[SIDEBAR] The Practitioner's Perspective: Johns Manville
Denver-based Johns Manville may be 145 years old, but the $2 billion building materials manufacturer is arming itself with the latest in e-business tools as it works to remain competitive in today's challenging marketplace. Specifically, the company — which produces insulation, roofing systems and engineered products such as mats, fibers and filtration solutions — is implementing an e-sourcing solution called QS from FreeMarkets as a platform for the strategic sourcing program.
Ed Williams, vice president of corporate supply chain at Johns Manville, is bringing to Johns Manville the same approach to strategic sourcing that he practiced at Carrier Corp., where, as vice president for supply chain management until coming to JM last January, he helped introduce the FreeMarkets solution as a tool for ensuring the company was getting marketplace pricing for the goods it buys. "Before Carrier, I worked at Xerox Corp.," Williams explains. "Xerox had about 50 cost engineers who could come up with a target cost estimate for about anything you might want to buy. At Carrier, I did not have the luxury of a battery of cost engineers, and I don't have cost engineers here at JM. So the FreeMarkets tool allows us to get to competitive benchmark cost levels."
Johns Manville is using the FreeMarkets tools to whittle away at the cost of its indirect spend, beginning with certain IT projects and local plant projects along the lines of janitorial services and cafeteria services. Currently, Williams is expanding the use of the tool to direct materials and transportation, and he plans to start running online auction events for certain raw materials soon.
But Williams is not relying solely on the e-sourcing tools to keep Johns Manville's costs in line. Rather, he views the QS solution as one instrument in a whole toolbox of processes to work the company's spend. "At Carrier, we may have put as much as 20 percent of our spend through the solution," he says. "We may get to 50 percent at JM, but that still leaves 50 percent that we're going to have to work other ways, whether it's through Supplier Integration or Supplier Workshops [two programs that Williams has initiated at JM], global sourcing in Asia or cost reduction through working with engineering." Still, the e-sourcing tool is a necessity in this day and age, says Williams, noting, "You'd be at a substantial disadvantage not having a similar solution today."