News Watch

March 1, 2003
SourceAlliance makes new cuts SourceAlliance.com, an e-commerce initiative launched by Rockwell International in 1999, is being disbanded, according to
SourceAlliance makes new cuts

SourceAlliance.com, an e-commerce initiative launched by Rockwell International in 1999, is being disbanded, according to several sources close to the company.

According to sources who worked for SourceAlliance, only about 10 employees remain at the company, and the company's doors are expected to close soon. Many of the employees who worked for SourceAlliance have left, been let go or been offered jobs by other companies, including ABB, a Swedish company that is looking to expand its e-business capabilities, according to knowledgeable sources.

An ABB spokesperson confirmed that ABB has hired “several” employees from SourceAlliance to work at ABB's Electric Technology Institute (ETI), in Raleigh, N.C. “We already had a group there that was focused on e-business activities. These hires from SourceAlliance are going to be joining ETI,” he said. He declined to say exactly who ABB hired from SourceAlliance, noting that ABB has a policy of only making people announcements at high levels.

TradePower plans to link Trade Service Systems and Estimation

In an effort to build a digital network that ties distributors' business systems directly to one of the most popular estimating software packages used by electrical contractors, TradePower, Linthicum Heights, Md., announced its intent to acquire Trade Service Systems, Blue Bell, Pa., from Trade Service Holdings for an undisclosed amount from Boston Ventures, the Boston-based private equity firm that owns both firms.

The acquisition of Trade Service Systems is contingent upon pending undisclosed terms. Thirty-year-old Trade Service Systems, which is generally regarded as the biggest developer of business software for electrical distributors, would become a wholly-owned subsidiary of TradePower.

TradePower plans to link electrical contractors' estimating and procurement processes directly to the business systems of their suppliers. According to a company statement regarding plans for the acquisition, this direct connection will allow for the exchange of real-time data between the buyers and sellers of commercial and industrial materials through TradePower's digital marketplace, resulting in business efficiencies for contractors and suppliers that impact the bottom line.

Through the acquisition, TradePower said that Trade Service Systems' customers will gain access to thousands of contractors currently using Estimation and other TradePower products, as well as the industrial MRO customers that the company expects will use the digital marketplace to streamline their procurement processes.

TradePower acquired Estimation last year and has been working closely with Trade Services Systems since that time to integrate the two business systems.

Boston Ventures will continue to be a major shareholder in TradePower. Trade Service Corp., San Diego, is now owned by i2 Technologies, Dallas. (EM — Jan., 12, p. 1), but it has a long-term agreement with TradePower to continue supplying the company with its electronic database of electrical products.

Gambino sees webcast as online forum

Michael Gambino, bestroute.com president, used a Feb. 16 webcast and teleconference to answer some questions on his long-range goals for bestroute.com.

Gambino said that while the company does not ever intend to change its focus as a source of “B,” “C” and “D” items for electrical distributors, there will always be some customers who prefer to buy directly over the Internet and not through electrical distributors. He sees the day when 15 percent to 20 percent of bestroute's sales are to end users.

The former Pass & Seymour and T&B executive also stomped out rumors that the company will offer “A” items in the future. “It has never been part of our business plan, nor do we intend it to be part of our business plan to stock the high-frequency items that have done so well in local distribution. The logic in terms of the financial model for us has never been in the plan because it did not make any sense.”

He also offered details on how the company handles any customer information that it receives through distributors' orders. “We have a legally binding privacy agreement that doesn't allow customer information to be used by us in any sort of sales and marketing activity. Nor does it allow any future entity or our parent to utilize that.

“The information is basically invisible to the world. What we do take from that information is point-of-sale information — SIC and zip code. We can provide our manufacturers with the information so they can properly compensate their representatives in the field.”

Gambino said that bestroute now has 15,000 SKUs from 28 suppliers in its Louisville, Ky., warehouse, and that it has the capacity for 90,000 SKUs.

Werner Electric to buy Van Meter

Werner Electric Supply Co., Neenah, Wis., has agreed to buy Van Meter Industrial (VMI) of Cedar Rapids, Iowa. The purchase would propel Werner Electric Supply into Iowa and give it a presence in Nebraska, South Dakota and Illinois. It would also expand Werner Electric's area of primary responsibility (APR) for Allen-Bradley Co. to include the majority of Iowa and a few counties in Illinois, South Dakota and Nebraska. Werner Electric already has the APR for parts of Wisconsin and the Upper Peninsula of Michigan, with the exception of a couple counties on the far east.

“The purchase of Van Meter Industrial is part of our strategic initiative to grow and become a regional distributor. The Van Meter opportunity was a natural because of our common goals, the quality of the personnel involved and the additional markets and customers that the VMI organization serves,” said MacDonald. “The transaction represents the joining of two independent Allen-Bradley and Affiliated Distributor members having a common philosophy of servicing customers with products as well as services, using knowledgeable and talented people.”

Werner Electric, with about 260 employees and 1999 annual sales of over $95 million, is ranked the 53rd largest electrical distributor in the nation, according to Electrical Wholesaling's 250 Biggest listing. Werner Electric has 10 separate locations throughout Wisconsin and the Upper Peninsula of Michigan. Van Meter Industrial, with approximately 225 employees and $92 million in 1999 annual sales, is the nation's 56th largest electrical distributor, according to EW. Van Meter has 15 locations throughout Iowa and portions of Nebraska, South Dakota and Illinois.

Jim Schmitt of VMI will assume the role of chief operating officer of Werner Electric Supply after the acquisition. Barry Boyer will continue to lead the Van Meter Industrial organization.

Prophet 21 rolls out trading network

Feb. 8 through Feb. 11, Prophet 21's Summit 2001 user conference served as a showcase for its new private network marketed toward users of its business software.

The Trading Partner Connect exchange (TPCX) is Prophet 21's e-commerce solution that serves as a hub for buying and selling of goods with the instantaneous connectivity of the Internet, but without its vastness and insecurity. Prophet 21 plans to streamline the procurement process and allow more efficient end-user access via a wireless-ready system and connectivity with other electronic procurement systems.

The idea is to connect many different types of distributors so that they can communicate electronically and share inventory when desirable. Other features of the system include a comprehensive, co-branded and wireless-ready “sell-side” e-commerce solution; and the ability to streamline the procurement process between distributors, their suppliers and end-users. Prophet 21 hopes to employ these capabilities combined with connections to manufacturers, to differentiate itself by housing a behemoth database of a projected 6 million products. But they also will rationalize the entire database of products so that the same products don't have multiple names or multiple product numbers.

Doug Levin, executive vice president, strategy and business development for Prophet 21, pitched TPCX as a tool for smaller distributors. “Grainger's big competitive advantage is access to a lot of inventory. A small distributor can't afford that same type of inventory, but now when you group all these small distributors together, they're bigger than Grainger.”

Another idea that distributors are very excited about is the ability to sell slow-moving inventory to their TPCX partners.

Not only will distributors be sharing old, dead inventory, but they will also have the ability to immediately get products they don't currently have access to. These items can then be shipped to their customers, directly from partner distributors, without the customers even knowing where the products came from.

Steve Epner, president of BSW Consulting, St. Louis, explained how the instantaneous verification of electronic procurement could change a company through new efficiencies.

“A process that took four to eight weeks is now done potentially in less than 24 hours. A process that required many people, forms, file cabinets, carbon copies and staples was now done without human intervention and without one piece of paper. Think about the value this adds to your business.”

Though everyone seems to agree that this kind of networking is a win-win situation, Prophet 21 is the first to admit that this will not work without a certain critical mass of customers involved. There are currently about 50 distributors signed up with TPCX, and only a handful of major manufacturers.

Prophet 21 is hoping that once a few distributors sign on with the TPCX network, others will join. Prophet 21 has the advantage of a base of around 400 electrical distributors already using its software.

Housing Starts Up in January

Privately owned housing starts in January 2001 came in at a seasonally adjusted annual rate of 1,651,000. This is 5 percent above the revised December rate of 1,568,000, but is 5 percent below the same month a year ago, according to the U.S. Bureau of the Census.

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