To get the most from a supply-chain management strategy, companies are finding they must enhance their information-systems infrastructures.
Long gone are the days of disparate systems, the inability to exchange information both internally and with supply-chain partners, and half-hearted attempts to offer Web-enabled solutions. While the investment involved in overhauling systems could make executives cringe, it's a cost that companies must swallow if they want to survive in the cutthroat high-tech environment.
It's something Paradyne Networks Inc. knows all about. In the past several years, the company has spent about $4 million on an ERP system, said chief information officer John M. Guest.
And that isn't counting the cost of several software launches that enabled the Largo, Fla.-based company to manage its database, engineering-change order, and customer-service requirements.
That's only part of it. The company, which makes broadband network-access products, is also looking to improve its Internet capabilities, supplier interfaces, and forecasting activities. The results, according to Guest, have been worth the effort.
Engineering-change cycle time has been reduced by 60%, and customer satisfaction through its Web site has increased, the company said.
Paradyne started working on its supply-chain infrastructure approximately three years ago.
The first step was to implement an enterprisewide system that would enable various departments to communicate with each other, Guest said.
Back in mid-1996, finance, sales, and manufacturing personnel were working off their own separate numbers. During planning sessions, the executives would spend much of the time debating who had the right data, Guest said.
"In a business where decisions have to be made on a daily or weekly basis, we don't have a lot of time to argue about the numbers," Guest said. "They were their own smoke stacks because each was getting information from different systems."
Understanding the amount of time that was being wasted, then-chief executive Tom Epley decided in July 1996 that the key to success rested in a single platform that would integrate the various operations. So, Paradyne embarked on an ERP mission.
Brought on board in the fall of 1996, Guest was charged with negotiating the ERP deal, finding the hardware necessary to run the software, and bringing the company up to speed. Denver-based J.D. Edwards & Co. won the contract, and IBM Corp., Armonk, N.Y., was the hardware vendor of choice.
In all, it cost less than $4 million for the software, hardware, consulting services, and labor associated with the ramp-up. The company also trained members of its IT staff on the J.D. Edwards technology to avoid additional consulting expenses down the road.
The project was done in phases, with finance coming on line in June 1997, sales in December of that year, and manufacturing in June 1998.
Although converting the data into a new format took considerable work, the company's biggest hurdle had little do with information services, but rather with changing people's attitudes, according to Guest.
"People were thinking: Here's IS coming in and saying we want you to do this," he said. "We recognized that there would be a natural resistance to moving to a new platform. "Early in the process we got key people within the functions who would be using the system involved and trained in the process."
With the ERP launch behind it, the next task was to find software to handle the database and engineering-change orders.
The company signed Cognos Inc., Ottawa, for data-warehousing functions, and Agile Software Corp., San Jose, for product-content management, he said.
The Cognos system allows departments to track budgets and interface with back-ERP systems. Agile's systems allow engineers to make design changes and search databases more easily. As a result, the engineering-change cycle has been reduced by 60%, and the search time associated with finding the correct records has been shortened by 50% to 75%, Guest said.
Paradyne plans to enhance its Internet strategy and provide suppliers and customers with greater access to information, order status, and design features. To that end, the company expects to install additional software from Agile early next year to provide the necessary interfaces.
In the next few quarters, Paradyne also plans to examine how the Internet could improve forecasting practices between suppliers, customers, and distributors.
"In the long- and short-term view, the Web is fundamentally changing the way business is done," Guest said. "There are two key areas we will be looking at next year: customer-relationship management, which will allow us to get closer to our customers; and supply-chain management, which will link us with our key suppliers in a true business partnership."