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September 27, 1999

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IT Brings Manufacturers Closer To Customers

Manufacturing

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Managing customers' inventory isn't easy. It requires accurate inventory data and knowledge of distribution schedules, as well as a clear understanding of customer requirements. The payoff: Competitors find it harder to steal business, says Campbell of Sonoco, which provides similar vendor-managed inventory services to its key accounts.

Online trading communities as well as applications that manage the procurement process offer other collaborative ways to shave costs off the purchasing process.

AlliedSignal Inc., the Morris Township, N.J., maker of aerospace products, automotive parts, and engineered materials, participates in electronic marketplaces it calls "communities of interest." These groups of suppliers, distributors, and manufacturers in specific lines of business, such as aircraft landing systems or automotive turbocharge systems, can sell and bid on products through a Web portal. Participating in these marketplaces lets AlliedSignal compare prices for materials, place orders, and calculate delivery schedules. While AlliedSignal has preferred suppliers, the Web communities let the company constantly shop for the best price and quality from competing suppliers and renegotiate contracts with existing vendors based on better offers, CIO Larry Kittleberger says.

In an effort to keep its purchasing groups better informed, Lockheed Martin Corp., the Bethesda, Md., aerospace and defense company, built a Web application called Supplier Net that gives more than 50 business units a central source of information about suppliers with whom the company maintains purchasing agreements and contracts. The custom-developed Web application is tied to Lockheed Martin's procurement system and is also accessible to its suppliers, who can view and update data on their products, discounts, and delivery schedules via a Web browser.

Something For Everyone
Self-service applications that run on the Web help some manufacturers automate administrative tasks and eliminate time-consuming paperwork by letting customers serve themselves. Self-service can be a double win by giving customers easier access to information and slicing administrative costs.

Snap-on Inc., a $1.7 billion manufacturer of automotive tools and equipment in Kenosha, Wis., is implementing a self-service ordering system on the Web for purchasing managers at several large industrial accounts, including airplane maker Boeing Co. and automaker General Motors Corp. The system employs the Internet and EDI to fulfill the orders and features an electronic catalog, shopping basket, and cross-selling logic, which points customers to complementary products. Alan Biland, VP and CIO of Snap-on, says more than 100 accounts have signed up for the service.

Throwing considerable weight behind the notion of online services, GM formed e-GM, a business unit charged with offering a range of company products and integrated services on the Web. The division will build on several existing technology initiatives, including BuyPower, GM's consumer shopping Web site, to make it easier for customers to research, buy, and service their vehicles.

For example, e-GM is developing Web applications that let owners schedule service online at local GM dealerships as well as speed the sales process online by consolidating financing, insurance, and licensing information. The business unit also is charged with developing E-commerce initiatives with GM to help integrate and simplify the shopping and buying process.

Such value-added services can strengthen a company's relationship with its customers and differentiate a manufacturer from competitors beyond just price and quality, says David Caruso, an analyst at AMR Research, who adds, "The real name of the game is servicing the hell out of customers, so they won't go anywhere else."

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