New technologies boosting efficiencies for distributors

Jim Broughton, president of DataWeld Inc., sees available computer technologies offering great efficiencies for gas and welding product distributors. Those technologies include the standardized XML Internet technology that has just been developed and is being put into service.

GWD: Where do you see opportunities for growth in the next two or three years?

Broughton: Our core business, as you can tell by our name, is the compressed gases and welding supply industry, and that will always be our core business.

But one of the things we have seen is that a lot of the tools that we have developed for the compressed gas distributors are getting some interest in other markets that we're looking at.

For example: if I can help a distributor process an order on a truck using handheld technology that same concept works in other industries, such as anybody who sells anything off a truck. We had a call recently that took us buy surprise from a company that sells food off a truck. A company called us looking for some hardware, and while we were talking they were asking "Can your software do this, this and this," and we said, "Well, yeah, but we're primarily focused on welding distributors." So after about an hour of talking they said "Your doing exactly what I want," and we are hoping to get an installation with them. The only difference is that, instead of the inventory system having helmets, it will have some sort of food items.

The concept of what we've done carries over to other markets, and we're going to look at some of those.

We also have done quite a bit of work with radio frequency identification tags, and some of our tools carry over into other markets with that technology.

GWD: Are there specific markets that you're targeting?

Broughton: We have worked for a number of years with our cylinder tracking software, and we are looking at other markets outside of the compressed gas industry that have similar needs, but to say there is something specific right now, no; but we have been doing research into other markets.

GWD: Other than new markets, do you have other initiatives underway that you expect will help you to grow the business?

Broughton: I think the initiatives we have in place are to take advantage of our existing products in other markets.

For instance, cylinder tracking combined with order entry processing and a handheld computer. That's a fairly unique application, but it has some carryover into other markets.

What the handheld tools do is instead of the driver having to manually write out a ticket, put a price in, figure out the tax, figure out the extension and figure out the delivery charges, the handheld does everything for him and in a matter of a minute or two he's able to hand the invoice to the customer.

If we go back to product differentiation, using our handheld products is one the things a distributor can do to make it more attractive to do business with him because you get completed invoices on the spot or information available to you on the spot.

GWD: How prolific is that technology in the gas and welding distribution area?

Broughton: I would say at most 10 percent to 20 percent of the distributors are using this. There is a lot of room for growth there because there is a lot of operational efficiencies in that type of product.

We're a small company, and I'm guessing we have 15 to 20 locations with that technology, and we expect that to grow as the price of the handheld computer drops. There is just no excuse for not doing it.

We have noticed that the welding supply industry has been slow to adopt new technology, so one of our roles is to educate the industry and to have the technology available when the industry is ready to accept it.

We started on this technology about four years ago, and it is becoming a technology that distributors are seeing as a way to differentiate themselves and as a way to get greater efficiencies.

Take the example from the food industry: The guy has 15 trucks, and every day they go out in the field and create invoices in the field. Right now, they come back every day and there are between 200 and 300 invoices that have to be keyed in manually each day. When he installs our product, as soon as the driver plugs his handheld into the PC to download everything, there's no more data entry, so we've just eliminated the time it takes to key in 300 invoices every day. That's a huge time savings on a daily basis.

GWD: What are the issues that prevent people from adopting that technology? Is it a lack of education? A lack of awareness? A cost issue?

Broughton: I don't think it's a cost issue; it's a matter of how we look at things.

If you look at it as a pure cost issue, then you're looking at it wrong. But if you look at it as an investment in terms of ways to save your people time, then it becomes very, very economical.

When we're working with people, we do a cost justification, and we ask them: "How much time each day are you spending keying in these orders that come in from the driver?" Then we ask: "How much does that person who does the keying in typically make?"

When you factor in the time and the money it costs and the fact that the driver is already doing it once, what you end up with, with some people, is a payback that is less than six months.

So it's almost a no-brainer, but then they say: "Well, I've got that person on the staff anyway." So a lot of people have the attitude that, "If I free someone up from doing that, they're just going to waste time someplace else." I think that is a management issue not an operational issue.

That's the kind of thing we're looking at to continue to create operational efficiencies.

There is one other thing that is really exciting for the industry as a whole: XML technology. In a nutshell, the XML code is like a translator — it lets one computer system talk to another without having to do a lot of complicated programming.

We are in the final phases of implementing an XML product that will allow the distributor to press a button on their PC to send a message via the Internet to their supplier to ask if they have an item in stock. And, in five seconds the distributor will get all the information it needs — computer-to-computer — without the distributor having to pick up the phone and call to ask if the item is in stock and what the price is.

We're doing it, and the other software companies are doing it, so it's not unique to us, but it is an exciting concept for the industry.

Through the efforts of GAWDA, we and the other software companies are going to be able to eliminate the need for thousands of phone calls each month to suppliers.

The reason I say that's exciting is because that's kind of the tip of the iceberg.

I think that in the future, if distributors can go to their suppliers and ask questions electronically, that then poses the question: "Why can't the customer come to the distributor and ask the same question?"

GAWDA pushed real hard for a standard with this XML code so that we could all be on the same page, and have one set of programs.

I think that's fantastic, and what it did is to open the door for all of us and say, "What is the next step?"

And if your customer can sit at a PC and ask the computer a question, and say, "Hey, do you have this in stock for me, and what's my price, and when can you ship it to me?" then it makes it real attractive.

GWD: How far down the road is that technology?

Broughton: We are right in the middle of it, and we'll have it running by the end of July.

GAWDA has worked on the standard for quite a while, and I believe the other software companies are also working on it, so it can benefit any distributor regardless of the software they're using.

But we're going to see it very shortly.

It will be available at the distributor level by the end of the year.

The answer to the question "How is the industry changing?" is that when a distributor can answer a question in five seconds that used to take him three or four minutes, then there is a huge operational efficiency there.

Of anything that I've seen, of anything that I've worked with over the last couple of years, the concept of one computer system talking to another, from the distributor to the vendor and to the customer, that has an incredible potential for the entire industry to benefit.

Right now, we're working on "Do you have it in stock?" and "What's my price." The next step will be placing orders, then establishing an order acknowledgement standard, there's an order placement standard, so what we're going to have through the Internet, through GAWDA's efforts — and I think GAWDA really is to be applauded in this area because they really pushed us — but it's going to have a millions and millions of dollars impact on efficiencies.

Read the full text of Bruce Vernyi's interview with Jim Broughton at www.weldingdesign.com.