Williams: Our customers want to place orders with us and have a quicker delivery time. We're looking at how to drive the technology so we can have the order filled when customers want to have it filled. So the whole fulfillment process now focuses on how to optimize the distribution process and how to manage our logistics providers so we can have real-time data that tells us two things: when an order is filled and when the customer wants it.
iSource: How has the state of the economy affected the supply chain?
Williams: A year ago we were chasing shortages in various components. It was a seller's market. Now it's a buyer's market, and we have to capitalize on that by going back to suppliers and asking them to be more efficient, helping us further reduce cost. We have an initiative now, Supplier Day, during which we're bringing in 10 to 15 suppliers, showing them the current state of Carrier, and asking them to share how they're going to help us through this economic downturn.
iSource: How are suppliers reacting to all these changes?
Williams: A lot of suppliers aren't thrilled. We aren't thrilled to be placed in an auction either, because these reverse auctions are deadly for the incumbent suppliers. We've seen prices tumble 20 percent and we know that's because the incumbent has dropped its prices. Of course, that means the prices had a tremendous amount of waste before.
The challenge for suppliers is to rethink the services they provide and their core competencies. The ones that can come up with a compelling case are the ones that will survive.
iSource: Aren't there risks to supplier collaboration?
Williams: In the HVAC industry there are a handful of providers. It's a tight-knit industry. The risk is that our competitors will get benefits from the work we're doing. Our hope is that the flip side - some of our competitors, hopefully, - are doing this and we're getting benefits from their efforts.
The question is, how do we get our competitive advantage and keep it to ourselves? As we take costs out of our supply chain and leverage the best tactics, initiatives like low-cost sourcing and reverse auctions have a way of migrating through the firewall to competitors via suppliers. The challenge is to keep the ball moving fast enough so the competition can't keep up.
iSource: How do you see enabled technology in the supply chain evolving?
Williams: I think the role of the supply chain will evolve to the point where people throughout the organization have the data they need to make intelligent choices for sourcing, to truly optimize the value chain so they can find the lowest cost service or product. Everything in the process will be transparent to everyone in the company and the supply base. The work force will also evolve to the point where they're comfortable with the technology, and they are able to apply and accept it.
iSource: But companies still have a lot of work to get to that point?
Williams: The plate is definitely full. You have to stay ahead of the technology and the competition. And you have to figure out a faster way to drive cost reduction and productivity across the business and inside the corporation. If you don't, then margins will shrink.
Ultimately, it's all about information. How we manage that information, how we get our competitive advantage from it, and how we communicate that over the Internet - those will be the keys to success. Companies will need to integrate all this stuff both inside the company and with critical suppliers. That's where the home run will lay.