Order management goes first in the agentic era | Ep. 10

[00:00:00] Welcome to Data vs. Commerce, where we explore the messy middle between database and doorstep. I'm Matt Johnson. And I'm Floyd Blakey. Let's dig in. Hello, Matt. Floyd, it's good to be back with you. It is. It is good to be back. Believe it or not, I don't just podcast, although I think that, you know, likely it would do the world a favor if that's all I did. But in my day job, of course,

[00:00:26] I lead the marketing department at Pivotree. And we have been working on a couple of reports. So as part of what we do, we like to keep a pulse on the industries that we serve, see what people are up to, keep tabs on the movers and shakers. And this is not the topic that I want to cover today, but we recently released our State of the Industry Retail Report. And I'm sure we can go into that with one of our retail experts on a future episode. But the one we're about to release

[00:00:53] is the State of the Industry and Industrial Manufacturing and Distribution through Q2. And I think it's a really cool report. And I'll tell everyone how to get it at the end of the episode. But I wanted to tell you the wackiest thing, the coolest thing I think that we found in this report, which is Swagelok has made just a huge leap forward in terms of using AI

[00:01:17] for order management. They are now handling 97% of order to cash through automated multi-agent AI. It's lifting purchase orders, putting them straight into SAP. 97%. Have you ever in your life imagined that amount of order taking could be lifted and shifted into an AI system?

[00:01:42] It's really incredible. And if anybody from Swagelok is listening to this, I'd love to talk to you, not to sell you anything. I am just genuinely curious how you did this. Because if those numbers are true, the amount of change management that had to happen, the amount of governance that had to happen before

[00:02:06] you're able to realize those numbers is just staggering and really a case study for everybody in across industrial. So good on you guys. That is really impressive stuff. And, you know, hey, I think that's where we're heading. Absolutely. And maybe it's a little scary, you know, for the people who have traditionally been at the counter or have been, you know, on the phones or receiving the faxes or whatever, you know, we used to

[00:02:34] do back in the olden days. And in fact, I think most manufacturers and distributors are still there. From what I'm seeing in this report, only about a third of manufacturers and distributors are really on the leading bleeding edge of this, this kind of order management workflow. And it's interesting to see how that differs from what's going on in retail. So the agentic era, of course, has come for retail as well, but it's coming in the front door, right? It's the shopping, it's the finding the

[00:03:03] products, even the adding to cart, you can do the entire purchase process through AI. Although I don't think a lot of people are doing that much right now. But the agentic era is about finding and buying the product from the front end of the store. But I think in industrial, you know, there often isn't a storefront to put a robot in front of, right? That's what you've seen, I'm guessing, in IMD.

[00:03:28] Yeah, there's so much to say about this. And I love the headline of our report in is order management, you know, goes first, you know, it's leading this AI push in organizations and for very good reason. Because you said that back in the olden days, this is how this worked. Actually, it's not so old. Like, this is happening. It's not. This is happening today. Like, you're going to have a department

[00:03:58] of inside sales reps, literally printing papers out on a printer, picking those papers up and moving them across the organization physically. That's just reality for most manufacturers and distributors today. But that this is, this is not uncommon, because the process of actually taking an order

[00:04:26] from quote to cash is extremely manual, they're limited by legacy processes. And turning a ship like the Titanic is not so easy, right? So changing the way you fundamentally handle an order is extremely risky to your customer experience, as well as to your internal teams, like a factory cannot just shut down while you figure out how to go digital.

[00:04:55] No, no. And I think that there's still a pretty big cohort of B2B businesses that are trying to figure out how to get started. One of the stats that we uncovered in the report was 71% of B2B businesses do offer e commerce to some extent, but that does not necessarily mean that it is a digital experience from start to finish. You might be able to log into, you know, a portal and place an order,

[00:05:20] but it might still be somebody at a desk who's getting the printout. And then, you know, going and typing that into another system, it's not necessarily a connected ecosystem. So you've got that reality, which is that not all B2B has adopted e commerce, the ones that have only about a third of those are actually doing the full thing start to finish, and certainly not to the swage log extent.

[00:05:42] On the other hand, you've got analysts, like the gardeners of the world saying that by 2028, AI agents are going to mediate more than $15 trillion in B2B spending, and 90% of B2B purchases will be AI assisted. Do you think like, does that sound real to you? Or is this just like the, the number crunchers making things up for slide decks? What do you think?

[00:06:09] I watched that same, I watched the video of that analyst isn't, I think his name is Daryl Plummer. If I'm wrong, I apologize. But I watched that video. And when I first heard him say that my jaw dropped and I thought, what is this guy on? I didn't really believe it at first. But I will say this, I'm starting to become a believer because I'm watching companies advance so quickly, even in our

[00:06:39] business, like what we've done in six months, would have taken six years, you know, in innovation, and how quickly you can experiment and adopt new processes and technology. It's just crazy. But look at what Swagelock's doing, right? Like you think that took years and years, it probably took months and months. And that's the difference today, right? With the right leadership,

[00:07:05] with the right processes, you can very quickly change the way that you do business. And is it believable? It's believable. Is it going to be a stretch for a lot of companies and industrial? Absolutely. It's going to be very difficult. And one of the things in our report that we point out is the gulf between those who are leading, who are on the leading or the bleeding edge,

[00:07:32] versus those who are sitting still. And that gulf has always been there, right? There's always been like digital leaders, companies that are doing, you know, that are industrial MRO distributor that does 60% of its revenue online, compared to, you know, a not small business who's doing maybe 1% online. But that gulf's always been there, but it's getting wider, faster than ever before. And

[00:08:00] yeah, so yeah, I do believe it because the big guys who own most of that market share are going to advance very quickly. And you will see billions in revenue through industrial being mediated by AI. Yeah, absolutely. And I think electrical distribution is what we're seeing as being on the kind of leading edge. I don't want to generalize too much, but you know, we've got AI ordering and quote assembly from Graybar. That was another thing that we covered in the report. And if I'm a leader in the, you know,

[00:08:30] manufacturing distribution space, it's easy to look at those stories from Swagelok, from Graybar, from other organizations that have rolled out these really sophisticated, you know, AI enabled buying experiences and say, well, that's so far ahead of me. Like, I don't even, I can't even think about that right now, but it wouldn't be a very good report if I was just repeating press releases. There's other stuff that we look at too. And one of those things is job postings. And the strongest

[00:08:59] hiring signal of all of Q2, that's the time range we're looking at in this report was product data. So one in seven companies that we tracked across over 700 companies across North America, they are putting out product data roles. So these are like channel infrastructure roles. They're not like web roles, right? We're not just writing product content for the e-commerce storefront.

[00:09:24] These are people that are getting hired to feed other companies systems. They are, they're looking for PIM roles. They're looking for engineers to build AI agents. Like, I think that is the signal that the middle of the pack is working to catch up. Are you seeing that too, with like new hires and job postings in the organizations you're talking to? I am seeing that. And you are right. There is a mad

[00:09:49] dash right now to catch up. And everybody in, in leadership understands that the place where things are going to break down in the back office AI automation initiatives is kind of started at the product data level. There's customer data also, which is a big concern, but yeah, product data is essential to

[00:10:14] making the order management, the, the, the quote to order automation work because you know, that is where the human intelligence has always lived in these companies. You have to understand the catalog in order to handle a customer's quote request or to enter an order correctly. And if it relies on the human

[00:10:43] tribal knowledge that are inside of these inside sales departments, then you'll never be able to fully realize that kind of automation that, you know, AI promises and not just promises, but is delivering for some of the market leaders. All right, let's put some heat on a guest who's not even here to defend themselves, which is very unfair. But recently we had the founder and CEO of Trommel on the podcast,

[00:11:12] Lauren, and she was talking about how her organization is using AI to help like field sales do that relationship-based selling in a better way. I feel like these findings are at odds with that in some way, because if we're saying that the order, you know, order management is the first place to go, the person at the desk is going to be replaced by AI. Like, does that mean relationship selling is no longer important? I feel like that's going to be something that B2B does not want to

[00:11:41] let go of very easily. No, it's not. And you know what I was thinking about just a few minutes ago when we were talking about, you know, these, these roles that are coming up and we're seeing them, you know, it's a demand right now for product experts. It's a demand for people that can manage and own that data. And really the thought that actually came down to my mind whenever I hear hiring

[00:12:06] is I think about this changing demographic. And I know that there's executives that are sitting in their boardrooms right now and they're talking about these market leaders and they're saying something like, oh, you know, that's okay. That's okay for Graybar. That's okay for Sonapar or Swagelok. We're going to win with relationship. You know, that's going to be our competitive advantage.

[00:12:33] They can automate all they want. Our people are our value proposition. And that's great, but it's also at the same time a real danger because of the changing buying demographic because of that next generation, you know, purchasing manager, purchasing director, they're adapting

[00:12:56] faster than you're adapting. And what I mean by that is like, they're no longer as constrained to who they can purchase from. They're simply looking for the fastest, cheapest, easiest way to manage their supply chain. And if that's the case, relationships start to break down, not in terms

[00:13:19] of the importance, but in terms of the value that you always have relied on, right? The managing of the order is no longer where the value is in face-to-face sales. The value is being available, being that human face-to-face-to-the-business. But what happens behind that relationship is really what purchasing managers

[00:13:46] care about today and will increasingly care about. We don't got time to be calling in and emailing and following up and asking questions. That's just not what this next generation expects. Yeah, I think you're right. And I think that it's just that the bar to earning the relationship gets a bit higher, right? You don't have to force someone into a relationship by just making a human the gatekeeper. You have to earn it in a different way, which I think is interesting. I've been in

[00:14:14] manufacturing for 12 or so years. And I remember in those earlier days hearing about, oh, millennials are coming and taking over. Millennials are going to be the biggest purchasing group. And now it's Gen Z, like us millennials are getting old. Like I'm pretty sure I need bifocals and I'm solidly a millennial. And the research supports that 67% of B2B buyers now want a rep-free experience, which should be a

[00:14:41] little bit scary for people whose, you know, relationship skills are covering some sins in the product data department. And 45% of B2B buyers have actually used AI in a recent purchase. This is not a theory. This is already happening. Those dang kids are taking over our, you know, buying processes. Get off my lawn. So I think, yeah, I think that, you know, even if the order counter becomes an API,

[00:15:10] you still need the relationship. You just have to earn the right to start that relationship by having a good experience up front. The tough truth in all of this is that you're, you can no longer rely on one or the other. You've got to bring both, right? Like I just think of Grainger. Like, and I always, when I always think about what best practice looks like, I think about Grainger because they do it

[00:15:36] better than everyone, anyone, right? And they are everywhere. Physically human faces on job sites on, like in the manufacturing facilities, they show up, they embed themselves. And I'm talking field reps, like they know their customers. They are always there adding value, but guess what? The ordering,

[00:16:00] the catalog, all of it is best in class, right? So you get the best of both worlds in that you, you have that relationship, you know, your Grainger rep, but you also can go online and you can order and make sure that, you know, you're never missing those parts and those materials that your business

[00:16:23] requires. And so that's a very tough value proposition for most mid-market distributors in particular to compete with, but they've got to, they've got to figure out a way. And, and usually what's missing is what's behind the rep because they've relied so long on just the human touch and, you know, automating the order management, making sure that questions are answered without having to

[00:16:51] go to their rep is where most mid-market distributors are really struggling. Yeah. And I don't think based on what, you know, we've seen in the industry and in building out this report is that there is no way to opt out, right? You can say, you can be the biggest AI hater. You can say, I don't care what you say. I'm just going to continue to rely on my relationship-based sales organization, but you can't make that choice because machines are ingesting your data,

[00:17:21] whether you want them to or not. You don't have to sign off and say, sure, chat GPT, you're allowed to look at my product catalog. You can certainly block it, but I don't know, unless you're really interested in preventing sales, then I don't know why you would do that. But your products right now are being read, they're being compared, they're being recommended by AI buying bots. Gartner's calling them custo bot. I'm not sure I love that, but I don't think I get to make that decision. Like,

[00:17:50] being behind on digital doesn't keep you out of agentic commerce. It's just making you lose. It's, yeah. Am I wrong on this? No. Well, you're not wrong. There's just the nuance I would add is that when your end buyer is researching, they're going to use the industry's best research tools. Okay. So they want to do their job faster. They're turning more and more to AI to do that research.

[00:18:18] They're going to go to the manufacturer first as the authoritative source of that product information. And manufacturers who are in competitive categories, they're either showing up because their data is machine readable and structured for those LLMs, or they're not even in the consideration.

[00:18:41] So they're either informing the buyer who will then take that information and go to whatever approved supplier distributor that they have and make the purchasing decision. And this is a untapped area for manufacturers. They've always known that they need good product information online for their customers.

[00:19:04] But what they're starting to realize is that the way that my products are also appearing downstream on distributor channels impacts the way that these AI models are looking at their brand. Because if you're invisible on distributor websites, AI doesn't consider you a viable option in terms of supply and, you know, and the ability to actually get that product.

[00:19:33] Right. Doesn't matter how good your product photos are, doesn't matter how good your counter person is, you're just out of the consideration set entirely. Scary, but there's a lot of opportunity here also. Yeah. And it's not like anything has fundamentally changed because business is business and we've always done this, right? Like we

[00:19:55] manufacturer has always needed to own the authoritative source of product information and get that product information where it needs to go. The challenge today is just that it's different and there's more places where it needs to go. Right. So it used to be about that beautiful studio photo and, you know, that nice brochure in the PDF.

[00:20:22] And, you know, unfortunately, a lot of manufacturers are still in that world where it's all about the marketing brochure and they haven't taken the data that's in those marketing assets and put them into machine readable formats or even digital commerce friendly formats. And then like that's step one. Step two is actually getting it downstream.

[00:20:46] Step two is getting it into the hands of your distributor sales reps in those marketplaces so that, you know, you can actually sell. Absolutely. Big PDF is going to come for us. I can feel it, but I want to make sure people get to see this report. And I'm actually I'm really excited because this is something we're doing now on a quarterly basis to see what changes or how this evolves between Q2 and Q3.

[00:21:09] So we'll be looking at that later in the year. But if folks want to see the report, we're going to add it to depending on where you're listening to this, you can go to data versus commerce dot com. We'll have it on our LinkedIn page. You can search us at data versus commerce and we'll put it in the show notes and transcript on the site as well. Anything you want to plug, Matt? You got any cool stuff?

[00:21:29] Well, you know, thank you for pulling together this report. I mean, it's it's really exciting to be able and we're using AI on our own to do massive amounts of research that, you know, would have taken me weeks and weeks. So, Floyd, thank you so much. It's incredible. This report is really exciting. We will be updating it. We are already looking forward to some events later this year.

[00:21:55] We have some exciting new solutions that are coming out that speak to the very issues that this report brings up. So if you want to talk about the report, I'm always game. You know, you can DM me on LinkedIn or send an email and we'll get together. Oh, that's great news because I did put your email address in the report. I wasn't going to tell you and just have it be a surprise, but glad to have your blessing on that. Thanks, Matt.

[00:22:21] Yeah, you've got it, Floyd. This was this was great. And yeah, looking forward to the retail report as well. Let's get Dan on and we'll go through that one. All right, let's do it. See you next time. OK, see ya. Thanks for tuning in to this episode of Data vs Commerce. New episodes drop weekly. So if you're responsible for any part of how products get from a database to a doorstep, subscribe now on Apple, Spotify or wherever you listen.