Leap of Faith

There was a time when, if you wanted to sell a widget, you had to have a widget in stock. "Buy-hold-sell" was the name of the game. No longer. Thanks to the Internet and new, collaborative technologies, a dealer can step out in faith and move millions...


[From iSource Business, April 2001] Tim Vaio was ready to make a leap of faith. As director of supply chain solutions for Lucent Technologies' Worldwide Services division, Vaio oversaw a fundamental shift in the way his company fulfills orders and completes installations. Vaio's division, which handles the installations for products sold by Lucent's four other divisions, traditionally had waited for all the materials it needed for a given installation to be sitting in one of the company's warehouses before scheduling the job. Now, using the Internet and a software solution to gain greater visibility into its supply chain, Lucent has moved toward a just-in-time fulfillment model that Vaio believes will help the company cut its inventory holding costs while reducing its order-to-cash cycle. The leap of faith? Scheduling product installations before the company even has its hands on all the parts and materials it needs to complete the job.

Tim Vaio was ready to make a leap of faith. As director of supply chain solutions for Lucent Technologies' Worldwide Services division, Vaio oversaw a fundamental shift in the way his company fulfills orders and completes installations. Vaio's division, which handles the installations for products sold by Lucent's four other divisions, traditionally had waited for all the materials it needed for a given installation to be sitting in one of the company's warehouses before scheduling the job. Now, using the Internet and a software solution to gain greater visibility into its supply chain, Lucent has moved toward a just-in-time fulfillment model that Vaio believes will help the company cut its inventory holding costs while reducing its order-to-cash cycle. The leap of faith? Scheduling product installations before the company even has its hands on all the parts and materials it needs to complete the job.

The movement toward this type of just-in-time, sell-source-ship model (also called S3, or s-cubed) runs counter to the traditional buy-hold-sell (BHS) way of doing business. While the distribution business has been practicing S3 for decades, sell-source-ship is gaining broader acceptance as new technologies make it possible for more businesses to reap the benefits of S3. Challenges and potential pitfalls abound, and not every company is welcoming sell-source-ship as the panacea for their cycle-time issues. But, analysts and practitioners are already pointing to industries where S3 makes sense and to success factors that can make sell-source-ship work for your business. (See the accompanying case studies on communications technology provider Lucent, farm equipment distributor Southern Marketing Affiliates, and construction and agricultural equipment manufacturer Deere & Co. to understand how different companies are using, or thinking about using, sell-source-ship.)

AMR Research, the technology consultancy based in Boston, Mass., is credited with coining the phrase sell-source-ship in the November 1998 report, What about Wholesale Distribution? Under S3 a distributor buys and holds as little inventory as possible in advance, choosing to take inventory on consignment or to quickly source and ship it after the order is received, AMR wrote. S3 represented an about-face from the traditional model of buy-hold-sell under which a distributor would buy goods in advance, typically based on a demand forecast, and then hold the products until they were sold. S3 meant moving from just-in-case to just-in-time.

  • Enhance Your Experience.

    When you register for SDCExec.com you stay connected to the pulse of the industry by signing up for topic-based e-newsletters and information. Registering also allows you to quickly comment on content and request more infomation.

Already have an account? Click here to Log in.

Enhance Your Experience.

When you register for SDCExec.com you stay connected to the pulse of the industry by signing up for topic-based e-newsletters and information. Registering also allows you to quickly comment on content and request more infomation.

OR

Complete the registration form.

Required
Required
Required
Required
Required
Required
Required
Required
Required
Required
Required