The BIG Exception

The rule that processes should come before technology is like almost every other rule -- it has at least one noteworthy exception. In this case, the exception is a big one -- the Internet. If you hadn't noticed, this is one technology that is wreaking havoc on the old ways of doing business. You don't have to go far to slam headlong into some solid examples that prove this is the case. In the consumer world, the way people shop is being overturned by the Web. People are buying groceries online, having them delivered to their homes by companies such as Peapod Inc. and Webvan Group Inc. Just about any object of your desire -- collectible cars, rare books, even a human kidney someone tried to auction off illegally -- can be found and purchased through the various online sites. The business landscape is being reshaped as well. Scores of industry-specific Web sites now offer products ranging from chemicals to steel to plastics. Electronic procurement of products suddenly is a common practice at many large and small companies, replacing more tedious processes of the immediate yesteryear. Rarely has there been a technology that promised to overturn business processes right and left as the Internet has done, is doing, and will continue to do. "Reengineering is fundamentally the idea that you take a process view of the organization and think about completely new ways of delivering value to your customers, and the Web absolutely plays a role in this," says Russell Brackett, senior partner in CSC Consulting Inc., Cambridge, Mass. He points to the ways manufacturers' distribution channels are being reevaluated from the ground up as a result of this new technology. "If I'm a CEO, I'm thinking about how I get involved with my customers in a completely different way," Brackett says. "People are starting to see that doing business on the Web is not just about another channel -- to successfully do business there, you've got to completely rethink the way you do business and the roles people play in the value chain." Manufacturers are being forced to reconsider how they deal with customers, suppliers, and distributors. Before a manufacturer can effectively use the Web as a tool to bring about new relationships in its supply chain, some serious reevaluation of everything a company is and does must take place. In other words, the existence and potential of the Web is forcing companies to reassess and, where it makes sense, reengineer their distribution processes. For instance, Brackett recalls working with a client company that manufactures hoses and fittings. Its distributors make assemblies for hydraulic and pneumatic applications. Caught up in the hype over electronic commerce, the company initially viewed the Web as a means to market its products. "It would have been a disaster," Brackett says, "because they didn't even know their customers -- their distributors did." The hose-and-fitting manufacturer decided instead to gather information about its customers over the Web and use it to serve them better. "Through customer feedback on the Web, they learned about how often parts should be replaced and set up a service schedule for hose replacement," Brackett says. Bethlehem Steel Corp. has begun using the Web to tender finished-steel shipments bound for customers. Using a system that ranks its transportation carriers, the integrated steelmaker publishes its transportation needs on the Web. The selected carrier can either accept the order and promise pickup and delivery or reject it based on its own capabilities. In the latter case, Bethlehem simply turns around and Web-offers the shipment to the next carrier on its list. The company plans to add an interactive capability to this process, so that it and the carrier can discuss shipment terms online over the Web. What's important is that this new means of assigning shipments to carriers replaces a time-consuming one involving telephone calls and faxes to a variety of carriers. In another example, i2 Technologies Inc. last month announced plans to offer a worldwide trade logistics service via the Web. Unlike other so-called superportals, i2's TradeMatrix will enable manufacturers to contract for almost any kind of planning, scheduling, or logistics-management service over the Web -- whether they already use i2's software or not. That's big news. But, hey, exceptions to the rule usually are.

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