The Floor Covering Institute is pleased to announce that Mitchell Dancik, president of Dancik International, has joined our consulting group and will be posting regularly on this blog site. Mitch has specialized in providing software solutions for the flooring industry for over 25 years. In fact, more than half of all the hard surface flooring sold in North America today is processed by Dancik software at some point on its journey from the manufacturer to customers. He has worked with more than 130 flooring companies so many of you know Mitch; if you want to read more about him go to our website but be sure to come back because today he has chosen to explain the status of B2B and why it’s taking so long to implement the process in our industry.
At my software company, Dancik International, I am constantly asked about the status of business to business (B2B) connectivity in the floor covering industry. In particular, I am asked “What’s wrong with B2B?” and “Why aren’t there more results?” I will try to answer these and other technology-related questions, using my new platform here at the Floor Covering Institute.
The process of using computer technology to exchange information from “Business to Business” (B2B) is alive and functioning in the flooring industry but it hasn’t been adopted here as quickly as in some other industries and I’ll explain why in a moment.
First, it’s important to know that uniform standards that allow flooring companies to seamlessly exchange information electronically already exist and are being used by participants at every level of the industry. Price lists, product catalogs, purchase orders, order acknowledgments, and invoices were developed by a dedicated group of industry volunteers who formed the Floor Covering Business to Business Association (fcB2B) and have been working together for nearly a decade to advance B2B in this industry.
As you read this article, hundreds of dedicated people in all facets of the flooring industry are preparing for the 2010 industry-wide B2B gathering, an important event organized by the fcB2B group to continue their work on the industry’s B2B protocols. None of the participating companies are paid for this service to the industry.
When fully integrated, B2B will allow seamless exchange of information globally between domestic and foreign manufacturers, distributors, freight carriers, independent retailers, buying groups, chains, big box stores and software companies. Presently there are participating companies in each of these categories in the floor covering industry but the industry as a whole has been slow to adopt.
So, why is the flooring industry having a hard time implementing B2B?B2B is voluntary, but historically its implementation has happened best when one industry giant wields a big stick with the clout to demand B2B transactions. That industry giant usually has these attributes:
- They are the customer, not the supplier;
- They have large numbers of transactions that make B2B a real money saver;
- They have the technology culture to get the job done;
- They mean enough to their suppliers to make B2B happen on an accelerated timetable; and
- They don’t give a hoot about the “little guys” in the industry.
How is this different than the flooring industry’s B2B situation?
The flooring industry B2B movement is nearly a perfect inverse of the five attributes listed above:
- The flooring industry B2B movement is primarily driven by suppliers who hope their retail customers will adopt it;
- The suppliers have lots of transactions, but most of the retail companies do not;
- The suppliers already have B2B technology, but often the retailers do not;
- The retailers certainly mean enough to their suppliers (in fact the suppliers are eager to implement B2B for them), but the retailers do not have a “B2B or else!” mandate; and
- The “little guys” in flooring are one of the main targets for B2B, and it’s a lot harder to implement thousands of independent retailers than a single giant customer.
Wal-mart has the buying power to bend the supply chain to its design, and it has. In fact, more industry-wide B2B movements have been caused by Wal-Mart than by any other company, but its dominance has left small businesses and other slow adopters at a great disadvantage. In comparison, the flooring industry is not dominated by one giant nor does this industry desire to leave anyone stranded. We want every small business to share in the benefits of B2B but, without the “big stick” that forced other industries to adopt quickly the flooring industry is taking a longer journey to make B2B work for everyone. Even after a decade of progress, some retailers feel that today’s B2B is too cumbersome and not compatible enough with their current processes. We need to keep making it easier for the retailers until the barriers that exist today are overcome.
If there can be any comparison to Wal-Mart in our industry; it would be Home Depot and Lowe's who adopted B2B protocols with the flooring industry nearly 20 years ago. Yes, automated purchase orders, shipping notices, invoices, the whole nine yards, have been working without a hitch since the early 1990s. For many of my customers who service Home Depot and Lowe's, there is no human intervention with an order, except for picking and shipping. All order entry, inventory selection, pricing, and truck routing are achieved automatically. Small retailers can enjoy the same capabilities because of the work already accomplished in our industry, primarily by the fcB2B.
So, hang in there. The economy is soft, and investing in B2B may not be a top priority for some, yet B2B is a worthy pursuit that we will get right. If you want to know more about the advantages of B2B, visit the fcB2B website which has a comprehensive resource page, or feel free to contact me directly.
I look forward to posting here often and answering your questions about how technology can be used to streamline your operations and improve your business. Let me know what you want to hear about, and thank you for reading.
Mitchell Dancik is president of Dancik International and a consultant for the Floor Covering Institute.