Indeed, best-in-class enterprises have found that using Web-based technologies can shorten their deployment times and minimize total cost of ownership (TCO) by eliminating the upfront costs of hardware, consulting support and network setup. In fact, the Gartner Group claims that application outsourcing can actually reduce TCO by 30 to 50 percent, depending on the complexity of the application.
Consumer applications have paved the way, but sophisticated B2B (business-to-business) applications are now becoming commonplace in the global economy. For example, Salesforce.com is being used for enterprises as large as Cisco Systems. The pharmaceutical industry has also been using the ASP model to advantage. McKesson, one of the nation's largest pharmaceutical distributors, now allows hospital and retail pharmacies to search for and order products with real-time pricing and availability data. Not only is this process saving time, money and effort, it helps deliver the right medication to the right patient every time.
Case Study: Maxim Integrated Products
Maxim Integrated Products is a multi-national leader in the design, development and manufacture of integrated circuits. The company boasts 2005 net revenues of more than $1.6 billion and over 8,000 employees across facilities in the United States, the Philippines and Thailand. Diverse geographic locations made it challenging for Maxim to control shipping and distribution. Like many best-in-class enterprises, Maxim needed help with the following:
- Centralizing decision-making for how goods would be shipped and which carriers would be used
- Enforcing strict parameters on shipping methods and vendor selection
- Reducing overall costs of shipping and distribution
- Simplifying management of volumes of weekly invoices from multiple vendors
Maxim chose to adopt a SaaS shipping and freight management solution from Agistix instead of developing proprietary software. Within hours of implementation, Maxim was able to enforce a uniform policy for shipping methods and vendor selection. Gradually, Maxim realized increased pricing visibility for small-parcel shipments and began using the spot-quote market for heavy freight. By the end of one quarter after implementing the Agistix on-demand solution, Maxim had reduced shipping costs by more than 28 percent.
Within six months, instead of processing up to 2,500 shipping invoices each week, Maxim began receiving a single electronic invoice for all weekly transactions. With this change alone, this world-class enterprise reduced accounts payable processing time from 70 hours per week to five minutes per week, generating savings of up to $20,000 each month.
Best-in-class logistics processes are now available to any enterprise. Global companies know that the operational complexities caused by globalization must be managed proactively. They realize that to remain competitive in a global environment, they must optimize their supply lines to build in more flexibility and efficiencies. The road to flexibility and efficiency is technology; in particular, technologies that unite multiple processes and systems into a common information and real-time decision support network that supports all internal and external relationships.
About the Author: Frank Cirimele is a recognized expert on global trade and the practical application of effective Global Logistics Strategies. He has represented the United States on the United Nations International Trade Procedures Working Group (UN/CEFACT ITPWG), which addresses Trade Facilitation and global e-commerce issues. This respected UN group provides strategic and functional guidance to government and business entities on maximizing the efficiencies of an automated trade and logistics environment. Frank was also selected as a private sector expert by the U.S. Department of Commerce, International Trade Administration to join the Free Trade Area of the Americas (FTAA) Committee on Electronic Commerce. www.agistix.com.