We realised that taking our vision of the real-time, agile company from dream to reality was not something that could be done all at once. It was not just a matter of installing some software and teaching people how to start up the system. That would actually be the easiest part. The hard part would be learning new ways to do our jobs based on what real-time systems and data can do for us. A sudden flood of data would not make us any more efficient until we learned what to do with it.
As it turned out, our budget constraints at the time actually worked in our favour because they prevented us from embarking on a heroic but ill-conceived and hugely expensive ERP or e-commerce project. They helped us see the wisdom of using the "crawl, walk, run" approach as the best way to move toward the real-time enterprise.
In 2000, we built and rolled out the first version of a suite of e-commerce and supply chain management systems, and we have been enhancing and extending them each year since. These systems collect and move data such as purchase orders and invoices between our customers, our suppliers and us. They move data using batch cycles that happen every 15 minutes to two hours. Using these batch cycles, it is relatively cheap and easy to electronically exchange data between our systems and the systems of the companies we work with.
Using these batch cycles during the past three years, we have deployed supply chain systems that provide daily, updated sales history information and make it available over the Web. We and our customers can now monitor sales activity by customer location, product and manufacturer during any time period from one day to three years. This data has become critical to us and to our customers for planning, negotiating and managing procurement activities. We are starting to share this daily sales data with some manufacturers too. There are issues of trust and confidentiality (as in noncompete and nondisclosure agreements) to be worked out with each manufacturer when we share this data. It takes time, but it is happening.
Our customers are learning to use the data to plan their purchases and negotiate better deals with us. We are learning to do better sales forecasting and, in turn, negotiate better deals with the manufacturers we buy from. Operations people are learning to use the data to do better logistics management. Credit people are learning how to monitor sales and accounts receivable in a more timely manner. We are making progress one step at a time.
So where are we now? I'd say we are at about a fast crawl. For the past year or so, we have been rolling out an efficient transaction processing system that allows us to share five key documents (purchase orders, invoices, advanced shipping notices, product masters and price books) with more and more of the companies in our supply chains. As this project progresses, it will bring us into the walk phase: the creation of truly synchronised supply chains. Hello real-time, sense-and-respond organisation - here we come.
Mike Hugos is CIO of Network Services Company in the Chicago area and the author of Essentials of Supply Chain Management
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