E-business Grainger style

W.W. Grainger Inc. CIO Tim Ferrarell describes how this industrial products leader keeps close to customers and tabs on suppliers.

Grainger, a 75-year-old industrial products giant, has a laser-like focus when it comes to serving its 1.5 million customers on their terms. Hence Grainger, which supports manufacturing facilities in markets ranging from hydraulics to office supplies, has harnessed the Web not only as another channel to reach buyers but also as an airtight way to monitor interactions with the 1,200 suppliers needed to keep those buyers happy.

Consider Grainger’s Web application Supply Chain Sentry, which the Chicago company uses to monitor product shipments. If Grainger receives a damaged shipment, it takes a digital photo and sends it to the supplier. The supplier can dash off the replacement merchandise after using the digital snapshot to verify the damage. A vigilant gatekeeper, Supply Chain Sentry also uses paging technology and pop-up windows to alert appointed contacts at suppliers of potential problems with shipments. CIO Tim Ferrarell describes this unique application and others Grainger uses in its extended enterprise in an interview with Jennifer Jones, on assignment for Network World (U.S.).

What sets Grainger apart?

What separates us is our use of IT to integrate our various sales channels. This integration helps Grainger provide seamless service to customers whether they order via phone, fax, the Internet or the branch location. Grainger’s goal is to make it easy for customers to find the products they need and get them quickly.

Saving customers time and effort requires being close by with solutions to their problems. Grainger accomplishes this is by deploying ‘dispensing and locker’ technologies at customer sites. These allow us to get inventory closer to the customer so it’s there when needed. This equipment must be connected to customers and to Grainger, and work in a highly integrated fashion.

Give us some details. How do dispensing and locker technologies work?

Historically, customers who wished to carry an inventory of frequently used products on site stored them in a tool crib or some other manned storage facility. The challenges with this approach are typically record-keeping and inventory control. Inventory costs and service levels can get out of hand in a hurry.

Now Grainger provides automated dispensing equipment, which is connected to a customer’s purchasing system and to Grainger’s supply chain. The dispensers look like industrial-strength candy machines but act more like [automated teller machines]. They only release supplies to properly identified and authorized users. Transactions are posted immediately to all affected accounts. The system, available 24×7, generates more accurate accounts than manual processes. Customers know what is being used, who is using it, the purpose it’s being used for and other pertinent information.

The automated dispensers also provide Grainger with a purchase history so products can be replenished as needed. The result is no more ‘stock out’ [notices] or excess inventory. Service quality goes up and money wasted on excess inventory gets invested elsewhere.

Grainger’s lockers work in a similar fashion, except they are controlled delivery points for previously placed orders. To extend our business, we realized we had to have an architecture that let a lot of what we do happen at the edge of the enterprise. We maintain a competitive advantage by providing the easiest access to our customers at the point closest to their actual need. We grew a US$4 billion business [this way].

Now technology is enabling that strategy to go a lot further. Through our dot-com initiative, we’re pushing even closer to the customer with features such as search capabilities that allow users to select product lines and have access to those products 24×7.

We think of this as a multi-channel model. Whether a customer clicks online, places a call or stops by, the transaction needs to flow into the same system. Naturally, that has posed challenges for our network. But, we’ve managed to accomplish this by harnessing the efforts of vendors such as WebMethods Inc. and by using technology such as [electronic data interchange]. We use the connectivity tools that work for our customers. EDI will be around for a while, and we will offer it to customers who prefer it. WebMethods [integration software] connects our Web site to our core order management system.

You mention challenges. What are some hurdles you face in building your extended enterprise?

Security comes immediately to mind. Because our networks were designed to keep transactions inside the basic system, we’ve had to employ many of the more common security checks. Security also is an issue in that we constantly keep pushing the boundaries of where information and transactions take place. For example, there is now a move among manufacturers to incorporate the use of handheld access devices into their systems, and that can easily leave a system exposed if safeguards are not in place.

Grainger is moving from a location-based security model to a role-based security model. In doing so, we will need a convenient and effective authentication mechanism to provide secure access. We are experimenting with physical and software tokens, and we might consider biometrics.

Tell us about Grainger’s IT future.

For us, the future always rests with the needs of our customer. For example, we might be supporting a maintenance person who is working in a 100,000-square-foot manufacturing plant, where the inventory room is at the far corner, and he wants to place an order from the other side of the facility. This person does not want to waste time and must have in his pocket all of the information he needs to place an order. Those are the kinds of practical challenges that are of major importance to us.

Jones is a freelance writer in Vienna, Va. She can be reached at jjwriterva@aol.com.