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Defining The Business Value Of Technology
September 27, 1999
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IT Brings Manufacturers Closer To Customers
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rom makers of cereal boxes to producers of rocket boosters, the Internet, coupled with off-the-shelf and custom-built applications, is bringing manufacturers closer to their customers and suppliers. Manufacturing companies are employing packaged software to integrate business processes, implementing Internet and electronic data interchange systems to collaborate with trading partners, applying Web-procurement applications to streamline purchasing, and instituting online self-service systems to let partners complete transactions without intermediaries. Implementing these technologies is giving manufacturing companies an edge over competitors by reining in costs, assuring quality products, guaranteeing quick deliveries, and improving customer service.
"There's intense pressure to speed the design and delivery of products as well as improve service," says Sue Kampe, CIO of Meritor Automotive Inc., a $4.5 billion automotive component supplier in Troy, Mich. Meritor is standardizing and integrating business processes such as order fulfillment, accounting, production, and product design in hope of reacting more quickly to the needs of customers such as automakers Ford Motor Co. and Volvo Group. Such customers look for fewer, more full-service suppliers to provide high-quality, cost-effective products and services delivered with consistency as they consolidate, grow globally, and increasingly outsource product engineering and manufacturing.
To achieve its objectives, Meritor is installing enterprise resource planning software from Oracle, a manufacturing package from QAD Inc., a product data management application from MatrixOne Software, and a capacity-scheduling system called Resonance from Thru-Put Technologies. "In the last two years, there's not a stone we've left unturned," Kampe says.
The applications have helped the company establish a common set of data and business-process standards across three business units that serve the passenger-car, heavy-vehicle, and aftermarket repair and service markets. The sharing of information allows global coordination of production and customer service across operations in North America, Europe, Asia, and Latin America.
For example, Meritor can fulfill an order from an international customer such as Navistar International Corp. in any of the 23 countries in which the truckmaker operates through access to consistent account data, billing history, and contracts. This lets Meritor build and deliver products when and where customers need them.
Operating on an integrated global-transaction system also gives Meritor a foundation to let customers place orders, check order status, and process payment over the Web. Meritor plans to develop front-end applications that give customers using standard browsers access over the Internet to its internal systems and replace expensive, less flexible private value-added networks and EDI systems. By moving to the Web, the company hopes to improve service to its heavy-vehicle and aftermarket customers who, for the most part, rely on fax and telephones to conduct business with Meritor because of EDI's prohibitive costs.
Improving business processes doesn't necessarily mean adoption of the same software and standards across an enterprise. When manufacturers become large conglomerates by acquiring other businesses, as is common in the aerospace and defense industries, divisional autonomy can be more desirable than enterprisewide application integration when it comes to business systems.
Cordant Technologies Inc., a $2.4 billion international aerospace and industrial manufacturer in Salt Lake City, is a case in point. Cordant is a conglomeration of three diverse businesses: propulsion systems, industrial fasteners, and industrial component casting. The company lets each unit align its technology strategy with individual business objectives because it doesn't make sense to impose common processes across divisions with different markets and business models. However, each unit's technology initiatives must adhere to three guiding corporate principles set by IT: enhance customer relationships, save money, and ensure current infrastructure.
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