Four Digital Technologies Deserving Member Attention

By Scott Ehrnschwender

Technology advances continue to offer substantial opportunity for distributors and manufacturers to enhance customer service and reduce operating expenses. In this article, we examine four of these opportunities, each offering tangible benefits to NWSA members.

Virtual Private Networks
A Virtual Private Network (VPN) is a rapidly growing method of enabling remote connection to a company's host computer. Currently, most distributor branches connect to the home office via a "leased line" or "frame relay" arranged by a telephone carrier at an approximate fixed monthly cost of $250-$1000 per branch. Traveling salespeople and home telecommuters gain access to the home office via direct dial or an 800 long distance telephone call, also an expensive and repetitive cost.

With a VPN, all users (branches, salespeople, and telecommuters) log on to a local Internet Service Provider (ISP) and create a "virtual tunnel" or pathway over the Internet to their company's host computer. User computers need to be equipped with special software to create this tunnel upon logon. Individuals may dial up to their ISP to create a connection, while branches will normally require a fixed ISDN or DSL connection. Since the data traffic is moving over the public Internet, communication costs are generally reduced, often only a fraction of current costs. In addition, the information traveling over the Internet is fully encrypted, ensuring its security. Yankee Group predicts that by next year, VPNs will overtake private lines in popularity due to their cost saving features.

What this means for NWSA distributors and manufacturers is significant. With a large number of members requiring remote access for branches and salespeople, most members could save significant communications costs with this service. In addition, customers who adapt VPN technology for their branches also are providing the capability for employees to access Internet and web functions as well. Implementation costs for VPN, however, might include the replacement of dumb terminals, multiplexors and communications gear at a distributor branch with more modern network-based equipment such as PCs, routers and network print servers. This up-front cost can often be recovered in the first three to six months of savings from ongoing communications costs.

Voice Over IP
Similar to a VPN containing encrypted data traffic, voice can also travel over the Internet. While traditional voice long distance rates have fallen dramatically over the past ten years, Voice Over IP (VOIP) can still offer significant savings for users. Corporate users should expect to save an average of 22 percent, according to recent surveys. Individual PC-phone rates are now showing significant savings. For example, rates for Deltathree's iConnect in mid-July ranged from 1.9 cents up to 2.9 cents per minute for a 400 minute/month plan.

VOIP uses much of the same routing and switching technology as data. Users may purchase a hybrid PBX that allows a transition from analog to IP traffic or an IP PBX and handsets. Traditionally, purchasing new IP telephone equipment has been a difficult sale compared to extending the life of aging PBX equipment. However, as equipment replacement is warranted, VOIP becomes an attractive option.

NWSA Member Delille Oxygen Company of Columbus, Ohio has had a hybrid VOIP system for two years. Tom Smith, controller, says the system works well, attaining both high quality transmission and cost savings.

Extensible Markup Language
Another up and coming tool, Extensible Markup Language (XML), also uses the Internet as its primary communication medium. XML is a data language used in applications to enable trading partners to exchange data. While this sounds similar to another acronym, EDI, XML differs in several positive ways:

1. XML is designed for the Internet, while EDI has been used primarily with VANs or third-party private switching networks that charge monthly fees per trading usage.
2. XML is human readable. Similar to its website cousin HTML, XML consists of sets of tags, such as , which precede and identify the type of data to follow.
3. XML is flexible. Whereas EDI consists of exacting document specifications, only XML tags necessary to describe an item or a transaction are required in an XML document. In addition, these tags may be placed in different sequence, or may be added, as long as both parties agree to a common set of tag definitions. Thus, the document has the ability to grow, i.e., extensible.
4. XML occurs in real time, while EDI is batch. Because XML uses the Internet with no third-party switching, transaction data are sent and received instantaneously, often accompanied with an immediate response. EDI is similar in delivery to an e-mail server that receives and forwards mail to a mailbox.
5. XML can send all types of data, not just specific EDI transaction sets, such as a purchase order or invoice. As a result, in large companies XML is the method used to communicate all data between disparate internal systems.

Due to the aforementioned reasons, XML is projected to fill the gaps where EDI was too expensive or too cumbersome to undertake. Eventually, as XML proves its value to those companies with decade old EDI systems, XML is expected to replace EDI as the standard for trading partner exchanges.

NWSA is currently investigating the establishment of an XML standard to aid distributors and manufacturers realize the value of this powerful new tool.

Global Positioning System (GPS)
With a Global Positioning System (GPS), a firm can view a map of the actual routing of a vehicle in real time or during a previous period of time. Companies can identify where their delivery vehicles traveled, the duration at each stop, the elapsed time between stops, if and when the lift gate was invoked, and when the engine was started and stopped. Guy Marlin of Lampton Welding Supply in Wichita, Kansas, has installed GPS systems in his fleet, and has realized significant amount of truck time and fuel savings by addressing routing issues with his truck drivers.

For distributors with fleets of trucks and manufacturers with fleets of salespeople, GPS is becoming an important tool for managing costs.