Rolling with the Changes

Oct. 1, 2003
Advances in technology and the creation of an industrywide product and pricing database bring changes to Trade Service Corp.During a 1984 interview, George

Advances in technology and the creation of an industrywide product and pricing database bring changes to Trade Service Corp.

During a 1984 interview, George Ganzenmuller, then chief editor of Electrical Wholesaling, talked with Trade Service Corp. founder Bill Gudie about the future of Trade Service's pricing services. He asked Gudie how he expected the medium of price-data delivery to change in the future. "I see it changing, but I don't know the answer... No doubt there's going to be a lot of improvement in telecommunications, but I think the answer will more likely come from a form that hasn't been born yet," Gudie said.

He spoke of sending data to distributors via satellite as one possible example. "Of course, when this all happens, then the question is going to be why doesn't the manufacturer just update the distributor's computer? No reason in the world. It could, you might say, put us out of the business. But the answer is that every manufacturer won't, at least for a long time."

A long time has turned out to be about 15 years in this case, an eternity in the information technology world of today. And as Gudie guessed, a new form of information-delivery media has since been born: Globally networked personal computers.

Building on that concept, the industry has thrown its collective momentum behind an effort to bring networking's full benefits home to the electrical industry by creating an industrywide product and pricing database and an extranet by which the industry can access the data directly. The industry data warehouse (IDW), due to go online next spring, will provide a constantly refreshed stream of product and pricing information, all updated directly by the manufacturer.

Will this change put Trade Service out of the pricing business? For the electrical distributor price-file maintenance business as Gudie knew it, yes, this probably signals the beginning of the end. After more than half a century of providing electrical wholesalers with pricing data, San Diego, Calif.-based Trade Service is facing a future in which electrical manufacturers' standard prices will be distributed by other means.

However, the evolution of computer technology and the changes in the electrical landscape that are putting an end to that business are at the same time enabling Trade Service to take on a new role in the electrical wholesaling industry.

"Looking forward at where technology is taking business, we realized long ago that our being known as a pricing service per se was changing and would change," says Norm Decker, the company's vice president and general manager. "So Trade Service began investing a couple of years ago in an infrastructure that would allow us to be more of a broad-based information provider other than just a pricing service. The IDW has put a magnifying glass to that and has more people asking the questions, but technology is driving the change and the IDW is just a version of that technology."

Trade Service is not a victim of the change, but one of the instigators. The company has played an active role in the creation and shaping of the IDW, with people on both the technical committee and the marketing committee of the Industry Data Exchange Association (IDEA), the IDW's caretaker organization.

IDEA officials have said Trade Service plays a critical role in the industry's transition to a new way of handling pricing data. Nobody in the world has more experience with the ways the electrical industry has collected and disseminated pricing data in the past. Nobody is in a better position to usher in the future.

Some facets of that role are still taking shape, but Trade Service has signed a contract with IDEA to help electrical manufacturers populate the IDW with data. Without charge to the manufacturers, Trade Service will assist them in gathering and organizing their data to match IDW standards, help them develop missing data fields and provide a data stream to the IDW to get the process rolling.

Trade Service will also be the only third party authorized to host manufacturers' data remotely. Otherwise the manufacturers will send data directly to the IDW's servers at CCI/Triad Systems in Livermore, Calif., or host the data in their own facilities on a system that mirrors the IDW.

Once the IDW is up and running smoothly, and once the manufacturers grow accustomed to the requirements of keeping the data clean and up to date, Trade Service will move into some other services that have yet to be defined in detail, says Decker.

What's clear is that Trade Service will no longer be the sole provider of pricing information to the electrical industry, and no longer a scapegoat in pricing disputes. "When there's a problem, hopefully there won't be the finger-pointing that has gone on in the past," Decker says. "Oftentimes we would get pulled into it, 'It's Trade Service's fault' was always an easy out."

Those disputes usually arose from the contention that Trade Service "editorialized" on prices by publishing price categories not specified by the manufacturers. For example, for a product normally supplied by a vendor in a package of two, Trade Service might publish a suggested retail price for broken packages as well. The company considered providing this kind of information part of the value added in its service, according to Gudie's 1984 interview. In the IDW, by contrast, nobody will touch the data itself except the manufacturer. As the data stream flows into the database, IDW will have software in place to "scrub" it-to make sure the format matches the data field and alert the manufacturer of any probable errors-but even in that case the manufacturer will have to make the corrections.

Having manufacturers in control of their own data is one of the fundamental long-term benefits of the IDW, Decker adds. "It's the awareness of the data that's really the important thing-getting manufacturers to say 'Yes, this is our data, we're going to take responsibility for it, and we're going to make sure what's out there is correct and it's something that we provided.'"

Trade Service will still provide pricing updates to distributors in legacy formats, such as floppy disks and magnetic tapes, and will continue sending price-file updates to distributors that don't join IDEA, but Decker expects prices for these services to increase as fewer distributors use them, and eventually it will make more sense for a distributor to just sign on with the IDW.

As the transition to the IDW progresses in the electrical industry, Trade Service will continue providing suggested retail prices to the end-user market and pricing services to distributors in other industries, such as plumbing and heating, ventilation and air conditioning (HVAC) distributors. The company has already begun telling distributors and vendors in those other industries about the electrical industry's IDW project, and hopes to get similar balls rolling for them.

Meanwhile, in the electrical industry, Trade Service will be busy embracing the industry's information needs of the future. The company expects to roll out new products and services for the electrical industry that will take it further into the business of providing content that facilitates electronic commerce, Decker says.

Trade Service is in talks with developers of various procurement and electronic-commerce applications outside the electrical business to develop new content-based products. The company hopes to announce some new product and services soon, Decker says.

"Our business is built around content," Decker says. "We will continue to specialize in aggregating and publishing information. We will be providing more content that supports electronic commerce, especially descriptive content organized around the attributes of products. As Web order entry systems come online, we will have the data and the systems to support search and retrieval functions."

He pointed to a recent addition to the company's CatTrak CD-ROM catalog as an example. The disk now has capabilities for connecting the data on the disk to a manufacturer's Web site to retrieve updated catalog images and information.

These products and services will be added to the many information products Trade Service already provides, such as the CatTrak, the Tra-Ser product and pricing disks for the end-user market and the Virtual Warehouse online service where distributors can swap and sell overstock and obsolete products.

The company's continued focus, says Decker, will be on "the commerce aspects of content," with the ultimate goal of bringing buyers and sellers together in real time.