The Right Remedy

Dec. 21, 2004
Manufacturers combine new e-business systems with process change to alleviate their pain.

Whether it's in the office, the plant or the warehouse, most manufacturers have a blood trail. It's whatever part of the business that's costing the company big time in terms of late shipments, lost customers, production snafus or excessive employee turnover. But finding the pain is only part of the solution. Fixing the problem is something else -- and often software, in tandem with process changes, can help. That's what Quaker Chemical Corp. found when the company faced a serious dilemma recently. With hundreds of the company's most creative scientists and chemists scheduled to retire in the coming years, Quaker management grappled with what to do to avoid the impending brain drain. One of Quaker's most valuable assets is the company's portfolio of lubricants as well as its overall knowledge and experience in lubrication technology and development of new lubricants for various industries, including steelmaking, "We have a very mature workforce, with many baby boomers who will be retiring soon," says Thomas Baker, manager of business intelligence development at the Conshohocken, Pa., firm. "These people have quite a bit of knowledge in their heads, and we faced the prospect of seeing it all potentially walking out the door. It was a huge problem for the company." For instance, Baker says the company has one employee in its European operation who "has visited just about every steel mill in the world, and steel is one of our biggest customers." The employee has a tremendous amount of process knowledge that is invaluable to the company, but he is only a couple of years from retirement. To solve the problem, management resolved to implement a knowledge management (KM) system from Intraspect Software, Brisbane, Calif. Little did the executive team realize at the time that the system they sponsored, which came to be called QBI, for Quaker Business Intelligence, ultimately grew and expanded into Quaker's main information backbone. "The visibility this software offers our company is tremendous," Baker says. "Without this system, there is no way we could have progressed to where we are today as a global organization." The development laboratory, initially the prime user of the KM system, now represents only one-tenth of the total users in the company, Baker points out. Out of the company's total work force of 1,100, about 780 employees are regular QBI users, including laboratory, management, accounting and sales. "We are trying to use this as a competitive advantage by becoming a knowledge-based organization to better serve our customers," Baker explains. Quaker has offices in 16 countries and does business in two dozen more. But more often than not, its scientists in one country had no way to learn how its scientists in other countries had responded to similar customer needs. Since installing the software two years ago, the company has built up an impressive database of both documents and "meta-data" -- notes and other information -- associated with various development projects. Lab personnel enter into the system development reports, research reports, notes and other data. Gradually, year by year, Quaker is aggregating a mass of information that ultimately will insulate it from the pain of having all those key scientists and engineers retire. Besides being a repository of information, the system also gives the company an easy way to find out who among its far-flung operations are the best engineers to tackle a particular customer problem. "Over time, the system has enabled us to identify the experts in our labs in particular areas," Baker says. "Today we can take the best skill set around the world and leverage their capabilities." In the past, when a customer called with a particular question or need, the company's local scientists would go ahead and begin development work, trying to come up with a solution to the customer's problem. Now, instead of always embarking on a major development effort, the company's scientists instead immediately check the database to see what has been done before. "I don't know how many cases we have stopped of having to reinvent the wheel. That's been a huge savings for the company," Baker adds. Initially some scientists and engineers, unable to see the value in the new system, were reluctant to use it. "People first said, 'This is more work for me, and why do I want to do this?' " Baker recalls. "We convinced them it would help them do their jobs better." He says the proof was immediate. "They could see similar projects to what they were working on going on elsewhere around the globe." Shortening Lag Time Another company that found software helpful in surmounting a business problem is Microchip Technologies, a maker of microcontrollers for the embedded controls market. The company's sales efforts to new and existing customers were being seriously hampered by its sluggishness in responding to their requests for product samples. "It was taking 19 days or more to ship the average sample," says Rob Owen, vice president of information services at the Chandler, Ariz., company. "That was really not acceptable to our sales organization." Owen emphasizes that Microchip's Sample Center in Bangkok, Thailand, plays a crucial role because, "It's a potential lead-in for future business. It's important to our future revenue. If we can get the silicon in the customer's hands first, it gives our business a clear edge." Last October the company hit on a solution comprising both software and an organizational change. It decided to put its Sample Center operation, which previously was run manually, on its companywide Baan ERP system and at the same time, consolidate all sample shipments from a single location in Taiwan. The change required almost no process or major technology changes since the company already was using Baan to manage its warehouse and distribution functions. "We basically utilized the business processes and systems already in place," Owen says. Now, when an engineer at one of the company's customers calls seeking an analog or memory product or a microcontroller, Owen reports, the company is able to ship a sample in one day if the product is in stock and three days if it is not. The system checks to see if the product is in stock, and if it is, a picker working the warehouse is notified of the order's priority. "We also give an electronic notification to the prospective customer that the product has been shipped, as well as to our sales organization, because they will want to follow up," Owen adds. "We've gotten very positive feedback from our sales organization. And customers say they are seeing a difference." Owen is quick to point out that the company's solution to the problem was more than just a software package. "No business problem is solved by a single piece of software," he says. "In this case, we utilized people, process, and technology in a different way than before and achieved tremendous results." Recovering Lost Customers One manufacturer that is trying to enlist software to help it solve a business problem is Columbian Chemicals Co., a manufacturer of carbon black, a material used in tires. The Marietta, Ga., firm's business problem is having trouble responding quickly enough to customer inquiries regarding potential new orders. "We ship to tire manufacturers, and it was taking us a week to decide if we could meet a customer's requirements," says Allan R. Nichols, senior business systems analyst at Columbian. "We've lost orders because we couldn't respond in a day." Speaking at a recent QAD Software customer conference in Long Beach, Calif., Nichols said the company's goal is to reduce the response time to two to four hours, using technology, particularly software, as an enabler. "It's very high on our list of things to do," Nichols adds. The company is using QAD's MFG Pro ERP system to help it respond to global business change. "We decided we wanted to reinvent ourselves, using the technology to get ourselves back ahead in the market." In another case, United Agra Products, a distributor of chemicals, fertilizers and seeds, faced the possibility of serious bottlenecks in transmission of customer orders over its private network. The problem, explains Stuart Davie, CIO at the Greeley, Colo., firm, stemmed from the fact that the company's sales force and other representatives in the field were using bandwidth-hogging PCs that were threatening to clog up the company's network transmissions, thereby slowing down the order-taking process. "The issue was good performance of our telecom lines and good control of software," says Davie. United Agra's field staff used the computers to take and place orders, check the status of orders, review customer accounts and credit positions and check on product information. Unfortunately, besides the high cost of computer hardware, one of the problems posed by having what CIO Davie terms "full-blown PCs" out in the field was that the units often broke down in the harsh environment of a farmer's field in the middle of nowhere. When that happened, getting PC support to some location 70 miles from the nearest town of any size was no easy trick, Davie says. "You'd be out of commission in the middle of Iowa," he says. Not to mention the fact that downtime could mean lost sales for United Agra. "Farmers expect something right then -- they don't want to wait." The answer was to centralize control of the software and speed up response time from the devices used by the sales staff in the field. The key pieces of technology employed in the solution were "thin-client" laptop computers and a centralized software system from Citrix Systems, a Fort Lauderdale, Fla., software company. The hardware resembles a small laptop with the lid closed. ("It looks like a fat book," Davie says.) Now, sales staff at the company's 400 locations in the U.S., many of them remote and lacking connections to the company's frame-relay network, are able to do wireless communications with headquarters, including accessing various business applications provided by Citrix. "Using Citrix you can place all the applications software at the headquarters, so you have no software loaded on the thin-client machines in the field." From a business standpoint, Davie says, "The Citrix software enabled us to have much better response time." An extra benefit is that, since there is no applications software to load or upgrade on them, the company can remotely manage the thin-client machines, which were chosen especially for their durability under harsh conditions. That means a big savings in the cost of systems management and software upgrades. The bottom line, Davie says, "is that we are getting information in more quickly over much cheaper units, giving us faster response to our customers." United Agra got help in developing the answer to its problem from an IT consulting firm, Boulder Corp., Boulder, Colo. CEO and owner Lesley Taufer says the firm's bread-and-butter projects are those that require solving business problems with a combination of process change and information technology, e.g., computer software and hardware. "We do discovery," she says. "We sit down with a sales director or a CIO or the CEO and talk to them about what their pain is -- and believe me, that's the term we use."

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