Success in Action: A Real World Case Study
A recent partnership between World Wide Technology (WWT) and ClearOrbit demonstrates these principles in action. This successful collaboration implementation delivered tangible, substantial results to a major automotive manufacturer in the form of significant cost savings and increased profitability.
World Wide Technologies, a systems integrator and provider of outsourced supply chain solutions, was hired by a large automotive original equipment manufacturer (OEM) to automate vendor relationships and reduce the automaker's spending on maintenance, repair and operations (MRO) material across all U.S. and Canadian assembly plants.
Historically, the OEM conducted the entire purchasing process, which included more than 1,800 vendors, using a range of mostly manual processes. These vendors conducted business with the automaker via a variety of formats, from suppliers' own electronic data interchange (EDI) signals to the exchange of hard-copy documents. Twenty full-time employees at the OEM's centralized purchasing group managed the MRO vendor relationships and were responsible for setting up blanket purchase orders with vendors, introducing new items on new blanket orders, receiving invoices and conducting payments. 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.
It turned out to be a paper nightmare. Moreover, vendor representatives were assigned to each plant exclusively to ease the flow of information back and forth between the OEM and the supply base. Vendors saw the need to provide human resources at plants simply as a necessary cost of doing business with the OEM. Lastly, OEM employees other than tool store managers usually performed follow-up work with vendors unofficially at their respective plants, so as to build yet another layer of security into the system when materials were critical to their operations. With so many people involved, controlling the MRO purchasing effort had become difficult and costly for the OEM; and limiting the number of suppliers was not feasible due to the company's need for spot-buy transactions.
WWT was charged with developing and implementing an electronic transaction hub, handling the exchange of data between suppliers and the OEM. This technology-intense purchasing process was aimed at increasing control, enabling automation and reducing human intervention. Specifically, WWT's tasks were defined around the cost-effective management of purchase orders and invoices in a real-time, collaborative fashion. In this case, collaboration referred to the near-instant (within minutes) exchange of documents back and forth with suppliers in such a way that accuracy of key business process parameters, such as prices and line items, was maximized and sustained.
To provide the technology infrastructure required for such a system, WWT partnered with ClearOrbit to deploy ClearOrbit's Purchase Order Collaborator (POC). POC is an Internet-based, scalable, real-time collaborative solution for companies to manage POs, deliveries and invoices with suppliers, regardless of size and technology resources available at each supplier.
With the control POC added, WWT could ensure that orders matched shipments before physical product started moving and additional costs were incurred. These controls enabled a streamlined accounts payable and PO settlement process for the OEM. POC also integrated directly to the OEM's ERP system without the need for additional layers of data; therefore, no duplication was necessary. Additionally, POC's customizable platform has a rules engine that allows controlled flow of information, so the tool could be tailored to the OEM's specific business process needs.