Supply Chains

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TraiT 10 Globally Optimized Operations (Completing the Effort)

Throughout this book we have stressed collaboration as an ingredient of greatness. Add to that a complementary feature— the ability to use technology as an enabling factor for success. The combination of these two elements provides a powerful capability that enables supply chain leaders to maximize their global resources and opportunities. This final trait— the ability to optimize a global network of resources— clearly distinguishes supply chain leaders from others in their indus- try. In effect, global optimization represents the culmination of the nine greatness traits that have preceded it. This chapter explains how technology-enabled global collaborative capabilities give leaders huge cost and responsiveness advantages over their rivals.

Global optimization is sustained only by constant scanning and evaluation of partnership opportunities that can potentially change the network structure. Supply chain leaders excel not only at optimizing flows in their current networks but also at continually improving their network structures and business models. This ability includes finding the best locations and insource/outsource arrange- ments for all of the key supply chain processes.

Figure 12.1 shows that the leaders in our survey feel much more positive about their abilities to develop and manage global resources than followers and laggards. Ninety percent of the leaders reported that they optimized and synchronized flows of materials, people, information, and cash throughout their global networks. While only 70 percent of leaders agreed that their processes were optimally located

Poirier, C., Quinn, F., & Swink, M. (2009). Diagnosing greatness : Ten traits of the best supply chains. J. Ross Publishing. Created from apus on 2023-07-17 11:38:42.

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222 Diagnosing Greatness: Ten Traits of the Best Supply Chains

globally, this trait was still one of the greatest points of difference between leaders and laggards.

Several factors typically keep the laggards from achieving the leaders’ levels of global optimization. Relational factors include company cultures that emphasize internal-only improvement efforts and a mistrust of external business partners. Many firms lag in performance because their managers are unwilling to admit the need for outside advice or the need to share valuable knowledge with external partners. They don’t understand that competition today is network based, rather than company based. In some cases, firms are willing to accept external advice and do acknowledge the benefits of a network orientation. Yet they remain frozen by fears that non-trusted business partners will give away proprietary secrets or will

0 10 20 30 40 50 60 70 80 90 100

Percent responding agree or strongly agree

Leaders Followers Laggards

We optimize our global network for �ows of materials, people,

information, and cash

Our processes are positioned in the best locations around the world

Our global assets are managed for peak performance

We synchronize supply and demand across global markets

Figure 12.1 Differences in global optimization

Poirier, C., Quinn, F., & Swink, M. (2009). Diagnosing greatness : Ten traits of the best supply chains. J. Ross Publishing. Created from apus on 2023-07-17 11:38:42.

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Trait 10: Globally Optimized Operations (Completing the Effort) 223

exploit the advantages gained from having inside information. Such relational issues are not obstacles for the leading supply chain companies; they know how to cope with them.

A second factor that impedes laggards from achieving global optimization is a reticence or inability to invest in cutting-edge technologies. Managers in these companies are typically risk averse and loathe upsetting their current processes by implementing “disruptive” technologies. Moreover, lagging companies do not view technology investments strategically; they lack the proactive perspective and cul- ture needed to aggressively seek out and acquire new technologies. Typically, they adopt a wait-and-see posture. And while this may lower their risk, it also fore- closes on the kinds of improvement opportunities captured by more assertive leaders.

Leaders use both collaboration and technology as powerful execution tools. Getting the key processes identified and brought to best-in-class performance levels is their primary objective. They enhance these processes with technology and extend them across the business network. As part of the global optimization discussion, we will detail the necessary role of the IT function in creating advanced supply chain management as well as specific recommendations for transforming IT from necessary evil to essential ally. We’ll also present a framework for over- coming the obstacles cited and building the “Integrated Value Chain,” which we define later in this chapter.

TEChnOlOGy-EnablEd COllabOraTiOn is sTill ThE FuTurE

When our 2008 global survey asked about IT’s involvement in supply chain man- agement, we received mixed responses. Although the surveys over the years have shown a steady rise in IT-supply chain management integration, only 40 percent rated IT’s involvement as high in 2008. The remaining respondents, on the other hand, still characterized the IT connection as medium or low. Clearly, there is opportunity for greater involvement and collaboration between IT and the supply chain, but such involvement must include helping with the specific improvement needs across the business and with enterprise partners. The results can be opti- mized processes enabled with the best technology.

Arizona State University Professor Joseph Carter and his associates help clarify the problem and the opportunity. In their report on “The Future of Supply Management,” a collaborative effort of CAPS Research, A. T. Kearney, and the Institute for Supply Management, they comment, “While collaboration is cited by many supply management leaders as an important success factor for the future, it does not easily fit in with the traditional view of supply management’s role in the

Poirier, C., Quinn, F., & Swink, M. (2009). Diagnosing greatness : Ten traits of the best supply chains. J. Ross Publishing. Created from apus on 2023-07-17 11:38:42.

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224 Diagnosing Greatness: Ten Traits of the Best Supply Chains

organization.” Their research points out four main changes that firms must make to attain supply chain leadership positions:

1. Internal collaboration and cross-functional integration must advance further

2. External collaboration must transform competition to partnership for selected segments of the company’s supply base

3. Technology is a necessary enabler— internal systems will have to provide more visibility to multiple data views, while external systems will have to share information safely and effectively

4. Firms must address the tension between the potential for strategic advantage through collaboration and the concerns about manag- ing risk and protecting intellectual property (Carter, Slaight, and Blascovich 2007)

With respect to achieving greater internal collaboration, one participant cited in the research commented: “We’ve actually put in what we call new product engineers, which are sourcing people co-located in the laboratories, to assist the labs in finding the right sources of supply, developing the target class where they need to be so that we’re launching products that we know we’re going to be able to make money at.”

With regard to seeking external help, another participant remarked, “Six years ago our CEO wasn’t really interested in our suppliers or our relationships with suppliers; they were more downstream focused and purely customer oriented, with globalization and with higher level relationships. Now CEOs are becoming more interested in some of the supplier relationships and helping to manage at a high level, typically around innovation.”

The next decade will certainly see important advances in the use of collabora- tive technologies. Carter and his co-researchers point to a growing number of technologies that offer greater ease of access, both internally and externally; visi- bility through web-based tools; collaboration platforms for everything from prod- uct development to operations to schedules, tracking, and simulation; newer and more powerful tools for risk, compliance, and supply market analyses; and more intuitive user interfaces. In addition, the researchers cite tools that will better inte- grate data across functions and applications in the future. Moreover, these tools will do a better job of capturing and codifying knowledge for training and for co- planning. Issue, project, and process stakeholder workspaces will be developed and used in a fluid, as-needed way for collaboration. Users will be able to define their own dashboards and analytics. In short, it’s quite a vision of technology’s potential to enable richer and more frequent supply chain collaboration.

The data from our own survey corroborate these views and paint a representa- tive picture of the technology-adoption progress to date. Reviewing our survey

Poirier, C., Quinn, F., & Swink, M. (2009). Diagnosing greatness : Ten traits of the best supply chains. J. Ross Publishing. Created from apus on 2023-07-17 11:38:42.

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Trait 10: Globally Optimized Operations (Completing the Effort) 225

results to see which technologies the respondents were applying, we find execution systems and planning systems top the list. These included, for example, enterprise resource planning (ERP), transportation management systems (TMS), and ware- house management systems (WMS). About 50 percent of the survey respondents reported they are experienced users of such systems. In sharp contrast, only about 20 percent had experience with strategic planning and network optimization sys- tems or with relationship management systems such as collaborative planning, forecasting, and replenishment (CPFR); customer relationship management (CRM); and supplier relationship management (SRM). Finally, only 16 percent of the respondents indicated they had experience with supply chain network integra- tion systems.

Figure 12.2 gives a revealing breakdown of technology usage by leaders, fol- lowers, and laggards. Leaders are significantly more likely to be more experienced users of all technologies. The biggest usage gap between the leaders and the others is with the collaborative technologies— that is, relationship management, strategic planning, and network integration. While over half of the leaders reported heavy experience with these tools, only a relative handful of followers and laggards had such experience. Put in different terms, leaders are five times more likely than lag- gards to be experienced users of relationship management systems. Further, they are 10 times more likely to be experienced users of strategic planning and network integration technologies. Clearly, collaborative technology enablement is an advantage of the leaders.

TEChnOlOGy-EnablEd COllabOraTiOn isn’T Easy

As much as we tout collaboration and technology usage as a trait of greatness, we also acknowledge the difficulty of developing this capability. In their SCMR article on “Mastering the Slippery Slope of Technology,” Brigham Young University pro- fessor Stanley Fawcett and associates offer a few-well placed caveats: “For many firms, technology investments have not delivered the desired performance bene- fits. Nor have they enabled uniquely collaborative relationships with supply chain partners. . . . Decision makers do not fully understand the nature of an informa- tion-leveraged competitive capability. . . . they forget that technology is an enabler and begin to manage it as the solution” (Fawcett et al. 2008).

Successfully enabling collaboration through information technology involves a lot more than just buying hardware and software. The real advantage lies in applying information technologies in ways that leverage unique strengths and remedy unique limitations. A solid understanding of these strengths and limita- tions coupled with a clear set of goals and associated opportunities are needed to guide the implementation effort.

Poirier, C., Quinn, F., & Swink, M. (2009). Diagnosing greatness : Ten traits of the best supply chains. J. Ross Publishing. Created from apus on 2023-07-17 11:38:42.

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226 Diagnosing Greatness: Ten Traits of the Best Supply Chains

As mentioned earlier, one of the biggest limitations to reaching the full potential of information technology is a firm’s unwillingness to share information with key partners. Relationship and network integration technologies provide the needed connectivity and decision support, but many companies are simply unwilling to share critical decision-making information. As Fawcett and his co-authors note: “Managers view information as power— and they are not willing to share it. . . . [F]our in ten managers suggested an unwillingness to share information is actually a greater barrier to supply chain collaboration than deficient technology.”

In spite of this reluctance, there is cause for optimism going forward. Most managers understand the need for a longer-term orientation toward partnerships

0 10 20 30 40 50 60 70 80 90

Percent indicating high level of experience with the technology

Leaders Followers Laggards

Planning systems (demand, inventory and production planning, scheduling,

distribution planning)

Execution systems/practices (WMS, TMS, ERP, eProcurement and automated

sourcing, JIT/Kanban)

Relationship management systems (CPFR, CRM, SRM, supplier performance)

Strategic planning systems (business and supply chain intelligence, PLM,

network optimization)

Supply chain network integration (distributed order management, event management, enterprise application integration, RFID)

Figure 12.2 Differences in technology experience

Poirier, C., Quinn, F., & Swink, M. (2009). Diagnosing greatness : Ten traits of the best supply chains. J. Ross Publishing. Created from apus on 2023-07-17 11:38:42.

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Trait 10: Globally Optimized Operations (Completing the Effort) 227

that foster a willingness to share. Many, in fact, are working hard to put in place metrics, incentives, and organizational structures that drive such an orientation. Much progress has been made in terms of sharing operational data, including forecasts and inventory information. The followers and leaders need to take the next step in sharing strategic information such as new product plans, investment strategies, and marketing programs.

Carter et al. suggest that companies can accelerate progress here by creating a sense of urgency among a smaller set of global suppliers. They note: “In the future, companies will need to use collaboration to keep their innovation pipeline filled. For some, this may be as simple as having purchasing interface with their own product development organization as well as with their suppliers. More complex collaboration will enable companies to link the push of technological advances to the pull of customer demand that will accelerate the pace and need for product and service integration” (Carter, Slaight, and Blascovich 2007).

COllabOraTiOn PrOvidEs ThE imPETus FOr ChanGE

In addition to serving as a means for optimizing information and materials flows throughout a network, technology-enabled collaboration can lead to more innova- tive business models. A complete demand-supply network is defined by the num- ber of partners, the roles they play, and the informational technologies and relationships that link them together. Leading companies are continually using the intelligence they gather from collaborative partnerships and environmental scans to challenge existing network structures— and to innovate new ones.

Before the advent of collaborative technologies, vertical integration was con- sidered an effective business model. From an economic perspective, ownership of various business processes helped a company to minimize the transactions (and associated costs) of running the entire enterprise. Vertically owned and controlled processes could be synchronized for efficiencies. Further, through ownership, companies could secure access to needed supplies and services, and guarantee market access through dedicated channels. The problem, of course, was that highly vertically integrated companies also suffered the risk of owning low rate-of- return processes. They also suffered from a lack of flexibility in terms of entering or exiting new markets.

In today’s dynamic environment, collaborative technologies enable a wider range of business models. For instance, virtual integration affords most of the benefits of vertical integration but with few of the risks. As technologies make it easier and less costly to coordinate activities across corporate boundaries, leading companies are now free to take advantage of the best-in-class capabilities of part- ners located around the world. This feature undoubtedly explains the rapid

Poirier, C., Quinn, F., & Swink, M. (2009). Diagnosing greatness : Ten traits of the best supply chains. J. Ross Publishing. Created from apus on 2023-07-17 11:38:42.

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228 Diagnosing Greatness: Ten Traits of the Best Supply Chains

increase in outsourcing over the past decade. This period also has witnessed numerous companies moving into new markets and new delivery channels via partnerships and collaborative technologies. The Internet and the growth of third- party logistics service providers, too, have opened up new opportunities and a means for companies to reach existing customers and to create new ones.

At the same time, loosening the shackles of vertical integration has freed com- panies to invest in business processes that are core to their current value proposi- tions— or, even more importantly, that open up new value possibilities. For example, many companies have rapidly expanded their global reach by acquiring firms in desirable regions.

The upshot of these developments is that leading supply chain firms effec- tively manage two processes related to global network optimization: (1) optimiz- ing flows within the constraints of the current network and (2) changing the constraints when advantageous to do so. The ability to manage these dual activities effectively requires a tight integration among the corporate demand-supply plan- ning, sourcing, marketing, and sales personnel. While the internally focused cor- porate planning group seeks to optimize the current structures, it needs to make the other more externally focused groups aware of the system’s pinch points and bottlenecks. At the same time, sourcing, marketing, and sales need to keep corpo- rate planners aware of new sources and business opportunities that may disrupt the status quo. In this way, corporate planners can know when and where to invest their efforts for maximum effect.

Li and Fung Limited, a privately held business based in Hong Kong, provide an excellent example of effective internal coordination, coupled with technology- enabled collaboration. This $16 billion global apparel and toy company manages a network of more than 10,000 suppliers in 40 countries. Toys “R” Us is one familiar entity. Through the use of cutting-edge collaborative technologies, Li and Fung is able to optimally source materials in one country, have them knit and dyed in another, sewn in another, and delivered by third parties to a final destination— all without owning any of the processes. The company uses advanced Internet-based and in-house developed collaborative technologies to communicate and control operations throughout the network. Li and Fung is well known for its broad con- nectivity with suppliers and a willingness to rapidly adopt customers’ billing and ordering systems. As a result, the company arguably operates one of the fastest and most efficient global networks in existence.

At the same time, Li and Fung has pursued an aggressive acquisition strategy to gain access to new customers and new geographic regions. Over the last decade, it has acquired dozens of competitors, customers’ operations, and some service operations. The company is constantly changing the shape of its global footprint in ways that enable new efficiencies while also opening up opportunities for

Poirier, C., Quinn, F., & Swink, M. (2009). Diagnosing greatness : Ten traits of the best supply chains. J. Ross Publishing. Created from apus on 2023-07-17 11:38:42.

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Trait 10: Globally Optimized Operations (Completing the Effort) 229

enhanced value propositions. The ability to maintain network efficiencies while dealing with constant changes to the network structure makes it one of the world’s top supply chain companies.

CrEaTinG an inTEGraTEd valuE Chain rEquirEs CErTain aCTiOn sTEPs

All of this advice on collaboration and technology enablement can be synthesized into a series of action steps that lead to creation of the integrated value chain (IVC). That is our terminology for a collaborative, technology-driven network involving a company and its key business partners that are operating as close to optimized conditions as possible.

As global commerce becomes more competitive, innovative strategic actions are needed to deliver both low net landed costs and competitive market position- ing. So why should a firm be interested in a concept like IVC? Because the supply chain generally impacts 40 to 70 percent of a firm’s cost structure, and the IVC becomes the means for reducing those costs and bringing serious financial improvement to the business. Moreover, it’s a vehicle for reaching higher perfor- mance levels in areas that make a difference to customers.

When executed properly, the IVC will:

• Better serve unique needs of individual global markets • More effectively meet the challenges of new global competitors • Meet ever-increasing customer expectations • Service multiple market channels • Rapidly incorporate new partnerships, acquisitions, and joint ven-

tures • Orchestrate outsourced design, manufacturing, distribution, and

other selected business processes • Manage product proliferation with shorter time to market and greater

success rates • Satisfy government and environmental regulations

ThE FOCus is On ExTEndEd EnTErPrisE ExCEllEnCE

The IVC goes beyond a typical supply chain improvement effort by focusing on an extended enterprise in which the constituents can achieve excellence in areas crucial to costs and revenues, both top and bottom line. In other words, IVC helps find where the business network can make a difference in terms of what it delivers.

Poirier, C., Quinn, F., & Swink, M. (2009). Diagnosing greatness : Ten traits of the best supply chains. J. Ross Publishing. Created from apus on 2023-07-17 11:38:42.

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230 Diagnosing Greatness: Ten Traits of the Best Supply Chains

The IVC model is illustrated in Figure 12.3. If carefully followed, it can trans- form a business network into a healthier enterprise by extending the traditional narrow focus on internal excellence to excellence across the extended organiza- tion. The transformation is accomplished by integrating best practices, process improvement, and system architectures across the linked organizations. We have already noted that implementing IVC requires information technology as an enabler. Such enablement results in lower costs and higher velocity through better visibility and an absence of the errors, mistakes, and frustrations that inflict most supply chains.

Let’s consider a few real-world examples from successful IVC applications:

• Customer acquisition costs reduced by $160 million per year in a retail communications business

• Better operational efficiencies in a consumer product company with 25 percent fewer deliveries, a 50 percent reduction in receiving cycle times, and greatly reduced handling costs

• A 300 percent increase in distribution productivity with only single- digit staff increases

These kinds of gains are not achieved by adding a best practice here or there. Instead, the IVC approach is a systematic multi-phase effort that includes four key actions:

1. Facing strategic challenges in an organized and prioritized manner 2. Building a strategy and road map that shapes the improvement

effort 3. Introducing design and implementation methodologies that trans-

form the network 4. Making smart decisions regarding the outsourcing of business pro-

cesses

It’s interesting how IVC concepts are developing across many companies and industries as firms struggle to reach the next level of business performance. The September 2007 issue of Harvard Business Review contained an interesting related article titled, “Are You the Weakest Link in Your Company’s Supply Chain?” The authors suggested that, “If you’re disengaged from supply chain, you run the risk of sabotaging partner strategy and customer relations and leaving money on the table now and for the long term” (Slone 2007).

We agree with the article’s contention that you certainly don’t want to be the weak link. But there’s more to excellence than that. You need to collaborate with trusted business partners to create an IVC— one that optimizes all phases of busi- ness activity. Collaborative success starts with a laser focus on high-level business

Poirier, C., Quinn, F., & Swink, M. (2009). Diagnosing greatness : Ten traits of the best supply chains. J. Ross Publishing. Created from apus on 2023-07-17 11:38:42.

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Trait 10: Globally Optimized Operations (Completing the Effort) 231

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Poirier, C., Quinn, F., & Swink, M. (2009). Diagnosing greatness : Ten traits of the best supply chains. J. Ross Publishing. Created from apus on 2023-07-17 11:38:42.

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232 Diagnosing Greatness: Ten Traits of the Best Supply Chains

objectives and a project approach. Workshops can be an effective facilitator for establishing this focus. The end result should be a tailored approach that enables the firm to create an IVC at multiple entry points across the business and with important network partners.

To illustrate the points we’ve been making, let’s consider an actual case study of a company that embraced IVC. The company is Sysco Corp., a well-known distributor and marketer of food products. Even though it was a major player in the extended food service supply chain, with a substantial number of operating companies, Sysco had been functioning very much in a localized independent mode. Other than to establish national brand contracts with manufacturers and suppliers, the firm was not leveraging its entire organization and was hampered by complex and costly product and information flows. Given the limited collabora- tion among the operating companies and significant replication of safety stock and inventories, processing redundancy was rampant. In spite of the corporation’s national presence, Sysco’s individual units would often fail to reach the highest volume brackets and thus obtain the best pricing.

In an effort to better leverage scale and gain greater overall efficiency, the corporation decided to involve 14 Sysco companies in the Northeast in a pilot program to see what could be accomplished through a dramatically revised busi- ness framework. Beyond the efficiency and profit objectives established, a basic goal was to create an inventory management system that would rival the industry standard set by retail giant Wal-Mart. To say this project involved a magnitude of cultural change is an understatement.

Sysco surmounted the challenges and scored a solid win with the pilot pro- gram. It realized major benefits in three primary areas:

1. Lower supplier-to-distributor landed costs, deriving from savings such as a 25 percent reduction in transportation costs

2. More efficient use of capital, including a 39 percent reduction in capital avoidance costs

3. Improvements to distributor’s operating efficiencies, including reductions of 14 percent in handling costs, 6 percent in transaction costs, and 16 percent in inventory carrying costs

aCTiOn sTudy: COCa-COla EnTErPrisEs

Our action study further illustrates how collaboration and the application of tech- nology can resolve longstanding operational problems and lead to an improved future state. It comes by way of Brian Korkus, who is the director of Application Support for Coca-Cola Enterprises (CCE), a $21 billion Atlanta-based firm. CCE is the world’s largest marketer, producer, and distributor of Coca-Cola products. It

Poirier, C., Quinn, F., & Swink, M. (2009). Diagnosing greatness : Ten traits of the best supply chains. J. Ross Publishing. Created from apus on 2023-07-17 11:38:42.

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Trait 10: Globally Optimized Operations (Completing the Effort) 233

operates in 46 U.S. states and Canada and is the exclusive Coca-Cola bottler for all of Belgium, continental France, Great Britain, Luxembourg, Monaco, and the Netherlands.

The story starts when the business identified warehouse labor efficiency as an opportunity for improvement. Changes in the beverage industry, which had expe- rienced a five-fold increase in stock-keeping units, had led to more complex orders and increased costs for order fulfillment. Inefficiencies and expenses associated with correcting picking errors drove up costs. At the same time, an industry move- ment to advance shipping notifications (ASN) from customers such as Target and Wal-Mart put a heightened emphasis on order accuracy.

In the warehouses used to store the bottled or canned products, crews of pick- ers would work off of paper order sheets and navigate through the warehouse selecting products to build mixed pallets for shipment. As this was a manual paper-based process, errors could result from skipping a product, selecting the wrong product, or reading the wrong quantity. As workers gained experience, their efficiency and accuracy improved; yet turnover of the picker staff was high. Post-process checkers were needed to validate the accuracy of the orders and per- form any rework required. Productivity was being negatively impacted at a time when ongoing competitive pressure to handle larger volumes without increasing headcount or square footage was forcing the firm to look at simplifying labor- intensive processes and avoid process duplication.

CCE wanted to enable advanced process optimization strategies through real- time automation. The goal was to improve order accuracy and reduce labor costs. To that end, the paper-based system would be replaced with what appeared to be the industry best practice— the use of voice technology to manage the order-picking process. This was something customers desired as well. They were demanding con- tinuous improvement and the market was rewarding progress. As measured by an AMR Research study, better perfect-order performance correlated strongly with higher corporate earnings per share and return on assets. Best-in-class metrics for the industry were 99.5 percent accuracy of complete order shipped.

A project was approved with the following scope: Introduce voice technology to the picking process at selected North American sites. Select the technology and voice partner, develop SAP interfaces, enhance order distribution functionality, enable radio frequency within the warehouse picking area, and show proof of concept through a pilot and rollout. A CCE team analyzed a wide range of poten- tial technology solutions. The aim was to automate an accurate voice-picking process that eliminated the reliance on the paper-based system and had the follow- ing attributes:

• Employee is directed to a specific slot location • Location is confirmed via check digit

Poirier, C., Quinn, F., & Swink, M. (2009). Diagnosing greatness : Ten traits of the best supply chains. J. Ross Publishing. Created from apus on 2023-07-17 11:38:42.

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234 Diagnosing Greatness: Ten Traits of the Best Supply Chains

• Employee is directed to pick a quantity of cases • Pick quantity is confirmed • Employee is directed to next slot location • Order is complete

According to CCE’s Korkus, the 100 largest warehouses in North America were targeted, involving a scope of 2,000 workers. Among a number of readily available solutions on the market, CCE wanted to pick the best one, model its processes, conduct a pilot, and then begin a rapid deployment.

The charter for the Corporate IT Group was to deliver standards-based solu- tions that could be reused for additional processes, to leverage existing invest- ments, and to work with strategic partners on innovation. The group also had to ensure that the systems were reliable and scalable. Since voice recognition technol- ogy could have many uses, CCE’s evaluators kept in mind that future users could include employees (drivers and merchandisers), customers, and suppliers.

In researching the available solutions, the team found that most were based on proprietary hardware and software solutions. Warehouse workers were to wear large radio frequency Windows Mobile devices with headsets, and CCE found one that best fit its needs, as it was standards based and could run on a number of available windows mobile devices. However, this solution could only be used for other processes involving employees who would be issued a hand-held terminal. CCE knew there was a growing demand for voice as a user interface, so the imple- mentation team kept looking for a solution that could be deployed to either a server or Windows Mobile device. Such a solution was not available.

After looking for alternatives, the team changed the view of the problem. If it could install in a centralized solution similar to what was already commonplace for banks and airlines, then workers would only need portable phones to call into the system and receive instructions. However, both the expense and limited cover- age of cell phones in a warehouse were quickly identified as problems. The team then investigated wireless voice over Internet protocol (VOIP) phones. They are lightweight and inexpensive, and have a battery life that could last through an eight-hour shift. CCE was already rolling out stationery VOIP phones in its offices, so extending a wireless network into the warehouse would leverage the existing investment.

With only three months to deliver, building the system from scratch was not an option. CCE discovered that Datria Solutions had a voice-enabled application that distributed service requests to mobile technicians using cellular telephones. The characteristics included: 100 percent open standards, off-the-shelf technolo- gies, ability to run on SAP Netweaver, and utilization of the leading speech tech- nologies. The solution became to mold Datria’s application to manage customer orders and the picking process and using wireless VOIP phones with headsets.

Poirier, C., Quinn, F., & Swink, M. (2009). Diagnosing greatness : Ten traits of the best supply chains. J. Ross Publishing. Created from apus on 2023-07-17 11:38:42.

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Trait 10: Globally Optimized Operations (Completing the Effort) 235

Benefits from automating operations were plentiful, including order accuracy that reduced cost, increased customer satisfaction, and improved delivery produc- tivity. The system also greatly accelerated training of new employees, including seasonal and temporary workers. These individuals now were achieving one-year experience levels in the first two weeks. Safety was improved through heads up, hands-free work. Automation lent itself to increased worker satisfaction because it was easy to adapt to new product and bin locations.

The users liked the results, as training was easy and they were accustomed to using a familiar device, the telephone. Unlike other solutions available, there was no need to train the system to recognize each picker’s voice. This eliminated 45 minutes of administration for each new user. The device used was small and light- weight, thus reducing fatigue. It had good sound quality and provided the extra communication capability not available on the Windows Mobile devices. Three- way conferencing was used for training and supervisor communications.

Corporate IT liked the results as well. The devices were 75 percent less expen- sive, and they didn’t need device software to install and maintain or the ability to record and manage users’ voice samples. The devices leveraged the existing SAP NetWeaver platform and Cisco infrastructure. And they utilized an enterprise- wide service-oriented architecture that was reusable for other business processes— all types of enterprise mobile workers, customers, and vendors.

The project was successful, meeting its aggressive time frame of completing 100 warehouses in 18 months. In terms of accuracy, order fulfillment today exceeds 99.8 percent, and is achieved without the need for post-process checkers. CCE’s innovative technology solution was driven by a desire to deliver a complete system than exceeded what was available in point solutions. The implementation has been recognized as the first successful one of its kind.

COnClusiOns

Network optimization through collaboration and technology enablement is a mark of supply chain leadership. The best supply chains combine the capacity to optimize their current structures with the ability to rapidly incorporate structural changes. They go forward carefully and selectively with a small group of the most trusted business partners to construct what becomes an IVC, or integrated value chain. In this chapter we described the framework for such an entity and the action steps needed to progress along that framework. A significant factor for suc- cess here is the willingness to overcome cultural barriers and to create the most effective business enterprise possible with today’s technologies. When these com- ponents are in place, the firm can boast of a highly effective supply chain trait: a globally optimized operation.

Poirier, C., Quinn, F., & Swink, M. (2009). Diagnosing greatness : Ten traits of the best supply chains. J. Ross Publishing. Created from apus on 2023-07-17 11:38:42.

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Poirier, C., Quinn, F., & Swink, M. (2009). Diagnosing greatness : Ten traits of the best supply chains. J. Ross Publishing. Created from apus on 2023-07-17 11:38:42.

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