Honda Logistics Adds SaaS Link To Supply Chain

This success story highlights one of the reasons why CIOs in this rotten economy can't close their eyes to forward-looking innovation: a Honda warehousing unit says that a SaaS application from a small vendor called SmartTurn has exceeded all of its expectations and is leading to "a whole new change in how this type of business is done."I've gotta tell you: of the thousands of IT buyers I've spoken with in my time with InformationWeek, this exec from a unit of Honda Logistics was the most excited and delighted customer I have ever run into -- bar none. Rick Franklin is corporate director of operations for Honda Komyo, which runs three huge warehouses in the U.S. for Honda Logistics ranging from 500,000 square feet to 800,000 square feet. So clearly we're not talking about a small operation here.

Honda Komyo was created to sell and ship after-market parts to nine American Honda distribution centers that in turn sell to Honda dealers. About a year ago, Honda Komyo was told by its parent company to expand its business model to include a whole new set of customers unrelated to Honda with an ultimate goal of having this new channel make up 50% of Honda Komyo's sales.

To achieve that, Franklin said, the company needed to augment its existing AS-400 system with an entirely new computer system to handle the new non-Honda business to ensure the records for each would be kept separate and secure. "We had talked to all the big names like Microsoft and many others but felt that ultimately when we accounted for purchasing the hardware and software the total would be $100,000 minimum -- in some cases a lot higher -- and I just wasn't willing to accept that," Franklin said.

Then, several months ago, Franklin met SmartTurn CEO Jim Burleigh "and as he explained what SmartTurn could do I really had an 'Ah hah!' moment," Franklin said.

"With SmartTurn, we can parse out an individual customers and let them handle their own business online within ST from a desktop or notebook computer," Franklin said. "And because SmartTurn hosts everything, we can establish pricing that allows us to ultimately compete on price for the business at these new customers we're trying to attract because we don't have to bundle into our pricing a huge allocation for IT costs."

Franklin ticked off a list of benefits he sees from SmartTurn's SaaS model: lower ongoing labor costs because customers manage their own accounts online; full transparency via real-time online status reports; complete and robust warehouse-management system (WMS) features; and a short learning curve.

Because of the excellent results Honda Komyo has experienced, American Honda has begun evaluating SmartTurn for possible use within its business as well, Franklin said, which is a move he heartily endorses: "I told SmartTurn that there's a whole world out there of companies that can't afford $100,000 or $200,000 for a WMS, and with the fair prices you guys are charging, you're creating a whole new change in how this type of business is done."

For my final question to Franklin, I told him that I'd never heard an IT customer as excited about a product as he is about SmartTurn, so I needed to confirm whether he actually is, in fact, an employee of Honda Komyo or was perhaps a secret-agent behind-the-scenes plant from SmartTurn. Franklin laughed and assured me he's a customer, not an employee. And for those cynics out there, here's video proof.