Taking Performance Management Outside the Four Walls

Agere's approach to extended business performance management primarily involved a change in process. The principle technology involved, to date, has been a set of tools that the company built in-house to convert spreadsheets with forecast figures from customers into electronic data interchange (EDI) messages that could be sent directly into Agere's back-office systems. Total investment: about $5,000 and 70 person hours.
Other companies have been adopting rather more sophisticated solutions as part of their own initiatives to extend business performance management to their supply and demand chains. Thomas Built Buses, for example, is using a solution from Webplan called RapidResponse that lets several dozen suppliers connect to a central portal to collect information on demand and to provide feedback on supply. Dave Haskins, with Webplan, says that the provider's solution uses the suppliers' feedback to alert Thomas Built when changes occur in supply. Thomas Built can then use the solution to proactively determine which of its own orders might be affected by the change, allowing the company to determine immediately how they might reallocate supply to orders of higher priority or source alternative supplies to meet demand.

Elsewhere, pet food company Hartz Mountain is using a solution from Blue Agave Software to analyze orders coming in from its retail customers as a way of identifying which products may stock out within Hartz's own supply network of plants and distribution centers, according to Keith Belton, vice president of marketing with Blue Agave. Hartz also is using the provider's solution to look at the point-of-sale (POS) data provided on a regular basis to Hartz by its mass merchandiser customers. The solution compares the POS data with information residing in Hartz's own fulfillment, inventory and demand systems, giving the company visibility into which products are in danger of running out in which stores. By working on both the supply and demand sides of the business, privately held Hartz is able to meet retailer's high in-stock requirements and tight order cycle times while also thinning out its own inventory, according to Belton.

On the retail side, companies are applying business performance management principles to address the challenges involved in selling through multiple channels. Best Buy, for instance, is using a distributed order management solution from fulfillment specialist Yantra to manage its supply chain in such a way that it can meet customer demand regardless of channel while minimizing its own inventory requirements. So consumers ordering products online can have the goods shipped to their homes or to a store for pick-up, while customers shopping in the retailer's stores can have out-of-stock products shipped directly to their homes. Rob Sweeney, vice president of product management with Yantra, says that this type of distributed order management solution lets a company like Best Buy compete with lower-price retailers by offering consumers greater convenience, while at the same time helping to reduce the inventory requirements for the company's overall supply chain by, for example, having orders fulfilled directly from suppliers.

Best Practices for BPM in the Supply Chain

What all these implementations of business performance management for the extended supply chain have in common is the increased flow of information among supply chain participants. "If you're going to link your business processes with, say, your suppliers, what you're really talking about is sharing a lot more information, a lot more details about what's going on within your operation, within the part of the business process that you own," says Yantra's Sweeny. More important, the information sharing must be proactive, with participants actively informing partners of supply chain disruptions or opening up their processes so that partners can detect unplanned events. In addition, Sweeny says, that sharing must extend to the metrics that the supply chain partners use to measure success, as well as the goals for those metrics.

What's the hardest part of achieving that level of sharing? "Building the relationships," says Agere's Armbruster, "relationships based on trust. It just takes time." Time to ensure that partners understand how shared information is going to be used, time to establish the processes necessary for protecting sensitive information, and time to build the mechanism for moving the information back and forth between partners. "You've got to be determined," Armbruster emphasizes. "You have to be in it for the long haul, meaning that you can't go in and set up one of these things overnight. It's going to take a series of meetings to get it going, it takes some energy to get it going."