INDEX

Introduction WWT Background Supply Chain Collaboration Software Industry Automotive OEM Industry Challenges In Execution ClearOrbit Background POC Implementation Benefits Of Collaboration Challenges Ahead Learnings

WWT BACKGROUND

WWT was founded in 1990 by Jim Kavanaugh and David Steward in St. Louis, Missouri, as a Value Added Reseller (VAR) of IT products, including hardware and services. Originally, the company focused on servicing the telecommunications industry. However, two years into its existence the company broadened its market reach to include the federal government. The decision proved vital as it brought larger-sized programs that allowed WWT to invest most of its profits back into business. In 1997, WWT decided to invest in an ERP system, despite the then relatively small size of the company. They chose ORACLE as the ERP vendor. After a successful ORACLE implementation, and as the internet started booming in the late 1990s, WWT set out to drive efficiencies by offering different types of automations to its customers, partners and suppliers via web-based tools, integration points, XML technology, and the construction of Web portals. Between 1997 and 2001, annual revenues grew at a whopping 61.7 percent CAGR and almost reached 1 billion dollars. In early 2000, WWT decided to diversify the business by offering higher-end supply chain outsourcing solutions. In particular, the company focused on logistics and procurement services. WWTs revenues continued growing vigorously into the mid 2000s, at a CAGR of 17.5%. Fortune 500 firms and portions of the federal government outsourced complete operations to WWT, such as hardware and software management, supply chain services and order fulfillment. In effect, WWT had become a turn-key solution provider to its customers. By 2005, 40 to 50% of WWTs sales came from the execution of the supply chain processed on behalf of Fortune 500 and public sector clients. The rest came from value added reselling and distribution of IT products in the telecommunications, government, and commercial verticals for small, medium and large enterprises. The combination of cost-effective logistics and distribution services, coupled with state-of-the-art facilities and the deployment of integrated technology solutions had given WWT a unique market position vis-a-vis logistics companies and IT systems integrators.

SUPPLY CHAIN COLLABORATION

Collaboration could be defined as any kind of joint, coordinated effort between two parties in a supply chain to achieve a common goal. Advantages:
1. Cost reduction 2. Revenue creation

Barriers:
1. Technology 2. Data sharing

The Supply Chain Collaboration Software Industry:

It could be defined as encompassing applications in the areas of SRM, SCE, SCM and procurement/sharing. According to AMR Research, procurement and sourcing alone represented a $2B global market. Among the companies that went for collaborations, 75% already had an ERP in place. The market leader in the $16.5B ERP industry was SAP with 28.7% market share followed by Oracle with 10.2%.

The Automotive OEM Opportunity:

In early 2004, World Wide Technology (WWT) began a long-term partnership with a wellknown management consulting firm as a means to generate business opportunities. The consulting firm approached a large automotive Original Equipment Manufacturer (OEM) with a proposal to reduce the automakers spending on maintenance, repair, and operations (MRO) material. OEM conducted all purchases on its own. The OEMs MRO supply base was close to 1,800 vendors. Twenty full-time employees at the OEMs centralized purchasing group managed the MRO vendor relationship. In addition, close to 50 Tool Store Managers across all 26 assembly plants spent a significant amount of time every day on the phone getting information from suppliers about whether they had received orders, whether they were going to ship them, and when exactly they were going to ship them. The consulting firms proposal intended to drive cost savings from two main activities:
1.

Strategic sourcing-performed by the consulting firm itself.

The company suggested it would reduce the number of suppliers the OEM dealt with, from 1,800 to an estimated 300.
2.

Technology-intense purchasing process- performed by WWT. It aimed at increasing control, enabling automation, and reducing human intervention.

Challenges in Execution:
WWT was faced with the reality that most members of the reduced vendor community could not meet the collaborative requirements set forth by the consulting partner. WWT also realized that limiting the program to the proposed 300 suppliers under long-term contracts was infeasible due to the persistence of spot-buy transactions. The spot-buy suppliers were usually smaller and relied almost entirely on paper documents. In order to bring automation and scalability into the fledgling program, WWT realized it needed a software solution to manage POs and invoices collaboratively over a large supply base with minimum impact on staffing levels.

The Make or Buy Decision:

The unique requirement of the project was the tight implementation-to-deployment time budget. The automaker was eager to implement the proposed collaborative purchasing program. The options available to WWT were to develop the program internally or to purchase it. 1. Develop internally They would be able to leverage the companys skilled and experienced team of engineers. They would have tighter control over the features of the solution as well as deployment of it. However, it could potentially take longer to launch because of the complexity and the size of the program. Moreover, it would require extensive maintenance work from their engineers. 2. Buy from vendor WWT considered Oracle as the vendor as they already had an ERP in place from them. Oracles supplier collaboration tool was called iSupplier. It was an internet-based portal where the company could manage communication back and forth in real time. Also, it placed on IT or financial burden on suppliers. However, there were a few drawbacks of iSupplier. They are:

a. Only those suppliers who were familiar with Oracle could migrate easily into iSupplier. He others needed time to get acquainted with the program.
b. The program did not allow the vendors to upload throughout the fulfillment cycle. It only

allowed upload of ASNs and ASBNs towards the end of the cycle.
c. They needed support from the vendor in order to not only customize the solution to meet

their needs and those of the supply base, but also to customize the implementation approach itself. WWT realized that they could not influence a large company like Oracle to adapt a product to match WWTs needs. Due to these reasons, WWT needed to find a software company that would probably be smaller than Oracle and thus be able to better customize the program for them. For this purpose, they considered ClearOrbit.

ClearOrbit
ClearOrbit was founded in Austin, Texas under the name BPA systems. Initially the company positioned itself as a software developer and service provider in the high-volume shop floor manufacturing space. With Cisco Systems as its first customer and high-technology as its first targeted vertical, ClearOrbit released its first study, an Enterprise Harwdare Integration (EHI) platform, in late 1995. The product aimed at bridging the gap between out-of-the-box track and trace capabilities of an ERP system and the on the ground needs of high-volume manufacturers. From its inception, ClearOrbits strategy within the ERP landscape was to exclusively target users of the Oracle ERP system. Consequently, ClearOrbit software was primarily written in PL/SQL, Oracles proprietary server-based extension to the SQL database language. The company established a long-term partnership with Oracle early on in order to facilitate market entry and accelerate revenue growth. By early 1997, ClearOrbit identified the need to extend industry-specific ERP functionality not only by integrating external hardware, but by enhancing control over the entire movement of goods within an enterprise. As a result, the company released a supply chain software solution with modules to support the processes of receiving, inventory management, manufacturing, shipping and warehouse labelling. From 1997 to 2000, ClearOrbits revenues almost quadrupled.

In December 2000, with the entire software industry facing sluggish growth as the dot-com frenzy began to subside, ClearOrbit decided to re-brand itself in order to boost growth in an increasingly competitive marketplace. In February 2001, BPA Systems officially became ClearOrbit, a name that communicated the clean, seamless integration of their software solutions with Oracle products. Differentiation became a key factor in the eyes of ClearOrbits management. Starting in 2001, ClearOrbit aggressively expanded its product line offering. The company organized the new products into two major suites. The first one, named Gemini Series, was released in May 2001 and focused on supply chain execution within the four walls of an enterprise. The second suite was introduced in November 2001 under the name of Endeavour Series; it aimed at tight collaboration with business partners beyond the four walls of an enterprise. In 2003, with most of its business coming out of a single ERP platform (Oracle), ClearOrbit introduced another drastic strategic change. The company conducted a complete re-write of its products and converted them to J2EE, a platform-independent programming environment for developing and deploying Web-based enterprise applications. ClearOrbits migration to J2EE rendered the company ERP Agnostic.

WWT engages ClearOrbit:

ClearOrbits main contribution at WWT was a software product; the company had recently developed the Purchase Order Collaborator (POC). POC was an internet-based, highly scalable, collaborative solution for a company to manage Pos, deliveries, and invoices with a supply base regardless of its size and the technology resources available at each supplier. POC differentiated itself by its simplicity and intuitive inner workings. Within POC, POs were sent out to a companys supply base in real time. One of POCs most valuable advantages was that, despite being an independent best-of-breed solution, it integrated directly and seamlessly to any ERP system, without the need for additional layers of data. Traditional business applications were built on a three tier infrastructure: a user- facing presentation layer, a business logic layer, and an underlying database layer, a business logic layer, and an underlying database layer. In contrast, competing systems used their own business logic layer and their own business logic layer, in order to not to be tied to a specific ERP system. By building the data layers, these systems reached across many different ERP platforms with a

single standard solution. But that approach simultaneously forced them to build an integration link between their database layer and the ERPs database layer. Simply put, there was a duplication of data. In order to counter this, ClearOrbits approach was to build different versions of the POC product specifically built to leverage the data layers and data objects terminology native to a particular ERP. The data used by POC were only those residing in the ERP system itself, no duplication was necessary. In addition, from WWTs perspective one of POCs key strengths was its highly customizable software platform. Another differentiating factor of the POC product was its intuitive interface, which resulted primarily from two features. First, POC used a web-based navigation system, rather than proprietary navigation logic and templates. Second, companies had the ability to change the look and feel of the screens within the tool, say, by end-user or by supplier site, instead of having to work with a static, hard-coded view of information coming out of an ERP system. The last key capability of POC was control.

ERP RELATED PROBLEMS AND SOLUTIONS

Purchase Order Collaborator (POC) Implementation:

This was one month Long implementation which was structured in three phases: Phase I: (Early Jan 05) Define from a business perspective, specific needs and expectations to be covered from order till payment of invoice. Phase II: (Mid Jan 05) install POC at WWT headquarters. Phase III: (End Jan 05) Adapt POC to WWTs IT environment.

Phase 1: Order to Delivery Process Design

OEM Activities: OEM generates Order sent via EDI toReceives promised dateReceives drop-shipped order at assembly WWTs Oracle ERP via EDI items at assembly plant plant (2) (11) (12) (1)

WWT Activities: Once Incoming Oracle createsCorrects rejected POReceives invoice and order is validated, purchase order; POCand sends back toprocesses payment Oracle creates picks up PO vendor as received (10) salorder (4) (7) (3)

Supplier Activities: Supplier searches If PO incorrect, rejectsAccepts Order,Ships order and sends for PO in POC and PO and sends back toprovides promisedinvoice to WWT reviews it WWT delivery date (9) (5) (6) (8) The Order to Delivery Process design is explained in the above diagram with the sequential flow of Activities. Initially the built in Invoice capability was not implemented due to strict timelines. However it was implemented in March 06.Generally WWT involved actual handling of the moving product

through its state of the art distribution centers. But for automaker program products were dropshipped to one of the OEMs assembly plants. Once done, there were 2 ways of distribution: 1. Large materials and tools through tool cribs. Employees used pre programmed debit cards to get the materials from these cribs. 2. Smaller materials were distributed through vending machine like stations.

Phase Ii: Product Installation:

Customizing the tool as per the needs of WWT was the main part covered in this phase. Installation was done in 2-3 weeks due to technical expertise of WWTs software development team. There was a high level of collaboration with daily conversations and discussions between WWTs Technical Team and ClearOrbits team. They worked together and hence It could install the software in lesser time. Customization was done through tools rules Engine rather than code alterations. Thus this enabled suppliers to easily modify the look and feel without much effort. The WWT could make rule changes such as changing the price of a particular component for a particular vendor using this functionality. E.g: Price Tolerance tool. Though WWT had clear understanding in terms of technical aspect, functional level understanding was less as product was mainly for OEMs. This caused little hurdles in implementation of POC. Also there was continuous change of WWTs requirements from originally 1800 suppliers to 200 to finally 900 total suppliers. Also status of installation varied from full to temporary and back to full implementation status. However, strong collaboration and team work helped them in implementing the software in just a month.

Phase III: Adapting To a New Environment:

Phase 3 consisted of connecting he POC tool to WWTs server, ERP, and DB systems. POC was a Server centric application utilizing J2EE platform. WWT had WebLogic application server and intialy team faced a lot of problems while installing the server drivers. However, CLearOrbit team had then obtained WebLogic certificate to install drivers and connect to the database. Finally a stable connection to WWTs central database was made.

Convincing the Supply Base:

It took ClearOrbit and WWT 30 days to customize, install and test the tool. Software was ready on Feb 1st; Demo was scheduled on Feb 8th and first suppliers online by Feb 14th. A self service

feature was developed within POC known as Supplier Administrator (SA) to expedite the task of signup. Bringing all the suppliers on board was not an easy task. POC enabled small suppliers to receive more information in less time with higher accuracy and at lower cost and hence by and large most of the small suppliers were happy with POC. However large suppliers who had direct EDI connectivity with OEM suppliers were unhappy and resisted the change. WWT offered a single portal, an easy to use tool to upload promised date information and a way to send invoices and track their status in real time. Convincing the large suppliers on the argument that system wise they would be able to transmit and complete orders faster with lower cost and ease of use, WWT managed to bring all the suppliers on board and thus marked a successful implementation of POC.

BENEFITS OF COLLABORATION
The most basic benefit that the entire supply chain collaboration provided was that a larger number of suppliers (1200) could easily be connected using the POC. As far as the transaction procedures are concerned, collaboration helped in reducing the number of full-time employees in there. This advantage clubbed together with the right technology allowed the company to provide better value added services and detailed information to all the stakeholders. POC implementation helped in reducing the overall order processing time as now OEM did not have to cut POs to all its 1800 suppliers. It cut POs only to one company, WWTs consulting partner. It also contacted only 300 suppliers with which OEM had a strategic sourcing agreement and 900 more vendors, with which OEM performed on the spot buy business. OEM had more than 2000 suppliers, both big and small. It was not possible to furnish information of all kinds to all of them prior to the collaboration effort. However, due to the order acknowledgement and processed data capabilities, the timing and shipment visibility increased. As manual processes like manual data entry and daily phone call making were reduced, number of employees required reduced. The effort required out of each employee also reduced by around 30-40%. A one-to-many virtual hub was created, which helped in reducing the integration costs, implementation period and cost of online training program. This in totality helped in reducing the supplier sign-up cost. WWT and it suppliers made it a point to ensure that the goods being delivered are actually what were ordered, before they reached the receiving dock. This reduced the non conformances by about 10-20%.

Benefits to Suppliers and ClearOrbit

Since the systems were greatly online, even the smaller suppliers got easy access to real time information via the Internet after the POC implementation. There was greater visibility of the entire information flow about the cash as well as goods transfer. Earlier, larger suppliers had to keep their representative at the assembly plants. With the POC implantation, this was no longer required, thereby reducing the number of people involved in the process. The feedback from WWT enabled ClearOrbit to enhance the POC product and enable standard functionalities in it.

CHALLENGES AHEAD
The greatest challenges lay in terms of execution. OEM always wanted to deliver more than what the customers expected. They had to enable tightened control of suppliers date compliance, ontime delivery and invoice accuracy. For all this to be made possible, they thought of incorporating a central material reception control system, in which electronic entries would be made at a centralized level as soon as the material is received at the intended end. For this they were trying to device two techniques: ePOD, Electronic Proof of Delivery: it would be a system based on digital signatures usage. RFID: Tags would be attached to the goods being transferred so that automatic entrie could be made to the system as and when the goods arrived at the receiving dock. Another challenge in from of them was to develop technological components to extend visibility and control multiple tiers into supply chain (to reduce dependency links). This was being planned because it was observed that generally the tier-2, 3 and 4 suppliers created bottlenecks in the supply chain and blocked its flow and not the Tier-1 suppliers. Thus, the functionality had to be expanded.

LEARNINGS
Early Identification of requirement of collaboration:

WWT identified early on in the OEM program that supplier-manufacturer collaboration required adequate technology as well as flexibility. POC and the ClearOrbit team helped WWT on both fronts.
Better understanding of supply chain collaboration:

As demonstrated by this case study, enabling supplier collaboration requires a structured approach that includes supplier involvement in crafting the solution, shared incentives, addressing technology and security issues, focus on visibility, control and commitment, creating rollout momentum, ongoing communications, established key performance indicators (KPI) and, finally, ongoing training and support. To meet the increasing demands of today's global markets, manufacturers must implement collaborative supply chain solutions that streamline business processes with their increasing global supply base. With real-time visibility and control of supply chain execution to all parties, while addressing supplier issues head on, collaboration can succeed. Manufacturers can implement effective supplier collaboration processes that orchestrate "win/win" outcomes with suppliers, enabling breakthrough advances in reducing costs, enhancing quality and accelerating operations that help ensure they win today's productivity battles
Role of technology in supply chain management:

The POC tool protected data integrity at all times while cost-effectively establishing a fluid communication channel with a heterogeneous supply base. Project results included install to go-live in 30 days; Vendor self-sign-up through supplier administrator feature; Built-in training material streamlined application adoption; Vendors came onboard at a rate of 50 to 100 per week; and, in less than 6 months, approximately 1,200 vendors connected to WWT.
Supplier need to have adequate flexibility:

ClearOrbit was flexible enough as a software provider to tailor the tool to the needs of a complex program. Enabling POC at WWT had itself been a collaborative effort. But it was the end-users, both administrators and the supply base, who ultimately conducted collaboration. POCs rules engine and its highly customizable user interface provided endusers with everyday flexibility.
Importance of maintenance, repair and operations in OEM:

For OEM Manufacture this collaboration resulted into reduced supply base by 33 percent. Also OEM needed place order with a single company, WWT, as opposed to thousands of

vendors. Reduced resources managing the purchasing operation; and, project also ensured that end-users at plants perceived higher service.
Importance of indirect material sourcing and purchasing as a source of savings:

World Wide Technologies realized about 50-60 percent reduction/cost avoidance in accounts payable (A/P) personnel; 20-30 percent reduction/cost avoidance in order processing personnel; 30-40 percent reduction in personnel tasks; and, 10-20 percent reduction in non-conformances at the receiving dock. Finally, the control the system provided gave suppliers immediate access to information they never had before in real time via the Internet. Suppliers were given visibility over the accounts payable process, ensuring faster cash transfers with fewer time-consuming reconciliation transactions. Moreover, larger suppliers no longer needed representatives at assembly plants to ease information flow.