Taking E-commerce to the Next Level for the Pharmaceutical Industry
By John Kossik, Beacon Engineers Inc.
Business-to-business (B2B) transactions represent the latest, and potentially the most profitable, trend in e-commerce. B2B transactions are a natural outgrowth of the original, well-known consumer sites like Amazon.com which have dominated e-commerce thus far. Perhaps the greatest potential for B2B e-commerce is the sale of industrial equipment, from pharmaceutical plants to oil refineries. Unfortunately, with all the growth in online commerce, transactions in this area of are still slow (see "An Uphill Climb for Buying Equipment Online," Chemical Engineering, November 99, p. 33).
Traditionally, industrial equipment vendors have been slow to provide a significant presence on the World Wide Web. Most equipment sites are little more than a limited version of a company's catalog, which still rely on personal communication between sales reps and customers to facilitate transfer of information and the eventual purchase of equipment. Although these sites do transfer information somewhat more efficiently than traditional methods, they site do not use the full capabilities of the Web that typical consumer sites have tapped into.
In addition to traditional equipment vendors, some auction sites have begun offering industrial equipment online. The power of databases on available equipment—and the large number of potential customers that these sites can reach—makes their potential very promising. Their sales, however, still account for a small amount of the total amount of equipment transactions occurring.
The Internet can connect customers and suppliers in a compelling way. Its interactivity, if it can be exploited, can serve industrial customers as it does traditional consumer markets. In trying to take industrial equipment commerce over the Internet to the next level, we must look at how the sales process of industrial equipment differs from that of consumer goods. We then must modify our approach accordingly to take advantage of these differences.
The major difference between these two markets is that a larger amount of preparation goes into the purchase of an industrial piece of equipment than into a consumer transaction. A significant amount of work must be done for industrial equipment, before a vendor is even contacted for an inquiry. Typically, a significant amount of engineering is done to determine the performance requirements of prospective purchase. This engineering usually results in a data sheet and/or specification that is then used to communicate the customers needs to a variety of potential vendors. Only after these data sheets or specifications are completed do the vendors find out about the potential sale.
In many cases the development of data sheets and specifications occur in a vacuum, without much input from potential suppliers. As a result, some degree of back-and-forth must occur between them, after the request for a quotation has been submitted, to clarify and potentially change specifications for the device. Equipment suppliers have always been aware of this "information gap" and have used various methods to close it. For example, they may offer technical brochures, onsite training seminars, free standalone design software, sample specifications, and of course customer visits. Before the Internet, these traditional ways of involving themselves with their customers early on in the design process was all that was available. Now with the interactive capabilities of the Web, we have the potential to revolutionize the way this early communication is conducted and make online sales of industrial equipment norm instead of the exception.
The key is using the Web's interactive capabilities to transfer selected knowledge from the equipment suppliers to their potential customers. This can close or even eliminate the traditional gap between the need for a new piece of equipment and the issuing of a data sheet or specification to the potential suppliers. Towards this end, we must add a significant amount of technical content to the supplier's site. Specifically, what in needed is technical engineering applications that allow the user (potential customer) to conduct their engineering calculations and specify their equipment needs online. These online, interactive applications will replace manual calculations, either done with specialized software or with pencil and paper, that customers use to specifically define the requirements of the equipment they need. It will also provide an efficient way to then communicate these needs to potential suppliers.
With interactive applications available on the Web, all users need is their browsers to access just about all the technical information required to make a purchase.
Customers win because they get free and simple access applications that allow them to design their equipment using online knowledge provided by the very people that make the equipment themselves. This eliminates customers' need for specialized software and reduces their learning curves on new technology. It also affords them efficient access and communication with suppliers eliminating paperwork on their end.
Suppliers win because they get unprecedented access to customers in that previous inaccessible time between when a need is realized to when formal information is transferred to them. In order for this to be successful the applications supplied by the vendors must go beyond just providing technical information: they must allow their customers to conduct their design calculations online. Only the interactive capabilities of the Web make this type of exchange of information possible.
With interactive online applications filling one of the important gaps in bringing industrial customers and suppliers closer together, equipment suppliers can make optimum use of the internet and increase the efficiently in which this type of commerce is conducted.
John Kossik is a process engineer for Beacon Engineers Inc., Seattle.
For more information: John Kossik, Beacon Engineers, 18940 Northeast 150th St., Woodinville, WA 98072. Tel: 425-742-9653. Fax: 425-883-2171. Email: jmk@beaconengr.com.