By Sramana Mitra and guest author Shaloo Shalini
In the following interview, Sramana and Steven discuss how supply chain services for Internet-based electronic data interchange (EDI) in the automotive and traditional whole goods markets are adopting cloud computing to their advantage.
Steven Smith is the president and CEO of GCommerce, Inc. He started his career at Ruan Cos.’ Iowa Export-Import after graduating from Grinnell College. He founded GCommerce in 2000 in New York. A few years later, in 2003, he moved the company to Iowa, weary of New York’s high costs. Smith picked Des Moines over sites in Illinois, Nevada, and New Jersey. Smith pledged that the 20-employee company would grow to 150 workers in about four years, but things did not work out well until Smith decided to rethink his software strategy and rebuild the company. He put his focus on helping auto parts retailers, distributors, and suppliers connect. Smith knew this business best. His father had worked for Gates Corp., a parts maker, while he helped Prestone antifreeze become a leading supplier to Wal-Mart. After GCommerce made the auto parts supply chain more efficient, customers wanted them to make it easier to fulfill special orders, such as requests for the parts that are not stocked. It was a problem Smith had wanted to solve for years, but the solution was expensive and technologically complex until GCommerce hit upon cloud computing. Lost sales, employee time, and other problems with special orders represent 80 percent of the costs in the supply chain, GCommerce estimates. Smith said that a conservative estimate of the cost is $20 billion a year. GCommerce promises to change that, in some cases cutting from 15 minutes to 15 seconds the time needed to find and order a part through its virtual inventory cloud (VIC) offering.
GCommerce, Inc. employs 40 people and has become the cornerstone of the supply chain for the auto aftermarket industry. Today, GCommerce is a leading provider of Software-as-a-Service (SaaS) based technology solutions designed to streamline the distribution and supply chain operations. Its connectivity solutions facilitate real time, effective information sharing between incompatible business systems and technologies, enabling firms to improve revenue, operational efficiencies, and profitability.
SS: GCommerce is the market leaders for a business-to-business exchange services in the $300 billion automotive after market in the United States. Globally, it is a trillion-dollar market. We provide and automate the entire procurement cycle in this market. The core problem that we are addressing, using this transformational solution called the virtual inventory cloud built on Microsoft Azure SQL Azure Platforms, is the lack of visibility on inventory, products, and the supply chain. Today, there are 10 million part numbers that are in distribution in the marketplace. These parts are spread across the 47,000 retailers and 216,000 repair shops in the ecosystem. An average distributions center stocks only about 200,000 parts. An average store stocks 13,000 parts. You have a massive inventory disconnect between being able to stock the products that either the consumer or the repair shop needs and the ability to deliver quick, quality service.
GCommerce rendered a solution we call the VIC to virtualize the availability of capacity to inventory in the supply chain by bringing together and harnessing all of our participants in the marketplace. We have over 1,000 suppliers and over 200 major commercial wholesalers and retailers in the ecosystem, including significant retail distribution and suppliers in Mexico and Canada. We have a large ecosystem that is participating in the VIC. The idea is, with Microsoft we are taking about a $20 billion problem called drop ship special order. It is core to what Amazon does – providing the ability to take an order and drop ship special orders to any location. In the context of this $20 billion problem in a $300 billion marketplace, with our solution, we can take a 15-minute process and convert it to a 15-second one. What is typically done today by using the phone, e-mail, extranets, and sort of random ad hoc processes that take about 15 minutes, takes only 15 seconds with our VIC.