The world of E-Commerce is upon us and poses a difficult and serious challenge to traditional water and wastewater sales channels. The challenge is not one of how to beat it, but rather how we conduct business in this new E-world.
Water and wastewater utilities, manufacturers, distributors and representatives are all important stakeholders who will have to adjust to the new reality. E-Commerce has the potential to provide cost savings for utilities by helping to streamline their procurement processes, especially if their operating software can be integrated with the E-Commerce site. But when aggregation and/or reverse auction techniques are utilized, a cost-benefit analysis needs to be conducted to see if potential savings are worth the costs.
Aggregation sites allow several municipalities to join together and aggregate their requirements. Reverse auction sites allow municipalities to place their RFQ's on the site for any and everyone to bid. Both techniques encourage as many as possible to bid and for manufacturers to bid direct. As noted above, this can produce potential savings for the municipality ... but at what cost? If questions arise or service is needed, to whom do they turn? The local representative or distributor who would have traditionally provided information and services is now out of the loop. They can't afford to provide support services for products they don't sell. While the municipality may save a few dollars on the front end, they could wind up losing far more in intangibles, such as field support.
The supply chain for the utility may include local distributors, representatives, and/or national manufacturers. When materials are required, it is through the local representative or distributor that they are provided. In return, the distributor or representative provides services that range from providing product information to start-up services. When a line break occurs at 2 a.m., it is oftentimes the distributor who opens his doors to provide the materials to correct the problem.
The reality of all this came to the forefront for water/wastewater stakeholders on December 14, 2000, when the American Water Works Association announced its entry into E-Commerce with a new site to be called EfficientUtilities.com. While many decried the entry of AWWA into E-Commerce one observation is unavoidable: AWWA is one of the few sites that is attempting to address supply chain issues. A Suppliers Advisory Committee has been established to identify the issues and find ways in which site technology can address them. The input of all is welcome and encouraged. Whether or not the issues can be successfully addressed is yet to be seen. But unlike other attempts to develop an e-commerce site in our market, a sincere effort is underway to do so.
And what of the utilities and their need to cut costs in the face of privatization, lack of funding and other issues? The site offers the opportunity to streamline operations and integrate system software. Like the supplier side, the utility side is also to have an Advisory Committee.
On March 3, 2001, a joint meeting of the AWWA Manufacturers/ Associates Council (MAC) and the Technical and Educational Council (TEC) was held and EfficientUtilities .com was discussed. The utility members of TEC made it clear that they were not about to give up local suppliers and service. Value based buying is still alive and well! As EfficientUtilities.com moves forward, we would all be wise to remember their admonition.
About the author: Phil Landon is Director of Marketing for Val-Matic Valve & Manufacturing Corporation (Elmhurst, IL). He serves on WWEMA's Board of Directors and chairs the AWWA Suppliers Advisory Committee.