This month’s column discusses how several well-known companies are gaining a significant strategic edge by way of e-business, strengthening their value-chain relationships and providing their customers with superior service, convenience, and value at lower cost and in less time.
Empowering Your EmployeesIn his book, Business @ The Speed of Thought, Bill Gates stresses the need to decentralize corporate control and empower employees. But, as he points out, “You can give people responsibility and authority, but without knowledge, they are helpless… Knowledge is the ultimate power tool.” One way successful companies are sharing knowledge with their employees is through the creation of corporate Intranets.
How do you create a top-notch Intranet? First, senior management must provide the resources and make the commitment to sharing the information that will make your Intranet a genuine knowledge tool. Second, and equally important, you must ensure that once information is on the Intranet, your employees know where and how to find it.
For one major auto producer, the corporate Intranet has become the backbone of their business, hosting the company’s half-million product design resources, production management tools and strategic information assets. Top company officials have made their commitment to the Intranet clear, advocating web-only publication of divisional business plans, engineering best practices and product development specs.
Mirroring the automaker’s traditional workflow structure, every car and truck model has its own internal website to track design, production, quality control, and delivery processes. Department webmasters describe what’s available on their sites in standardized formats, ensuring that information can be readily found when it’s needed. A central information management team guards against clutter by purging documents that have not been revised in a year or moving them to an archive. The team also coordinates with department heads to make sure that employees who need speedy, secure access to resources on the Intranet can get it.
Now, when workers need an instant answer to a question, rather than sorting through a stack of paper to find what may be outdated information, they go right to the website for a quick, up-to-date answer. Though calculating the ROI of an Intranet can be difficult, the benefit to employees is immediate and clear — it helps them do their jobs better.
Bonding With CustomersNo matter how technologically sophisticated we become, one maxim will never change: The customer is king. And if they’re not, they should be. Building on this truth, many companies are using the Internet to strengthen their relationships with their customers.
With a little ingenuity, one company, a major specialty chemical producer, came up with a winning value proposition: just-in-time delivery. On the manufacturer’s website, customers automatically share information about their usage patterns. Rather than the customer having to track chemical inventories and reorder when they’re running low, the chemical producer now has full responsibility for order placement and fulfillment. They monitor the usage patterns captured on their website to determine delivery schedules for each chemical and customer, automatically delivering the chemicals just before the customer needs them.
The program has been a huge success. Several customers, who previously dealt with multiple chemical suppliers, have consolidated all their business under the one manufacturer, due to the cost savings and ease offered by the automatic replenishment system. When seeking new customers, the company’s sales team is able to highlight the replenishment system as a key competitive differentiator, giving them a significant edge. By increasing trust and promoting a mutual understanding of business needs, the system has also increased customer loyalty and reduced account turnover.
Creating Dynamic Supply-Chain RelationshipsThe customer may be king, and a strong relationship with them may be essential for success, but in today’s quickly moving global marketplace it is equally important to have solid relationships with your suppliers. A recent survey of Fortune 1000 companies conducted by analyst firm Forrester Research found that customer demands, like rapidly changing customized products and shorter time to market expectations, are spurring companies to create more dynamic supply-chain relationships.
Suppliers, particularly in formula-based arenas such as coatings and specialty chemicals, are finding that, to effectively meet customer demands and build dynamic supply chain communities, they must first address a more basic and pressing problem: streamlining their product development process.
Traditionally, product R&D information has been scattered across the organization in various labs and R&D facilities. This has limited the ability to pare down supply chains through rationalization — the identification and elimination of overlapping materials and formulas. Too, it has often been simpler for R&D chemists to introduce a new sample ingredient to a formula than to search for an existing one with the correct price and properties, adding additional cost and complexity to the supply chain. To address these issues, product development software is now available to help formulators centralize product development data, to easily search and compare ingredient and formula data, and to speed the product development process as a whole.
Once the supply chain has been pared down, the next step is to create a new and open trading relationship with your remaining supply chain partners. To do this, many companies are turning to the Internet.
A leading international formula-based process manufacturer focused on the household products and industrial solvents marketplace is using their website to share formerly proprietary order and replenishment information with their suppliers. By way of a standard web browser, suppliers can log directly onto a secure, dedicated portion of the manufacturer’s website for detailed information regarding sales and inventory status on specific products and supplies. Using this information, they can proactively move forward, particularly in the case of commodity ingredients, to obtain and share with the manufacturer an aggressive market price.
The company and its supply chain partners have also migrated many formerly paper-based supply chain-related activities such as billing, accounts payable and shipping/receiving to the Web, and integrated this information into their product development, manufacturing, and enterprise resource planning systems.
The bottom line, for both the manufacturer and its supply chain partners, is a dynamic, real-time relationship that enables both parties to protect and expand their market share and profit margins, by responding more quickly and effectively to customer demands and sudden market changes.