Strategy 3: Show them the money.
Jack Kalina, BorgWarner's CIO, says that when his company's purchasing organisation set out to involve suppliers in B2B trading, BorgWarner had to demonstrate that the value its suppliers would realise would exceed any cost that might be incurred. The $US2.7 billion company makes transmissions, systems and components for engines, four-wheel-drive systems and fuel systems for automakers. BorgWarner explained to its suppliers that connecting via GE Global Exchange Service's TradeWeb exchange would prevent the manual error of transposing part numbers and quantities, which would reduce the number of returns the supplier would have to process or excess inventory concerns.
"Nobody changes a method in business unless there's a reasonable level of comfort that it's going to work and that it's going to be cost-effective," says Kalina. Of BorgWarner's 800 suppliers of direct materials, 400 are connected via TradeWeb.
Panasonic Industrial creates a value case for its third-party logistics providers that are servicing the OEM customers so that the customers can see what's to be gained from linking their warehouses to Panasonic Industrial's ERP system. Sixty-five per cent of all of Panasonic Industrial's orders each year are processed electronically. "I researched the total quantities of offline warehouses, the number of transactions, and the number of entries on orders, deliveries and invoices," says Ken Jeanos, group manager of e-business. "I then went to our accounting groups and asked how often they find discrepancies that need to be reconciled. I showed these numbers to my customers." Jeanos's customers couldn't argue with his maths. Jeanos also calculates cost savings from automating business processes. For example, he determined that creating and sending an order and an invoice electronically takes just a half day while doing the same thing manually takes two days. To determine the cost savings associated with that reduction in processing time, Jeanos multiplies administrative costs by the per cent of time each month that's spent on those activities.
Strategy 4: Don't forget the end user.
Recruiting partners for B2B can resemble selling an IT project inside your organisation: you need buy-in from end users as well as executives. "Too many companies devote adoption to senior management," says Sigma-Aldrich's Johnson. "The reality is, it's the lower-level people you serve who can really help or hinder your B2B activity," he adds.
While it's possible to convince purchasing agents and other executives using high-level cost/benefit, risk/reward analyses, such as the ones Jeanos whips up, the key to winning over front-line workers is to understand their needs and curb their fears about technology rendering their job obsolete.
Celanese Chemicals addresses that issue by pointing out that B2B e-commerce won't replace end users but will change their role from executing mundane, repetitive tasks, such as tracking down purchase-order approvals, to higher value activities such as procurement analysis. "We're definitely not headed toward a zero-person environment anytime soon," says Bill Schmitt, director of business enablement at the $US3 billion company. "There is so much to do to sort out the complexities of this connectivity that people who now do the manual processes are very valuable." The chemical producing unit of Celanese AG does 10 per cent of its global business through its e-commerce site - ChemVIP.com - and through dedicated B2B connections, and it hopes to boost that number to 25 per cent during 2002.
When Sigma-Aldrich's e-business team pitches its B2B initiatives to customers' procurement departments, it homes in on two selling points that are most important to those workers: efficiency and control. Like Celanese, the team promises that by ordering through Sigma-Aldrich's Web site, by participating in Pipeline (its private exchange) or by setting up a dedicated B2B interface, procurement employees will spend less time on repetitive tasks and will be needed to review and authorise all purchase orders before they are submitted. They are also able to see how the technology will make their job easier by giving them one source - the Web site - for checking what stock is in and the status of orders.
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