But the fundamental reason for the metrics is that we're trying to drive change and transformation. The metrics we use would not have been effective two years ago.
iSource: What are some specific measurements?
Williams: Things like how many online sourcing events we are conducting, the amount and percent of savings, and where we are in Web-enabling the supply base. We also look at how much spend is going through a particular supplier. Other measurements include how we're doing with suppliers in terms of new product development, how many suppliers we are collaborating with, and how much spend and savings are coming from low-cost sourcing regions.
iSource: What about the data gathering and studying opportunities?
Williams: The opportunity is huge. What we're doing is linking up with factories' ERP [enterprise resource planning] systems so we can collect information on all the purchases we have. The critical issues are seeing what your spend is with your suppliers and what that looks like year after year. That means knowing - by supplier, by part number how much is purchased. Ultimately, that data can tell you which suppliers are the most cost-effective.
But the more decentralized you are, the more complex it is. In our case, we don't have one Oracle or SAP system to connect to - we have 88 sites. So it's a big job.
iSource: What about the difficulties in getting everyone in the company to accept enabled technology. How should companies handle that problem?
Williams: They have to be much more collaborative in terms of how they get the stake holders involved in this process. When you start telling people, Here's the computer, you have to start doing your ordering over the Internet or purchase your tickets for travel,' it means a transformation of the organization. You can't just turn a light switch on and figure it will happen. The organization has to be prepared for that.
Getting the support of all the people affected by the change requires training, and you have to provide training for a large number of people. That requires thinking about how to package the message, representing the business case and showcasing what's in it for them. Take business travel, for example. We showed people the extra benefits of buying online, such as how many more cost-effective options they could find.
But you also need results. With some early successes, you can show people that a new system works and the quicker everyone gets on the boat, the better off we'll all be.
iSource: Tell us more about how enabled technology has affected your company?
Williams: The Web has had a major impact on our business, changing how we work inside our supply chain management and in the value we get from what we do. One example is how we work in indirect spend, how we buy things like office supplies. We now have a system where we essentially send a requisition from our desktop directly to suppliers on 60 percent of our purchases. It's all enabled by a Web browser that connects to the supplier and it is where all order fulfillment is done. And at the end of the day, we know what all of our people have bought.
We introduced that three years ago. Since then, we've re-engineered many jobs, as a result. People who were placing orders are now doing strategic sourcing. And individuals are empowered to purchase their own stuff in a controlled environment.
iSource: What about direct goods?
Williams: On the direct side, we've done a lot with reverse auctions. We've run maybe 1,000 online auctions here with nearly a billion dollars of spend through that process. We're buying from suppliers in China, Central Europe and Mexico.
It's a much cleaner process. We get much better pricing now than via traditional negotiations, and we can make the award quicker and get savings quicker. It's really enabled us to continue on the path of year-round cost reduction.