Supply-Chain EngineeringSupply-Chain Engineering
Harris is taking a novel approach to its supply chain by upgrading IT at the start of the production process
May 27, 2005
That "something" was the plan to develop the data hub based on Agile's software for product-life-cycle management, which would aggregate all product purchases across the company, impose consistent purchasing processes, and help engineers make more-informed decisions about components. The caveat: do all of that without forcing engineers to change the way they design products so as not to disrupt Harris' business. This approach avoided what causes many transformational technology efforts to stumble because they force too many people to change the way they do their jobs and, as a result, don't get buy-in from users.
Harris decided to develop a master parts database that would contain every piece of information about a component and supplier that the company could collect. "This kind of information will help our engineers because, when they design a product with a specific component, they have no idea how many of those components are available on a worldwide basis, how important [a specific] component is to the supplier, when that component might become obsolete, and whether there's another engineer in the company who also is using it," Plane says.
The plan is more ambitious--and more challenging--than merely collecting public information and consolidating it in one place. Harris wants its suppliers to provide information on their components directly into the company's data hub, so the company's engineers and procurement personnel don't have to go out to supplier Web sites to gather the information. In all, Harris hopes to have nearly 150 pieces of data on each component, including nearly 50 data points from suppliers themselves.
Eventually, more of the system will be opened to suppliers so they can see Harris' product-development and engineering plans and then develop parts and components that will better suit the company's needs.
"Developing and deploying the technology has been easier than I imagined," Plane says. Most of the technology-development work was done by Agile. "What's been more of a challenge is getting suppliers to participate." Some suppliers have been reluctant to join in for competitive reasons, fearing that every customer will ask for the same information, Plane says. "All I can offer them is a greater amount of my annual spending," he says.
It wasn't tough to convince Greg Frazier, executive VP for worldwide supply-chain services at Avnet Electronics Marketing, the distribution and supply-chain services arm of Avnet Inc. "What Harris is doing is bold. It's taking a holistic approach to its supply chain," he says. "I see hundreds of supply chains and know what works and doesn't. Harris is building a system that starts with the engineers and ends up with the supply chain in such a way that it doesn't limit either side of the business."
Frazier says he sees a lot of companies talk about implementing technology like Harris' supply-chain system, but few have followed through by deploying systems that cover the entire process from design to manufacturing to distribution. "Harris is actually doing what they said they would do, and they're on schedule," he says.
Harris will launch the first phase of the project June 12 with a handful of suppliers, including Avnet and PartMiner Inc., both suppliers of electrical parts and components, providing a direct feed of parts information into the data hub. Plane plans to add suppliers as this part of the project becomes more entrenched over the next six months, and vendors see that they can gain larger orders from Harris by cooperating.
Participating isn't a requirement, but suppliers that don't could find themselves losing business. "It will become more difficult for engineers to select parts from suppliers who aren't giving us the information we need," Plane says. "All of the parts from other companies and information about them will be right there at the fingertips of the design engineers, and it will be difficult for them to go outside of the system to source other parts. We're hoping that will cause behavior modification."
Avnet invested its own time and resources to set up systems to feed information about parts and components into Harris' supply-chain system. But the investment is paying off by cementing Avnet's position as a preferred supplier and giving it deeper insights into the needs of a major customer, Frazier says. Avnet also will gain access to Harris' product and design plans once the two-way flow of information is fully developed. "Clearly, the more knowledge we have about their designs and supply chain, the better we can interact with them and make better decisions faster," he says.
Phase two of the project, which will be implemented later this year, will use XML and Web services to push product data back down into existing Harris business processes and IT systems such as product development, supplier qualification, procurement, change management, and quality assurance. For example, the system eventually will collect quality service records and feed that information back to suppliers, so poorly designed parts that cause service problems can be quickly identified and replaced or redesigned.
The third phase, which will be implemented six months later, will link procurement to design engineering in an automated way. "Without a layer of automation, cost reductions aren't sustainable over the long run," Plane says.
Ultimately, each person in the Harris product-development chain will be able to access the component data hub, see the key bits of information relevant to his or her job function, and--the company hopes--then buy the right part at the lowest price to produce the best product.
With the backing of senior management, the Harris IT team laid out a detailed plan to transform the procurement and supply-chain process, identifying 37 change initiatives. "We developed a very comprehensive plan and talked to people in each of the business units," Lindsay says. "It helped that this was a top-down initiative, and it had the backing of the CEO."
Too many supply-chain initiatives fail because companies don't spend enough time aligning their business goals and processes, and they don't make sure that each part of the company is working from the same set of priorities, Forrester's Radjou says. "Harris is a great example of how you can have a lean IT organization and still innovate," he adds. "They focused on linking people, processes, and technology to drive improvements, and made sure that the technology adapted to their streamlined processes rather than them having to adapt to the technology."
"Most supply chains today are very reactive and transactional in nature," Lindsay says. Not at Harris, where the focus is on being proactive, starting at the front end of the design process. The company's project is markedly different than the typical supply-chain initiative, but Harris' new system is based on a universal premise: Better information leads to better decisions, and better decisions can cut costs, produce better products, and make a company more competitive.
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