April 23, 2001, 10:33 AM — COLLABORATION HAS always been a part of any economy, but the information age has breathed new life into the meaning of the term.
Although much of the focus in business-to-business e-commerce has been on expediting transactions, businesses are discovering that the flow of information within a supply chain is a collaborative process that is at least as important as the movement of dollars.
This is especially true for manufacturers. "New, Internet-based tools are starting to emerge to enhance the relationships and dynamics between manufacturers and their suppliers," says Lucine King, senior analyst at Forrester Research in Cambridge, Mass.
King recently completed a study that predicts a rapid growth in the adoption of these tools in the next two years. The reasons, she says, are compelling. "Over 75 percent of the companies we surveyed say the new technologies will enable them to bring products to market faster while reducing the errors in production processes."
Industrial-strength information
It isn't just about suppliers. Richard Gray, director of e-business and information systems at SPX in Muskegon, Mich., is using the Internet to share data with his customers.
Gray works in the Lightnin division at SPX where the job is making industrial mixers and agitators. This is equipment that you don't just buy off-the-shelf.
"We build these to order," Gray says. "We need to have the detailed specifications -- things like viscosity, blending times, and volume of the material -- before we can start to make the appropriate machine."
Such information is critical because it determines specifications such as the motor speed, impeller design, and shaft length of the product. And, perhaps more importantly, if any of this information is incorrect, it can mean big losses for SPX.
"We don't just guarantee our products for mechanical functions," Gray says. "We also promise [that] they will support the process. In other words, a machine could work perfectly and, because of one specification error, SPX still has to eat the cost."
So it is no surprise that Gray, the point man for information, felt a certain amount of pressure to ensure that the information was accurate. "It was a big problem for us," Gray says. "We sell to third-party reps. They funneled information to us via phones, fax, hard copy -- real old-technology stuff. It was extremely inefficient and error-prone."
So in November, hoping to find a better way, Gray and his colleagues started testing a complex system of software components. It consisted of a homegrown sizing and selection application; software from Big Machines, a Foster City, Calif., company; and connectivity software from webMethods in Fairfax, Va.
The system is all Internet-based: Sales representatives enter specifications from a browser directly into the SPX application which then passes the data to the Big Machines eSales application; eSales then creates a detailed set of specifications, generates a quote for the customer, and, with the help of webMethods, passes everything back to the sales representative.
Gray says the "killer app" here is the capability of eSales to dynamically generate AutoCAD documents and to talk directly to the SPX ERP (enterprise resource planning) system. "It means we can automatically generate a detailed quote -- complete with engineering drawings and specifications -- for the customer. The system is much faster and far less error-prone," Gray says.
Gray considered building a system such as this in-house but decided against it for a reason familiar to most IT professionals: "It would have been difficult for us to attract the type of talent Big Machines has on board," he explains.
Goddard Abel, president and CEO of Big Machines, says developing this kind of software internally would be prohibitively expensive for many manufacturers. "I think it would cost at least $5 million to do it yourself," Abel says.
The code is all written in J2EE (Java 2 Enterprise Edition). "We use XML to integrate with CAD systems," Abel says.
Gray says testing has gone well. "We have been in pilot with six of our sales reps. We are almost ready now to start full deployment. We think we can reduce cycle times and internal costs -- in some cases by more than 50 percent," he says.
Gray is already thinking about the next step. "This should support about 80 percent of our product line," he says. "The other 20 percent of our business involves more intensive collaboration with our customers on design. We will need a whole new set of tools for this."
