Plato recounts that in 9500 BC, there was a place just beyond the Pillars of Hercules where one of the most advanced civilizations of the time existed. In the middle of the Atlantic Ocean, Atlantis dominated Western Europe and Africa with advanced naval capabilities and many other technological marvels.
It is hypothesized that Plato used the story of Atlantis as a parody of a society exactly opposite of the Republic he lived in to help illustrate his political views.
So I figured I’d do something similar.
In my version, Cablantis is the opposite of our current Cabinet Industry. It is a place where dealers only have to carry one manufacturer line (yet can adequately service every market segment). It is a place where manufacturers would never take business from the dealers by going direct and dealers don’t have to go overseas to make better profits. But it is also a place of wonder for one other very important reason: dealers never have to re-key orders and the manufacturer receives all their orders electronically with no errors.
Cablantis also happens to be a place where there is no such thing as Nextel and dealer owners and manufacturer sales reps spend the majority of their time managing their businesses from the beach (even the ones that don’t have a son/daughter to take over the business for them).
We all know that Atlantis sunk into the ocean, so what about Cablantis? Well it hasn’t sunk at all. Not only is it a technological marvel, but it is rumored to exist somewhere near the Caribbean on an all-inclusive, resort-like island…
But Cablantis wasn’t always perfect. It actually started out much like our Cabinet Industry did.
Cablantis – The Early Years
There were no published standards on product codes like there is today in Cablantis, so each manufacturer created their own systems with their own versions of catalogs. The net result years later was that manufacturers all sold the same kinds of products but called them something different.
This created huge confusion for dealers in Cablantis’ early history because they usually carried more than one line of cabinets. So the only way the dealers could survive was to create paper to help deal with it all. And that they did. Boxes and boxes and boxes of it. And with paper came errors…by the boatload.
The Manufacturer’s Predicament
In an attempt to achieve electronic ordering with their dealers, manufacturers first tried to solve it with design software. After all, it was the one piece of software just about every dealer had so it was the closest thing to a standard platform available. But they soon found that routing orders from design was like eating your birthday cake, then blowing out all the candles. It was a pre-sales tool forced to solve every dealer problem because it was the only game in town. Electronic ordering from design software had many serious adoption issues like:
- It never worked in dealerships who had centralized purchasing so it was only feasible in the smallest of dealerships where the salesperson also placed the order
- It never accounted for all the extra things required on an order that aren’t a part of design (extra filler, toekick, misc parts, doors, panels, etc.)
- It only handled cabinets, yet the dealer was focused on ordering the job (cabinets, countertops, hardware, closet organizers, appliances, installation, etc.)
- Consumers would explore different prices for their kitchen which didn’t necessarily impact a drawing (i.e. upgrading molding, granite vs. laminate tops, light rail, decorative doors, etc.)
- Dealers still struggled with technology issues (i.e. where do all those drawing files get stored?)
- There were massive version control issues which actually increased errors and drove up costs significantly
- The product codes used in the design software were different than the product codes needed in the manufacturer’s ordering system, causing manufacturers to invest millions in translation layers to fire an order in without manual intervention
- Anytime a manufacturer wanted to alter their electronic ordering feed, it would require expensive and time consuming updates to the design software itself and would take quarters to roll it out — with no guarantee that it would ever be 100% implemented
After experiencing many problems with this approach, manufacturers went on to create their own ordering applications for their dealers. Each manufacturer created something slightly different and would get some dealers to try it.
But many dealers were more sophisticated and had trouble getting their staff to use these applications. The manufacturers didn’t understand this. After all, if the dealers would simply enter this information electronically, the manufacturer could cut costs, make more profit and offer better prices to the dealers. Certainly the dealers wanted this, so why weren’t they adopting?
It must be because some features were missing from their ordering software. So the manufacturers would add features here and there and try it again. Still the dealers resisted.
The manufacturers became frustrated. They spent millions of dollars to streamline their operations but the results were saddening. Many manufacturers even offered discounts to their dealers to use their ordering system. It still wasn’t enough. The panacea of electronic ordering with dealers was rapidly slipping away.
Since streamlining wasn’t delivering significantly improved margins, manufacturers looked to their product costs and contacted an island in the deep cold waters of the Atlantic. Chinartica was quickly becoming more sophisticated and was absolutely booming with population. They started making cabinets really cheap because labor was everywhere. Of course later they ended up eating all their ice, ruining their environment and making children’s toys out of lead – but that’s another story.
Chinarctica learned the ins and outs manufacturing quickly and partnerships were born.
The Dealer’s Predicament
We all know there’s always two sides to every story and in this case it was no different.
In an attempt to lower the costs of back office labor, dealers tried to implement solutions that sat in between design and accounting systems to gain efficiencies. No matter what they tried, their staff would become overloaded with paperwork and mistakes. Implementing software in between design and accounting had many serious adoption issues like:
- The software was not built for the Cabinet Industry (i.e. it rarely worked without serious work-arounds)
- Kitchen designers in the Cabinet Industry didn’t like change (i.e. the first time they perceived the system as difficult to use, they bailed)
- Kitchens were complex and had many pieces. The software being implemented didn’t understand how to read a design’s bill of materials
- Each piece could be customized in what seemed like endless ways — something generic software couldn’t handle
- The software required expensive servers, hardware and remote access to be installed and maintained
- Dealer management underestimated the time and training required to implement new software
- The software created even more issues downstream in shipping, receiving, delivery & accounting, causing gargantuan amounts of paper to be generated
- The software failed to improve the lives of the user and rapidly became something for the employees to hate
After experiencing many problems with this approach, dealers went on to create their own software for quoting and ordering – one single system to rule them all. Each dealer created something slightly different and would get some salespeople to try it.
But many dealers’ businesses changed too rapidly and they had trouble getting their sales staff to use these home built systems. Dealer’s management teams didn’t understand this. After all, if the salespeople would simply enter this information electronically, the dealer could cut costs, make more profit and offer better commissions to their salespeople. Certainly the salespeople wanted to make more money so why weren’t they adopting?
It must be because some features were missing from their home built system. So the dealers would add features here and there and try it again. Still the salespeople resisted.
The dealers became frustrated. They spent hundreds of thousands of dollars to streamline their operations but the results were saddening. Many dealers even offered incentives to their salespeople to use their home built system. It still didn’t work. The panacea of one system to streamline their operations was rapidly slipping away.
Then manufacturers began offering discounts to get them to order electronically. The dealers said, “I’ve got my own problems and each one of my suppliers wants me to do their data entry in their own ordering system – what are they smoking up there?”
Since streamlining wasn’t delivering significantly improved margins, dealers looked to their product costs and contacted Chinarctica.
Chinarctica learned the ins and outs of distribution and partnerships were born.
So the builders went to the manufacturers asking for better deals and the manufacturers had to choose to either go direct or lose the business. So manufacturers took the bait and built infrastructure to service the home builders directly.
The dealers became upset that business was being taken away from them. They also saw the manufacturer direct prices as devaluing the services they provided in their channel. So to better compete, the dealers looked overseas and began undercutting the manufacturer direct prices.
And so it was that the path to The Divergence was set. Soon it would be a time of war and strife for Cablantis. A time of tough markets, tested loyalties and desperation in some cases.
So How Does the Story End?
Some say the manufacturers got their act together and took the time to understand the dealer’s predicament better and streamlined operations between themselves and their dealers to deliver huge value. Others say the dealers pulled in their product from Chinarctica and decimated the manufacturer landscape. And still others say the manufacturers put the dealers out of business permanently.
No one knows for sure, but one thing we do know: Cablantis ended up with a healthy manufacturer and dealer side of things – with 100% electronic everything. So the way I see it, markets always go in cycles. Dealers and manufacturers exist in every industry for a reason. It’s one of those things like rain and water, I guess. You need one to make the other. And even though you might get pissed at each other, there’s a bigger battle you should be preparing to fight.
Like textiles and furniture, the real unfortunate part was the billions of dollars which were wasted during The Divergence. While the manufacturers and the dealers were trying to out-maneuver each other, they became very distracted. Instead of banding together and streamlining their operations to compete with the rest of the world, they spent all of their time and energy working with Chinartica who quickly learned all the detailed tricks of the trade – from both the manufacturer and dealer perspectives.
So how did Cablantis become the panacea we know of and talk about today? Well that’s easy to see when you look one layer deeper: there is only one supplier and one dealer in Cablantis. And they’re both owned by Chinarctica.