cutting down on turnaround time. "Using our system, we can import/export information from our 15-store system to our corporate headquarters in downtown Cleveland and then import/export information to Michelin through BIB NET in just a matter of minutes. In the old days, we used to sit down and create an order which was faxed to Michelin. Then, Michelin had to sit down and key in our order from the fax and, no doubt, edit the order for accuracy.
"Today, virtually no one touches an order sent via BIB NET. What used to take most of a day to complete now takes a fraction of that time. A BIB NET order transmitted from Mueller Tire at noon on Monday arrives on our doorstep the next day, Tuesday. In that way, BIB NET has increased our confidence that we will get the product we have ordered when we need it."
Gorey also speaks favorably about Goodyear's XPLOR. "Since this has been an internet-based system from the beginning, all of our stores are hooked up to XPLOR. We like the fact that our store people can handle their own national account billing and credit processing directly from their locations via XPLOR. Goodyear's XPLOR is new, but nice. It is also paper-less."
Sometimes XPLOR has more information than Mueller Tire needs, says Gorey. "If we don't have time to read a Goodyear newsletter online, we don't. To my way of thinking, the best way to approach XPLOR is to pick and choose what you want to use."
Ultimately, Gorey ranks all three major tire manufacturers about even in the extranet B to B department. Their sites are similar, but not mutually exclusive. "Just as I don't sell one line of tires now, I will not restrict myself to one extranet in the future. If I need three extranets to do business, I will work on three extranets. I also expect the functionality of all the extranets to improve as the electronic revolution continues."
Gorey believes profitability for tire dealers and tiremakers will improve as supply chain processes are streamlined. "This will make it easier for Mueller Tire and our customers to get product at the lowest possible cost. There will be fewer errors and better service, with the consumer coming out the big winner as a result of tire dealers and tiremakers partnering up.
"Look, Mueller Tire is an independent tire dealership, and we can be as independent as we want to be. But the bottom line is this: We still need tires and we still need to be profitable. The tiremaker needs me to be successful if he is to be successful.
"That is why we will do business together. And that's why I believe our B to B extranet relationships will need to be long-term partnerships with close cooperation between the partners. In that way, we both will be more efficient and successful."
Pilot program
Doug Connelly, owner of Connelly Tire Inc. in Canton, Ohio, has been in business for 25 years and has served as one of Goodyear's pilot program XPLOR dealers since the extranet was activated in 1998. "Goodyear calls my dealership all the time and pays visits regularly to see how XPLOR is working," he says. "They genuinely want it to work, I want it to work and we both want to profit. So this is turning out to be a win-win situation."
Goodyear and Connelly continue working out XPLOR's bugs. Order entry is one area that both parties want to improve. They are seeking ways to make the process faster and easier. "The acquisition of order status information is already fast and accurate," says Connelly. "I can double-check what I ordered, what is on backorder, what is being shipped and what has already been shipped very quickly."
Connelly says every time he logs onto XPLOR it seems to be better. One recent surprise was new business in the form of government agency sales. "XPLOR lists government agencies, their net price sheets, the prices I can charge and all the requirements expected by each agency. So I can go online with XPLOR and see what the government is paying for tires.
“Even better, those agencies have started to call me thanks to Goodyear's dealer locator. This was an unexpected highlight. There never used to be any money in government sales. It looks as if that is changing."
Another plus for Connelly Tire has been an improvement in its fill rate from Goodyear. "My fill rate a year ago was below 50%," he says. "I can't make incentives if I can't get product." A Goodyear loyalist, Connelly decided to place an extra large order on XPLOR early this year because an incentive program was on and he wanted to take advantage of it. His fill rate this time: 96%.
The Canton dealer also likes the fact that he can access XPLOR at home. "I do this a lot because it lets me work at my speed, not Goodyear's. That why I support the concept of doing business on the extranet. It means that I am the captain of my ship, I control my business, I will bear the cost of my own mistakes and I will profit from my own good judgment. That's the way I like it and XPLOR is allowing that to happen."
XPLORing options
Another XPLOR user, Lisa Sullivan, e-commerce manager for Feeney/McIntrye Tire Co. in Akron, Ohio, told Modern Tire Dealer that it doesn't take long to learn XPLOR and placing orders on XPLOR is easy. "But online speed can be an issue sometimes. The internet can become congested at certain times of the day.” (Goodyear says it is working on that.)
Sullivan likes the fact that she can see what tires are available in the warehouse, where the tires she ordered will be built, and when the shipment will be made and from where. "The order management part of XPLOR is pretty nice," she says.
Sullivan also likes the fact that she can see specials, prices, programs and doesn't have to run down her sales representative to find out what's going on. Also important, she can jump onto XPLOR and see where she stands in a sales quota program.
"I regularly build tire loads on XPLOR using the tire dolly, check price sheets, units moved and invoices for our associate dealers," she says. "Another real plus is that cash flow is much quicker on XPLOR. Credits back to our dealership are completed via XPLOR in less than 48 hours."
The Feeney McIntrye specialist also handles her Ford dealer program on XPLOR. "We can see what was shipped to the Ford dealers and when we will be credited for tires delivered. Without question, XPLOR makes us more self-sufficient. We don't have to call Goodyear for much of anything. We do it ourselves."
The future is now
S&S Firestone Inc. in Lexington, Ky., is one of three dealerships nationwide to serve as a pilot program site for Bridgestone/Firestone's ENTIRENET. Sales Manager Al Gumberts has been involved with the program at S&S since March 1, 2000, and he likes what he has seen so far.
"This is the future of the tire business," he says. "When I enter an order, my tires are committed to me right now; no waiting, no guessing, they're mine. Given the speed with which we do business at S&S that means a lot."
Importantly for Gumberts, who is responsible for creating a minimum/maximum order program that takes into account historical and seasonal buying patterns, ENTIRENET makes his life easier. "When I'm comfortable that my min/max system is working, I'll just turn it over to my accounts payable person. He can match the order number to the shipment when it arrives and reconcile the quantity received to the quantity ordered as well as check all terms, discounts, etc.... I can spend my time selling tires, doing what I'm paid to do, the thing I do best. In that way, ENTIRENET makes me more productive and S&S Tire more efficient."
Extranets like BIB NET, XPLOR and ENTIRENET are a far cry from calling in orders, says Gumberts. "Sometimes the person I reached was having a bad day. Because they were having a bad day, they might make a mistake with my order or even bark at me. Or maybe I was having bad day. Then I might make a mistake or holler at someone. With ENTIRENET, human personalities are out of the picture and mistakes have become almost non-existent because transactions can be checked again and again online. This cuts down on errors and certainly the yelling."
Gumberts, however, does not want to lose touch with the human side of the business with any of his suppliers because of extranet communication. "I like talking to people, I like selling to people. I don't want electronics to replace that aspect of the business."
Neither does John Lampe, president of Bridgestone/Firestone Tire Sales Co. "We will never compromise the value of maintaining human contact with our dealer customers," he says.
From A to Ziegler
At Ziegler Tire & Oil Co., a Canton, Ohio-based, 17-store, 81-year-old dealership, Tire Credit Manager Tom Tucker is well aware of ENTIRENET. "I believe all dealers will eventually be doing business on an extranet such as ENTIRENET. We're doing much of ours on Michelin's BIB NET already.
"That's why I know ENTIRENET will fit nicely into the way we're gearing up. I have no doubts that soon, dealers will order tires from their suppliers every day. The order will go straight to the manufacturer and there will be economies of scale for him and us. We are headed for an efficient, mistake-free, paper-less business environment."
Tucker says he receives a monthly Bridgestone/Firestone statement that is quite large. "But when ENTIRENET lets me download my statement into EXCEL, I'm looking at a half-day's work compared to the two or three days of work to reconcile those statements. Those are the kinds of enhancements and integrations that will occur, and I can't wait."
Here to stay
Although not every independent tire dealer is online with a supplier's extranet, many already have done so or are considering signing up. Most dealers at least are aware that the systems exist.
While it would be irresponsible to say that there is a complete trust between the two, it is evident that extranet B to B e-commerce can and already has reduced many old hostilities. Both sides have much to gain from a successful electronic partnering.
Yes, there are still questions to resolve, but they are being addressed one by one. For example, how much inventory should a tiremaker show a tire dealer? "There is a big difference between a fishing expedition and a hard order," says one tire manufacturer. Is too much information being provided on the extranet? The easy answer: Can there ever be such a thing as too much information about our increasingly complicated industry?
But the real issue about extranets doesn't center on answering questions like these. The real issue is the speed with which tire company B to B extranets catch on. Some dealers want more technology, others are content with the status quo. It is possible that some dealers may never want to do business on an extranet.
The best advice we can give you: Take a look at what these extranets are all about and make your best decision regarding their usage. If you don't at least do that much, you may be looking at a future without the promise that attracted you to the tire business in the first place -- success.
