Suppliers Talk about E-Business: It's Becoming Business As Usual

The exaggerated claims have been quieted. E-business has now become, for some companies, another tool to help achieve better efficiencies. Here's what some companies are doing with this tool.

The rhetoric about e-business has gone from being baroque to, comparatively speaking, minimalist. It was once the buzz. Now it’s almost background noise. So, given these changes in flourish and volume, we wondered: What is the state of the activity in the supply base? And wonder lead to asking four suppliers: Delphi Corporation (Troy, MI), Robert Bosch Corporation (Farmington Hills, MI), Siemens VDO Automotive (Auburn Hills, MI), and TRW Automotive (Livonia, MI).

You can make two conclusions about e-business from the experiences of these four companies. One is that e-business is going through the same maturation process that so many other automated systems, I.T. systems, and production management techniques have gone through. The other is: your mileage may vary.

 

Delphi Corporation


“E-business fits as an enabling process. And it’s one that we use to support process change. But we’re not doing e-business for the sake of e-business,” states Jon Stegner, general director of Delphi Global Purchasing. Indeed. Delphi’s e-business office has long ago worked itself back into the company’s conventional I.T. infrastructure.

Yet Delphi’s support of e-business is obvious. The Delphi Supplier Portal, hosted by Covisint, makes several Delphi business processes available to all of its suppliers. One of the first of those processes was “problem solver,” Delphi’s quality problem reporting and resolution system. This lets any Delphi factory identify and communicate quality problems to suppliers. Plenty of ROI exists right there, but Delphi wanted suppliers’ help for another business process change. Says Stegner, “We can jointly reduce waste in the value stream.” Presto: Delphi’s Supplier Suggestion System, which was launched without much fanfare in February. Going through Delphi’s portal and using pulldown menus, any supplier can enter a suggestion and identify where it should go. Delphi people receive and evaluate the suggestions, then work to implement them as appropriate. Along the way, suppliers can see the status of their suggestions, again through the portal.

Two months after launching the suggestion system, Delphi was working through about 200 suggestions. “That’s one example of where we recognized the need and the opportunity for a common process and we’ve enabled it with a tool,” explains Stegner. Best of all, he adds, Delphi didn’t spend a lot of time or money developing it. Therein lies a “best practice.” Delphi is eschewing big, high-priced I.T. projects that take years to implement. Instead, the company is focusing on implementing e-business and business process improvements that are globally capable, provide functionality within months, draw a small budget, provide experience quickly, and can then go through continuous improvement.

Another “best practice” is how Delphi implements such projects. While these projects eventually get deployed globally, they are often first deployed in North America. “We have a critical mass of users here. Training is typically done with our own supplier quality people, who will teach our regional quality and process people—sort of a train-the-trainer approach.”

 

Robert Bosch Corporation
“In my mind, e-business drives your processes toward real time,” says George Berg. He is the Robert Bosch Corporation’s director of e-commerce, a program office Bosch’s management board set up in 1999. This office is composed of managers from key functional areas: purchasing, planning and logistics, engineering, and sales—five people in all in the North American e-commerce program office. “We’re kind of an entrepreneurial group that understands the business processes and how to bring technology providers to these different processes,” explains Berg. “We leverage Internet technology throughout the business processes at the highest level of the organization; that is, the corporate level.”

In reality, three groups initiate e-business applications throughout Bosch. First, there’s the aforementioned program office. Second, there are the functional groups within Bosch that come to the group—or to I.T.—with a business problem. Third, the I.T. providers themselves come in with their product and implementation pitches.

Regardless of the initiator, Bosch takes a “somewhat conservative approach” to implementing e-business. To start, the company wants to see the technology at work and working. The e-commerce group will present a business case regarding the project to a steering committee. As a rule of thumb, Bosch seeks ROIs of less than one year. Once a project is approved, it goes through a three- to six-month pilot project. Much of the software development comes through third parties; little development occurs in-house. Only when the pilot proves successful is the project rolled out to the rest of the company.

Two major e-business projects stand out at Bosch. First, suppliers have real-time visibility into inventory using an Internet system provided by SupplySolution Inc. (Southfield, MI). For direct material purchasing in North America, including sending and receiving RFQs and running supplier auctions, Bosch uses the e-marketplace hosted by SupplyOn AG (Hallbergmoos, Germany). Bosch does not require suppliers to have anything more than a web-browser interface to use these systems. (That said, some suppliers connect to Bosch using EDI with full backend-to-backend integration.)

However, supplier rollouts have been, in a word, “difficult,” says Berg. While the e-business providers also train Bosch’s suppliers in using these web-based systems, there’s still too much proprietary software and interconnection required, he notes. “We need a solution for the industry that provides suppliers with options so they don’t have to subscribe to a particular service. They need to be able to select a service based on how it works for them, and that lets them connect with anything and everybody else.”

One key benefit for suppliers—especially for small ones—is the ability to see their inventory in Bosch in real time. Berg describes this as “way better than what they had.” Interestingly, it is this real-time nature of e-business, predicts Berg, that might put pressure on enterprise resource planning (ERP) to also become more real time, a deficiency he notes is not lost on ERP providers.

 

Siemens VDO Automotive
At Siemens VDO Automotive, e-business is just web-based technology. But, adds CIO Bill Macfarlane, it’s “a large challenge to change business processes to use web-based technology.” Partially for this reason, Siemens’ e-business applications have come about over time. The challenge, which still exists after two years of building an e-business foundation, is how Siemens can get people to use this technology.

Macfarlane sees three main areas where e-business is well suited for the automotive industry: procurement, supply chain management, and product development. (Ancillary applications include human resources.) For the most part, Siemens looks to people like its department heads to find opportunities where e-business might lead to business improvements. These people then work in tandem with the tech guys to make it happen. Note that Siemens never had a separate “e-business department”; however, a committee started when the company began implementing its SAP ERP system has since morphed into a business process I.T. improvement steering committee. This is the group within Siemens that oversees e-business implementations.

For the most part, Siemens purchases its e-business applications. (And it avoids modifying them. “That just gets you into all kinds of trouble,” says Macfarlane.) The SAP ERP system is a “big piece” of Siemens e-business strategy, including product development (both product data management and product lifecycle management) and procurement. Siemens also uses mySAP.com.

One of Siemens’ earliest e-business implementations was catalog-based procurement. The company is taking that to the next step with web-based requisitions, including workflows, approvals, and budget controls. Already the use of web-based auctions, RFP/RFQ management, supplier communications, and similar purchasing functions is increasing. To date, the company has webpages that suppliers can access, but those webpages are not what Macfarlane would call a supplier portal.

Web-based technology, says Macfarlane, “is the way to go. If you’re not doing it web-based, you’re missing the boat.” However, he admits that implementing such technology is not necessarily becoming easier. “You always have implementation challenges, whether it’s implementing mainframe systems or implementing the latest web portal. I.T. is not the biggest challenge. You still have challenges in changing business processes, getting them to take advantage of I.T., training, roll-outs, and getting the skill sets you need. Plus top management has to be convinced that the investment is worth it.”

 

TRW Automotive
TRW Automotive once had a group dedicated to raising e-business awareness and stoking change in the ways TRW did business, particularly outside the traditional I.T. community. That group has since been folded into I.T. “E-business—using the Internet and doing business connected to your partners—is just technology that we now take for granted when we talk about I.T. solutions to business problems,” says Joe Drouin, CIO for TRW Automotive. As a result, business process changes within TRW have become more collaborative, involving both business and I.T. folks. Partnerships really.

One of those process changes covered by the “e-business” umbrella is TRW’s supplier portal. This has capabilities for both inbound and outbound auctions, customer RFQs, plus TRW-specific applications. One of those applications is an on-line ordering system for TRW’s aftermarket organization. Between 50% to 60% of TRW’s orders now come in this way rather than through the traditional telephone and fax routes. Another “tremendously successful” application, in TRW’s fasteners business, is an on-line system for customers to configure new products and submit them to TRW for quotation.

TRW’s latest foray gives suppliers direct visibility into their inventory, à la vendor managed inventory. This e-business application, using SupplyWeb from Brain North America, Inc. (Ann Arbor, MI), was launched to about half of TRW’s plants worldwide. This has greatly helped TRW in managing inventory and premium freight issues.

Drouin succinctly states a common refrain about e-business: Ultimately, it becomes part of the toolset—“just another accepted component of any solution offered by the I.T. community. I see it continuing to disappear as a discrete initiative. In fact, I’ll be surprised if people are using the term ‘e-business’ in two to five years.”

Given that, he suggests that when implementing so-called e-business solutions, “make sure you’re solving a real business problem and that there’s a rock-solid return. The old days of having a tool and looking for something to fix it with doesn’t work in the current economy.” Instead, it is the initiatives focused on adding value to the business, versus adding for the sake of technology, that are the most successful.