As an illustration of how a firm can move successfully into level 3 and beyond,
consider what happened at a venerable organization called General Motors, after
chief information officer Ralph Szygenda was brought in to help GM regain
some of its preeminence in engineering and car styling by �better applying and
integrating information technology.� As reported in Supply Chain Management
Review, the first phase of the effort was launched in 1997, to improve the
vehicle development process. There were two subparts to the initiative: reengineer
design processes and implement time- and effort-saving IT. As progress was
made, GM further realized that it really needed to embark on a supply-chain
wide effort, extending much of the effort to suppliers willing to collaborate
electronically. The results have been dramatic: a 70% reduction in product
development cycle time and more than $1 billion in savings. As Szygenda
reported, �Broadening the vehicle development initiative to include our external
partners was always in the back of our minds� (Gutmann, 2003, p. 35).
When GM began its work on the vehicle development process, it formed
teams to look at key design processes, to find how it could make them better
and leaner. Concurrently, the teams looked at what IT could do to enable the
improvements. This is a very typical step in the maturity process, as collaboration
and technology are used to reach the higher levels of progress. The
company started by asking tier one and further upstream suppliers to identify
the problems with the existing design process. When this step is taken, most
firms find there is a lot more that could be accomplished with existing processes
than normally believed. GM used these conversations to identify three main
areas of concern: batch processes that needed to be more interactive, a balance
between security and accessibility, and improvements to the integration of suppliers
and the transmission of data in a way that would not disrupt business
processes.
Design files were synchronized with suppliers, ensuring that all parties were
working from the same information. Instead of exchanging design tapes back
and forth, an electronic solution was introduced to do direct computer-aided.
design (CAD) and computer-aided-manufacturing (CAM) exchanges. A common
technology backbone was used to integrate disparate technology solutions
and systems, �while providing one common source of up-to-date information
related to a product� (Gutmann, 2003, p. 38). This move led to the adoption
of one common CAD/CAM system at all GM locations and joint ventures
across the world. A product data management system was also installed at that
time.
In 1999, GM began connecting its suppliers to the common technology
backbone through its virtual private network and its supplier portal, Supply
Power. Through this technique, GM increased its suppliers� �access to business
and technical systems such as project schedules, engineering change requests,
technical specifications, test requirements, and quality controls. Tier one suppliers
focused on keeping the design changes lean, passing on needed process
improvements to their suppliers. Today, GM is able to integrate and update [its]
bigger suppliers� CAD creations on a daily basis. For smaller suppliers, that
information is updated weekly.� Security and access to information are balanced
by providing �different layers of visibility to different suppliers� (Gutmann,
2003, p. 36). At the end of 2002, GM had 1,000 suppliers in North America
and 1,000 suppliers in Europe integrated into this new system.
In 2001, the scope was expanded to include external suppliers for such
downstream processes as tooling, manufacturing engineering, and manufacturing.
A tooling supplier can now download design files right after the design/
styling phase, allowing it to begin its work earlier in the process. This assistance
is offered through GM�s product development portal, eliminating a previously
heavily manually intensive set of processes. This feature allows GM to share
facility and process design with its �most trusted suppliers,� which in turn
�accelerates the assembly design process� (Gutmann, 2003, p. 38). The result
has been a reduction in product development process time from 60 months in
1996 to 18 months in 2003, a dramatic example of how collaboration will work,
especially when enabled with the correct technology.
Monday, May 3, 2010
MAKING THE TRANSITION TO LEVEL 3:THE BUSINESS LEVEL
Given the willingness of the senior management of the company to embark on
the level 3 stage of the journey and a firm foundation of level 2 in place, the
next step is to open the discussion with key suppliers and customers. We say
key suppliers and customers because the discussions and effort needed to make
real progress are not insignificant. Therefore, choose the partners that also have
a willingness to explore the possibilities for finding greater value together, and
limit the discussion to those where you believe the biggest value proposition
lies.
The conversations with the chosen partners should include the examination
of all aspects of the customer/supplier relationship, including technical, transactional,
procurement, and logistics, along with product, information, and cash
flows. Based on this type of analysis, begin looking for the hidden values across
the full supply chain network that connects the customer and its supplier to the
final consumers.
The real breakthrough comes when you can create win-win solutions that
make more money for both firms. By defining specific opportunities for action,
chartering improvement teams, defining success for them, and developing performance
measures to track team performance, the value between the enterprises
can be unlocked.
THE PROCESS LEVEL
By capturing and analyzing the inter-company processes, to identify those with
the greatest strategic importance for both companies, the most profitable areas
for investments can be isolated and prepared for improvement. It is clearly not
possible to work on all processes; a degree of prioritization is vital. Typically,
the processes we see being put at the top of the list are procurement based:
auctions, catalogue-based inquiries, transaction automation, and, increasingly,
checking schedules to ensure that an order can be fulfilled on time, in full.
More advanced tools for BPM, such as Intalio�s tool set, will become an
essential part of the level 3 company�s tool kit. If processes on both sides of
the inter-company gap are automated and made to comply with the same process
protocols, then making them talk to each other will be relatively simple.
ORGANIZATION
The organization of a process-based company will start to reflect the process
priorities adopted. Departmental boundaries will move, and managers� roles and
responsibilities will change, to minimize the disruption to the efficient and
effective execution of the company�s strategic processes. The authors are already
seeing the impact of this in the early adopters.
For the level 3 company, the inter-company processes will be seen as having
increasing importance. Organization will change to make the interfacing processes
as effective as possible. There will be a few critical points of contact,
well-defined data structures, effective problem resolution routines, and, above
all, a clear view of the value added by making these arrangements.
As Gartner recently said: �Enterprises should begin to take advantage of
explicitly defined processes. By 2005 at least 90% of large enterprises will have
BPM in their enterprise nervous systems (0.9 probability). Enterprises that
continue to hard-code all flow control, or insist on manual process steps and
do not incorporate BPM�s benefits, will lose out to competitors that adopt BPM�
APPLICATIONS, DATA, AND TECHNOLOGY
It is a curious condition that this trio is left to the last in the list. For many years,
applications have been the starting point for investment and business improvement
efforts. Latest trends, supported by our recent supply chain survey, show
that this is no longer the case. Fewer companies are investing in applications.
Rather, they are investing in making those they already have work properly and
filling in the gaps � driven increasingly by the need to make processes work
more effectively. So it is that the processes that drive the improvements and the
role of applications become one of supporting the processes. In the authors�
experience, up to 85% of any company�s portfolio of IT projects are canceled
or redirected once the correct process focus can be identified.
THE BENEFIT CASE
With many companies striving to reach level 3, there must be a benefit case.
As we have seen, some companies still do not believe in this principle. The
authors firmly believe in, and have seen, the benefits of collaboration �across
the enterprise boundary,� from business unit to business unit or company to
company. Technology has removed many of the barriers, for example, to true
collaborative planning, forecasting, and replenishment (CPFR). The benefits
come in many guises:
_ Revenue improvement (+5 to 15%)
_ Resulting from reduced out-of-stocks and improved category
management
_ Cost reduction (15 to 30%)
_ For example, automotive manufacturers cut the cost per car by
$5,000 through better collaboration between consumers, suppliers,
and other partners (CSC automotive industry survey, 2001)
the level 3 stage of the journey and a firm foundation of level 2 in place, the
next step is to open the discussion with key suppliers and customers. We say
key suppliers and customers because the discussions and effort needed to make
real progress are not insignificant. Therefore, choose the partners that also have
a willingness to explore the possibilities for finding greater value together, and
limit the discussion to those where you believe the biggest value proposition
lies.
The conversations with the chosen partners should include the examination
of all aspects of the customer/supplier relationship, including technical, transactional,
procurement, and logistics, along with product, information, and cash
flows. Based on this type of analysis, begin looking for the hidden values across
the full supply chain network that connects the customer and its supplier to the
final consumers.
The real breakthrough comes when you can create win-win solutions that
make more money for both firms. By defining specific opportunities for action,
chartering improvement teams, defining success for them, and developing performance
measures to track team performance, the value between the enterprises
can be unlocked.
THE PROCESS LEVEL
By capturing and analyzing the inter-company processes, to identify those with
the greatest strategic importance for both companies, the most profitable areas
for investments can be isolated and prepared for improvement. It is clearly not
possible to work on all processes; a degree of prioritization is vital. Typically,
the processes we see being put at the top of the list are procurement based:
auctions, catalogue-based inquiries, transaction automation, and, increasingly,
checking schedules to ensure that an order can be fulfilled on time, in full.
More advanced tools for BPM, such as Intalio�s tool set, will become an
essential part of the level 3 company�s tool kit. If processes on both sides of
the inter-company gap are automated and made to comply with the same process
protocols, then making them talk to each other will be relatively simple.
ORGANIZATION
The organization of a process-based company will start to reflect the process
priorities adopted. Departmental boundaries will move, and managers� roles and
responsibilities will change, to minimize the disruption to the efficient and
effective execution of the company�s strategic processes. The authors are already
seeing the impact of this in the early adopters.
For the level 3 company, the inter-company processes will be seen as having
increasing importance. Organization will change to make the interfacing processes
as effective as possible. There will be a few critical points of contact,
well-defined data structures, effective problem resolution routines, and, above
all, a clear view of the value added by making these arrangements.
As Gartner recently said: �Enterprises should begin to take advantage of
explicitly defined processes. By 2005 at least 90% of large enterprises will have
BPM in their enterprise nervous systems (0.9 probability). Enterprises that
continue to hard-code all flow control, or insist on manual process steps and
do not incorporate BPM�s benefits, will lose out to competitors that adopt BPM�
APPLICATIONS, DATA, AND TECHNOLOGY
It is a curious condition that this trio is left to the last in the list. For many years,
applications have been the starting point for investment and business improvement
efforts. Latest trends, supported by our recent supply chain survey, show
that this is no longer the case. Fewer companies are investing in applications.
Rather, they are investing in making those they already have work properly and
filling in the gaps � driven increasingly by the need to make processes work
more effectively. So it is that the processes that drive the improvements and the
role of applications become one of supporting the processes. In the authors�
experience, up to 85% of any company�s portfolio of IT projects are canceled
or redirected once the correct process focus can be identified.
THE BENEFIT CASE
With many companies striving to reach level 3, there must be a benefit case.
As we have seen, some companies still do not believe in this principle. The
authors firmly believe in, and have seen, the benefits of collaboration �across
the enterprise boundary,� from business unit to business unit or company to
company. Technology has removed many of the barriers, for example, to true
collaborative planning, forecasting, and replenishment (CPFR). The benefits
come in many guises:
_ Revenue improvement (+5 to 15%)
_ Resulting from reduced out-of-stocks and improved category
management
_ Cost reduction (15 to 30%)
_ For example, automotive manufacturers cut the cost per car by
$5,000 through better collaboration between consumers, suppliers,
and other partners (CSC automotive industry survey, 2001)
. RESULTS PROPEL A FIRM AND ITS BUSINESS
In what becomes a co-managed value chain, the overarching focus is brought
to value propositions for the business customer and end consumers that cannot
be matched by competitors. Seamless electronic linkages are pervasive, carrying
the kind of data and knowledge that cannot be garnered from any other business
network. Business process management (BPM) initiatives are present here, as
they become a high-priority item for those companies that desire to use BPM
to share vital business information, particularly from their enterprise resource
planning (ERP) systems, and find the next level of improvement. The dual
purposes are to increase operational performance and maximize the return on
the total assets employed in the extended enterprise. Businesses that have learned
the value of trust between a few carefully selected business allies use BPM tools
here, to evaluate and optimize their joint business processes and to eventually
create and nurture their competitive advantage against slower and less able
networks.
An example of the kind of progress that can be made is given by beer and
alcohol manufacturer Diageo plc. In a move aimed at increasing revenues, this
firm determined that North American network partners should not run out of
its popular Guinness beer. The firm decided to go through a supply chain
improvement effort that would include sharing of �real-time sales and replenishment
data with distributors.� The motive was to encourage these distributors
to work harder at sales and less at generating redundant analyses and worrying
over missing inventories. With the help of Manugistics Group, Inc. and that
company�s collaborative planning, forecasting, and replenishment software, the
firm linked its distributors into manufacturing sites in Ireland, the Caribbean,
and Africa. The system helps Diageo �combine weekly data from sales, on-hand
inventory, and distributors� receipts with promotional information to generate
detailed forecasts that are automatically sent via a Web application to 120
distributors, which represent 80% of Guinness� business.� (Bacheldor, 2003, p.
57).
With this information delivered on a timely basis, a real form of collaboration
can take place. Differences resulting from interpretation of the forecasts
can be resolved electronically, and when agreement is reached, the accepted
numbers can be loaded into a replenishment system that creates inventory levels
and sales. Diageo �expects to save up to $1.1 million in inventory reduction,
and reap some $600,000 in logistics benefits, with sales being boosted by 1%�
(Bacheldor, 2003, p. 57).
The ultimate objective of BPM and business process management systems
(BPMS) in this level becomes the capability to connect business firms and
important functions within those firms in order to gain a distinctive advantage
in the eyes of the most important customers and consumers. From sourcing to
customer care, BPM is used by multiple organizations to transfer crucial business
knowledge and enhance those processes of greatest importance first to the
supply chain constituents involved and then to the intended customer base.
Better coordination, shorter cycle times, errorless transactions, and optimized
process conditions become the metrics of importance in this level of progress.
Ultimately, the business allies find the means to increase operational performance
and further develop their competitive advantage
to value propositions for the business customer and end consumers that cannot
be matched by competitors. Seamless electronic linkages are pervasive, carrying
the kind of data and knowledge that cannot be garnered from any other business
network. Business process management (BPM) initiatives are present here, as
they become a high-priority item for those companies that desire to use BPM
to share vital business information, particularly from their enterprise resource
planning (ERP) systems, and find the next level of improvement. The dual
purposes are to increase operational performance and maximize the return on
the total assets employed in the extended enterprise. Businesses that have learned
the value of trust between a few carefully selected business allies use BPM tools
here, to evaluate and optimize their joint business processes and to eventually
create and nurture their competitive advantage against slower and less able
networks.
An example of the kind of progress that can be made is given by beer and
alcohol manufacturer Diageo plc. In a move aimed at increasing revenues, this
firm determined that North American network partners should not run out of
its popular Guinness beer. The firm decided to go through a supply chain
improvement effort that would include sharing of �real-time sales and replenishment
data with distributors.� The motive was to encourage these distributors
to work harder at sales and less at generating redundant analyses and worrying
over missing inventories. With the help of Manugistics Group, Inc. and that
company�s collaborative planning, forecasting, and replenishment software, the
firm linked its distributors into manufacturing sites in Ireland, the Caribbean,
and Africa. The system helps Diageo �combine weekly data from sales, on-hand
inventory, and distributors� receipts with promotional information to generate
detailed forecasts that are automatically sent via a Web application to 120
distributors, which represent 80% of Guinness� business.� (Bacheldor, 2003, p.
57).
With this information delivered on a timely basis, a real form of collaboration
can take place. Differences resulting from interpretation of the forecasts
can be resolved electronically, and when agreement is reached, the accepted
numbers can be loaded into a replenishment system that creates inventory levels
and sales. Diageo �expects to save up to $1.1 million in inventory reduction,
and reap some $600,000 in logistics benefits, with sales being boosted by 1%�
(Bacheldor, 2003, p. 57).
The ultimate objective of BPM and business process management systems
(BPMS) in this level becomes the capability to connect business firms and
important functions within those firms in order to gain a distinctive advantage
in the eyes of the most important customers and consumers. From sourcing to
customer care, BPM is used by multiple organizations to transfer crucial business
knowledge and enhance those processes of greatest importance first to the
supply chain constituents involved and then to the intended customer base.
Better coordination, shorter cycle times, errorless transactions, and optimized
process conditions become the metrics of importance in this level of progress.
Ultimately, the business allies find the means to increase operational performance
and further develop their competitive advantage
HARLEY-DAVIDSON�S EFFORT PAYS OFF
Some firms draw on knowledge and make it available electronically, as part of
an effort to bring enterprise efficiencies to their business allies. Harley-Davidson
took three years to develop and introduce its H-D Supplier Network. Companies
making everything from valves and gears to pedals and clamps can enter this
site and see production forecasts, account status, and two-dimensional drawings
of parts. Suppliers can also submit shipment notices and receive inventory
replenishment alerts, much faster and at less cost than previously. This portal
eliminates the expense of an electronic data interchange system and reduces the
time spent on such interactions from the typical 45 minutes to less than 15
minutes. �Nearly 300 of Harley�s 695 parts suppliers now log on to applications
through this supplier portal� (Sullivan, 2004, p. 47).
Known for its leading-edge practices, Harley has worked hard with its key
suppliers to develop systems and methods that benefit both parties. Through the
portal, which is provided to large and small firms, suppliers can manage payables
and receivables so closely that a company can get paid within seven days of
submitting an electronic invoice. On the other side, using a single material
resource planning system, Harley provides its suppliers with the kind of information
that leads to better handling of schedule changes, improved responsiveness
to the unexpected, better planned capacity, and improved delivery performance.
The parts centers, known inside Harley as Materials Velocity Centers,
are a key component of this portal access. Requirements for the several manufacturing
sites and the headquarters operation are coordinated so that a single
reliable message is relayed to those needing to know what is actually happening,
a key in any advanced-state supply chain communication network
an effort to bring enterprise efficiencies to their business allies. Harley-Davidson
took three years to develop and introduce its H-D Supplier Network. Companies
making everything from valves and gears to pedals and clamps can enter this
site and see production forecasts, account status, and two-dimensional drawings
of parts. Suppliers can also submit shipment notices and receive inventory
replenishment alerts, much faster and at less cost than previously. This portal
eliminates the expense of an electronic data interchange system and reduces the
time spent on such interactions from the typical 45 minutes to less than 15
minutes. �Nearly 300 of Harley�s 695 parts suppliers now log on to applications
through this supplier portal� (Sullivan, 2004, p. 47).
Known for its leading-edge practices, Harley has worked hard with its key
suppliers to develop systems and methods that benefit both parties. Through the
portal, which is provided to large and small firms, suppliers can manage payables
and receivables so closely that a company can get paid within seven days of
submitting an electronic invoice. On the other side, using a single material
resource planning system, Harley provides its suppliers with the kind of information
that leads to better handling of schedule changes, improved responsiveness
to the unexpected, better planned capacity, and improved delivery performance.
The parts centers, known inside Harley as Materials Velocity Centers,
are a key component of this portal access. Requirements for the several manufacturing
sites and the headquarters operation are coordinated so that a single
reliable message is relayed to those needing to know what is actually happening,
a key in any advanced-state supply chain communication network
. ADVANCED SUPPLY CHAIN MANAGEMENT REQUIRES
As a firm and its most trusted and closest business allies prepare to enter this
fourth level of the maturity model, they realize that a solid plan of attack is
necessary for success. It is not enough just to link firms that have completed
their internal homework and begun to work with external partners. There must
be a coordinated effort aimed at optimized conditions across the extended
enterprise and a willingness to share the vital knowledge that leads to differentiating
processes. Advanced supply chain management, therefore, cannot be
accomplished without a clear roadmap that identifies where the network is
headed and how the participants can measure the progress made and show the
results on the financial statements.
A series of obstacles will be encountered as this planning begins. First, there
will be the natural resistance to sharing valuable data over any electronic system.
This problem is dealt with by an early agreement on what can and will
be shared, what will be kept protected and proprietary within the various businesses
systems, and what security features will protect the data that are not to
be shared at all. Second, some of the participants will view the sharing of
knowledge as valuable, but will balk at the work necessary to bring BPMS to
their existing methodology as they lack the understanding of the values or
perceive the application as too difficult to accomplish.
Since all of the key players must be involved in network connectivity, time
should be spent to train, if necessary, and to develop the capability of all
constituents to participate in the data sharing. Key to this is the identification
and, if necessary, simplification of the interfacing processes. We strongly advise
the establishment of diagnostic labs or demonstration labs to discuss, explain,
and show the potential values to be added from such data sharing. These labs
serve the dual purpose of explaining what activities the participants will be
pursuing, while allowing them to test their hypotheses and get a feel for the end
results. In Chapter 9, we will explain how the participants can go further and
simulate the changed processes that result from the knowledge sharing, before
investing too heavily in execution.
Third, initially there will be poor understanding of how to deploy the tools
and methods, resulting in poor definition of what the early gains might be and
delays in execution. Once again, time spent on clarifying the roadmap and
establishing a set of driving metrics will aid immensely in getting the necessary
buy-in and provision of key resources to move forward. Fourth, there will be
some confusion regarding the central purposes, especially as some participants
view BPM as a means to drive automation and eliminate personnel, rather than
the route to process optimization and the best possible customer satisfaction.
Each of these complications can be defeated through an adequate plan for
BPM deployment and a roadmap that defines the resolution of fundamental
business issues plaguing each of the network members. While most of the
solutions will derive from interactive discussions and planning between the
participants, as will be described shortly, several software suppliers can add
value in this part of the effort and could play a role in development of the plan.
As mentioned, Manugistics was very helpful to Diageo.
Fuego, Inc. offers another example. This firm provides �templates for more
than 60 sets of processes across the financial-services, insurance, manufacturing,
and telecommunications industries.� Pegasystems, Inc. has �rolled out a
series of process templates that accelerate deployment by automating common
back-office processes while letting companies manage exceptions� (Greenfield
et al., 2004, p. 68).
For our purposes, we have selected Yantra as a service provider to follow,
as we use its experiences and cases studies to document what can be done across
enterprises and to establish the kinds of improvements that can be deployed and
the type of savings to be found after the effort is completed. Yantra has headquarters
in Tewksbury, Massachusetts and has a proven track record with such
firms as Best Buy, Allders Department Store, Rockport, Target, and US Transcom.
Its extensive suite of applications runs the gamut of supply chain needs, from
distributed order management and flow through provisioning to synchronized
fulfillment and reverse logistics. As we develop our deeper analysis into the
final levels of the maturity model and the best use of the SCOR� model, we
will use Yantra as an example to bring a sense of reality to what can and does
happen.
fourth level of the maturity model, they realize that a solid plan of attack is
necessary for success. It is not enough just to link firms that have completed
their internal homework and begun to work with external partners. There must
be a coordinated effort aimed at optimized conditions across the extended
enterprise and a willingness to share the vital knowledge that leads to differentiating
processes. Advanced supply chain management, therefore, cannot be
accomplished without a clear roadmap that identifies where the network is
headed and how the participants can measure the progress made and show the
results on the financial statements.
A series of obstacles will be encountered as this planning begins. First, there
will be the natural resistance to sharing valuable data over any electronic system.
This problem is dealt with by an early agreement on what can and will
be shared, what will be kept protected and proprietary within the various businesses
systems, and what security features will protect the data that are not to
be shared at all. Second, some of the participants will view the sharing of
knowledge as valuable, but will balk at the work necessary to bring BPMS to
their existing methodology as they lack the understanding of the values or
perceive the application as too difficult to accomplish.
Since all of the key players must be involved in network connectivity, time
should be spent to train, if necessary, and to develop the capability of all
constituents to participate in the data sharing. Key to this is the identification
and, if necessary, simplification of the interfacing processes. We strongly advise
the establishment of diagnostic labs or demonstration labs to discuss, explain,
and show the potential values to be added from such data sharing. These labs
serve the dual purpose of explaining what activities the participants will be
pursuing, while allowing them to test their hypotheses and get a feel for the end
results. In Chapter 9, we will explain how the participants can go further and
simulate the changed processes that result from the knowledge sharing, before
investing too heavily in execution.
Third, initially there will be poor understanding of how to deploy the tools
and methods, resulting in poor definition of what the early gains might be and
delays in execution. Once again, time spent on clarifying the roadmap and
establishing a set of driving metrics will aid immensely in getting the necessary
buy-in and provision of key resources to move forward. Fourth, there will be
some confusion regarding the central purposes, especially as some participants
view BPM as a means to drive automation and eliminate personnel, rather than
the route to process optimization and the best possible customer satisfaction.
Each of these complications can be defeated through an adequate plan for
BPM deployment and a roadmap that defines the resolution of fundamental
business issues plaguing each of the network members. While most of the
solutions will derive from interactive discussions and planning between the
participants, as will be described shortly, several software suppliers can add
value in this part of the effort and could play a role in development of the plan.
As mentioned, Manugistics was very helpful to Diageo.
Fuego, Inc. offers another example. This firm provides �templates for more
than 60 sets of processes across the financial-services, insurance, manufacturing,
and telecommunications industries.� Pegasystems, Inc. has �rolled out a
series of process templates that accelerate deployment by automating common
back-office processes while letting companies manage exceptions� (Greenfield
et al., 2004, p. 68).
For our purposes, we have selected Yantra as a service provider to follow,
as we use its experiences and cases studies to document what can be done across
enterprises and to establish the kinds of improvements that can be deployed and
the type of savings to be found after the effort is completed. Yantra has headquarters
in Tewksbury, Massachusetts and has a proven track record with such
firms as Best Buy, Allders Department Store, Rockport, Target, and US Transcom.
Its extensive suite of applications runs the gamut of supply chain needs, from
distributed order management and flow through provisioning to synchronized
fulfillment and reverse logistics. As we develop our deeper analysis into the
final levels of the maturity model and the best use of the SCOR� model, we
will use Yantra as an example to bring a sense of reality to what can and does
happen.
Achieving Dominance at Higher Levels of Progress
It became a joint sales opportunity for CellStar and its selected business ally,
Yantra. CellStar was to provide the seamless end-to-end delivery system with
the necessary process improvements, including fail-safe electronic linkage. Yantra
would introduce mechanisms that would improve the capability of the ERP
system and link it with suppliers and customers. The software and systems
company would also provide a business-rules-driven fulfillment and returns
engine, with rapid integration into CellStar�s business processes and systems.
Together, they would introduce the necessary visibility into the key threads in
the new system, as well as provide event monitoring and early notification of
any systemic problems.
Through the partnering that was to occur, CellStar believed it could provide
an unmatched value proposition for the potential business customers and eventual
consumers. The potential increase to CellStar revenue was estimated to be
$33 million by 2004. The business allies began by drawing process maps of the
end-to-end system that was to be enhanced and preparing a business case foundation
for the eventual actions.
The new processes
would be aimed at wireless carriers and meet their need for complex
logistics services, while introducing a �converting pipeline� that included capability
to handle all fulfillment services and reverse logistics (a key element
in the offering). Among the operational impacts, the system would control onhand
inventory and reduce selling, general, and administrative (SG&A) costs.
Particular attention was given to the proposed reverse logistics pipeline,
described by one of the process maps, depicted in Figure 6.4. Bringing special
capabilities in this important process step helped distinguish the final offering
in the eyes of the wireless customers. Through the Gatekeeper program, Yantra
provided a total call center and equipment fulfillment solution, with the ability
to link into suppliers and customers for necessary information. One unexpected
benefit of this solution was that the refurbished units in the replacements mix
increased from 20% to 38%, which helped to meet the large demand backlog.
The overall intention was to create a distinctive advantage for CellStar, using
technology as a strategic asset, which was accomplished and helped the firm
expand its sales effort into other business areas.
The partnering that took place has been a success, as the new capabilities
met or exceeded the intended objectives. CellStar introduced its new offering
under the banner name �Omnigistics.� It was presented as a set of solutions that
provided depth and breadth to a customer�s logistics strategy, turning the supply
chain into a competitive advantage. The suite included forward logistics, with
procurement and inventory management, order processing and reporting, fulfill-
Yantra. CellStar was to provide the seamless end-to-end delivery system with
the necessary process improvements, including fail-safe electronic linkage. Yantra
would introduce mechanisms that would improve the capability of the ERP
system and link it with suppliers and customers. The software and systems
company would also provide a business-rules-driven fulfillment and returns
engine, with rapid integration into CellStar�s business processes and systems.
Together, they would introduce the necessary visibility into the key threads in
the new system, as well as provide event monitoring and early notification of
any systemic problems.
Through the partnering that was to occur, CellStar believed it could provide
an unmatched value proposition for the potential business customers and eventual
consumers. The potential increase to CellStar revenue was estimated to be
$33 million by 2004. The business allies began by drawing process maps of the
end-to-end system that was to be enhanced and preparing a business case foundation
for the eventual actions.
The new processes
would be aimed at wireless carriers and meet their need for complex
logistics services, while introducing a �converting pipeline� that included capability
to handle all fulfillment services and reverse logistics (a key element
in the offering). Among the operational impacts, the system would control onhand
inventory and reduce selling, general, and administrative (SG&A) costs.
Particular attention was given to the proposed reverse logistics pipeline,
described by one of the process maps, depicted in Figure 6.4. Bringing special
capabilities in this important process step helped distinguish the final offering
in the eyes of the wireless customers. Through the Gatekeeper program, Yantra
provided a total call center and equipment fulfillment solution, with the ability
to link into suppliers and customers for necessary information. One unexpected
benefit of this solution was that the refurbished units in the replacements mix
increased from 20% to 38%, which helped to meet the large demand backlog.
The overall intention was to create a distinctive advantage for CellStar, using
technology as a strategic asset, which was accomplished and helped the firm
expand its sales effort into other business areas.
The partnering that took place has been a success, as the new capabilities
met or exceeded the intended objectives. CellStar introduced its new offering
under the banner name �Omnigistics.� It was presented as a set of solutions that
provided depth and breadth to a customer�s logistics strategy, turning the supply
chain into a competitive advantage. The suite included forward logistics, with
procurement and inventory management, order processing and reporting, fulfill-
PROVIDING ADDED VALUE FOR CELLSTAR
We begin with a case involving Yantra, as a provider of software for systems
integration, and CellStar, a provider of value-adding logistics and distribution
services for the wireless communication industry, headquartered in Dallas, Texas.
CellStar was once a part of Motorola, responsible for the packaging and delivery
of handheld telephones to a wide variety of industrial and consumer markets.
At the time of this case, the firm was independent and competing for business
in the U.S. wireless market. This market was typified by a leveling of the
handset growth curve and had become an industry increasingly viewed as offering
a commoditized set of products.
CellStar, as a major provider of packaging and distribution services for such
products, found itself in a situation in 2002 where it was competing to be a highvalue
strategic partner in a business environment characterized as a race for
competitive advantage. CellStar�s financial position was not robust, and the firm
was finding it very difficult to generate cash in this business environment, where
it was competing with other distributors such as Ingram Micro and Avnet;
contract manufacturers like Flextronics and Solectron; with transportation service
providers UPS, FedEx, and USPS; and third-party logistics providers Menlo
and Innotrac.
The company had an ERP system, but it had an inherent problem that limited
CellStar in its market ambitions, which included expansion of its customer base.
The problem revolved around its ERP system having been designed as a �system
of record� for a single enterprise process. As such, the firm was unable to
compete for business where real-time order, inventory, and shipment visibility
across the logistics service network was a requirement. XML messaging could
be used to extend its ERP reach, but only for one-to-one processes between
customer and provider. This condition created a reconciliation nightmare for
inventory tracking and offered no support for processes that extended beyond
arm�s reach. As a result, the company had a high cost structure to support any
many-to-many processes. Coordination of orders for product, service, installation,
provisioning, and delivery was a serious challenge. The firm was simply
not able to meet core requirements of new opportunities or respond adequately
to new business opportunities beyond wireless applications.
The business situation, which brought these conditions to a point needing
resolution and led to the resultant improvement, occurred when CellStar faced
an opportunity to provide Alltel, Cingular, and Sprint PCS with outsourced call
center, fulfillment and returns services. The initial offering was to cover upgrade
and replacement fulfillment of all equipment requests. Typical of today�s
complex delivery environment, the basic requirement was to support a virtual
and extended enterprise business model, from carrier stores and individual
customers through call centers, fulfillment sites, repair sites, and final product
disposition. The chosen provider, CellStar was told, would need to deal with
complex process rules, based on customer preferences and product availability
in multiple inventories. Time to market was a key metric that had to be reduced
or the company would lose the opportunity.
integration, and CellStar, a provider of value-adding logistics and distribution
services for the wireless communication industry, headquartered in Dallas, Texas.
CellStar was once a part of Motorola, responsible for the packaging and delivery
of handheld telephones to a wide variety of industrial and consumer markets.
At the time of this case, the firm was independent and competing for business
in the U.S. wireless market. This market was typified by a leveling of the
handset growth curve and had become an industry increasingly viewed as offering
a commoditized set of products.
CellStar, as a major provider of packaging and distribution services for such
products, found itself in a situation in 2002 where it was competing to be a highvalue
strategic partner in a business environment characterized as a race for
competitive advantage. CellStar�s financial position was not robust, and the firm
was finding it very difficult to generate cash in this business environment, where
it was competing with other distributors such as Ingram Micro and Avnet;
contract manufacturers like Flextronics and Solectron; with transportation service
providers UPS, FedEx, and USPS; and third-party logistics providers Menlo
and Innotrac.
The company had an ERP system, but it had an inherent problem that limited
CellStar in its market ambitions, which included expansion of its customer base.
The problem revolved around its ERP system having been designed as a �system
of record� for a single enterprise process. As such, the firm was unable to
compete for business where real-time order, inventory, and shipment visibility
across the logistics service network was a requirement. XML messaging could
be used to extend its ERP reach, but only for one-to-one processes between
customer and provider. This condition created a reconciliation nightmare for
inventory tracking and offered no support for processes that extended beyond
arm�s reach. As a result, the company had a high cost structure to support any
many-to-many processes. Coordination of orders for product, service, installation,
provisioning, and delivery was a serious challenge. The firm was simply
not able to meet core requirements of new opportunities or respond adequately
to new business opportunities beyond wireless applications.
The business situation, which brought these conditions to a point needing
resolution and led to the resultant improvement, occurred when CellStar faced
an opportunity to provide Alltel, Cingular, and Sprint PCS with outsourced call
center, fulfillment and returns services. The initial offering was to cover upgrade
and replacement fulfillment of all equipment requests. Typical of today�s
complex delivery environment, the basic requirement was to support a virtual
and extended enterprise business model, from carrier stores and individual
customers through call centers, fulfillment sites, repair sites, and final product
disposition. The chosen provider, CellStar was told, would need to deal with
complex process rules, based on customer preferences and product availability
in multiple inventories. Time to market was a key metric that had to be reduced
or the company would lose the opportunity.
FIVE STEPS OUTLINE THE COLLABORATIVE PROCESS
Agree on the principles supporting the collaboration � Without an
understanding that the purpose is to seek higher level benefits for all
participants, one or more parties are going to withdraw at some point
in the effort to find the best enterprise processing. A simple single-page
listing of the principles and the metrics that will be improved generally
suffices to satisfy this requirement.
_ Establish a governance model to oversee the expenditure of time
and resources � There must be an illustration of how the mutual effort
is going to be conducted, managed, and implemented.
_ Validate the internal processes � As we have stated, progress to
maturity starts inside the four walls, and when the house is in order, it
can expand externally.
_ Consolidate processes � Across a platform that moves from the individual
company intranets to the network extranet, there needs to be
guidance on how the efforts of the network will be consolidated for best
results and how to transform the enterprise to an industry-dominant
position.
_ Transform the enterprise � With the purposes clear, the roadmap in
hand, and an understanding of what is in the effort for all the key
players, the stage is set for a major transformation effort that establishes
the network as the one to beat in any industry.
Step 1: Agree on Principles
As the collaborative processing begins, the parties come to a table and agree
on the principles that will guide their joint efforts The parties to this collaboration took the time
to list the enterprise process steps, much as the SCOR� model would do, and
then to overlay the principles. Note that it begins with sharing the benefits and
rewards, an essential to success. The balance of the ten principles is selfexplanatory,
but forms the backbone of how the effort will proceed. Yomi
Famurewa, vice president of supply chain for ArvinMeritor�, a leading tier one
automotive supplier, and his team used these principles to make significant
improvements in product development cycle time. Famurewa and Bauer shared
these insights with an enthusiastic audience at Supply Chain World in March
2004.
Step 2: Establish a Governance Model
With the principles established, the players can move to setting up a governance
system that will assure best results. The corporate executive committee of the nucleus firm or
driving entity behind the effort must also play a part, to make certain the
business plan objectives are being met. Design teams, assembled from the
various business units and willing business allies, are then established to perform
the actual collaboration and move the effort to specific objectives. Notice
that this council determines priorities, licenses projects, sets policy, polices the
players, and manages the enterprise bonus pool or how the benefits will be
dispersed. This list of control features needs to be analyzed and made specific
to the collaboration being conducted.
Step 3: Validate the Internal Processes
This thinking is fundamental � you
cannot expect your external allies to share equally with you and reach optimized
conditions if your own processes are broken. There must be a reasonable level
of parity with regard to key processes and the ability to add value for all
constituents before embarking on a serious collaborative effort. Moreover, there
must be a clear link between the improvement effort to the key processes and
the business strategy.
Step 4: Consolidate Processes and
Step 5: Transform the Enterprise
The final two steps become the crux of the effort, but cannot proceed without
the proper preparation. With the principles and governing structure in place, and
the internal processes ready for external collaboration, the nucleus firm organizes
the workshops, diagnostic labs, or team exercises that lead to consolidating
the processing into the one best system.
When the new state has been created and accepted, then the crucial
final step of transforming the enterprise takes place and, usually under pilot
conditions, the new model is tested and amended if necessary
understanding that the purpose is to seek higher level benefits for all
participants, one or more parties are going to withdraw at some point
in the effort to find the best enterprise processing. A simple single-page
listing of the principles and the metrics that will be improved generally
suffices to satisfy this requirement.
_ Establish a governance model to oversee the expenditure of time
and resources � There must be an illustration of how the mutual effort
is going to be conducted, managed, and implemented.
_ Validate the internal processes � As we have stated, progress to
maturity starts inside the four walls, and when the house is in order, it
can expand externally.
_ Consolidate processes � Across a platform that moves from the individual
company intranets to the network extranet, there needs to be
guidance on how the efforts of the network will be consolidated for best
results and how to transform the enterprise to an industry-dominant
position.
_ Transform the enterprise � With the purposes clear, the roadmap in
hand, and an understanding of what is in the effort for all the key
players, the stage is set for a major transformation effort that establishes
the network as the one to beat in any industry.
Step 1: Agree on Principles
As the collaborative processing begins, the parties come to a table and agree
on the principles that will guide their joint efforts The parties to this collaboration took the time
to list the enterprise process steps, much as the SCOR� model would do, and
then to overlay the principles. Note that it begins with sharing the benefits and
rewards, an essential to success. The balance of the ten principles is selfexplanatory,
but forms the backbone of how the effort will proceed. Yomi
Famurewa, vice president of supply chain for ArvinMeritor�, a leading tier one
automotive supplier, and his team used these principles to make significant
improvements in product development cycle time. Famurewa and Bauer shared
these insights with an enthusiastic audience at Supply Chain World in March
2004.
Step 2: Establish a Governance Model
With the principles established, the players can move to setting up a governance
system that will assure best results. The corporate executive committee of the nucleus firm or
driving entity behind the effort must also play a part, to make certain the
business plan objectives are being met. Design teams, assembled from the
various business units and willing business allies, are then established to perform
the actual collaboration and move the effort to specific objectives. Notice
that this council determines priorities, licenses projects, sets policy, polices the
players, and manages the enterprise bonus pool or how the benefits will be
dispersed. This list of control features needs to be analyzed and made specific
to the collaboration being conducted.
Step 3: Validate the Internal Processes
This thinking is fundamental � you
cannot expect your external allies to share equally with you and reach optimized
conditions if your own processes are broken. There must be a reasonable level
of parity with regard to key processes and the ability to add value for all
constituents before embarking on a serious collaborative effort. Moreover, there
must be a clear link between the improvement effort to the key processes and
the business strategy.
Step 4: Consolidate Processes and
Step 5: Transform the Enterprise
The final two steps become the crux of the effort, but cannot proceed without
the proper preparation. With the principles and governing structure in place, and
the internal processes ready for external collaboration, the nucleus firm organizes
the workshops, diagnostic labs, or team exercises that lead to consolidating
the processing into the one best system.
When the new state has been created and accepted, then the crucial
final step of transforming the enterprise takes place and, usually under pilot
conditions, the new model is tested and amended if necessary
THE ROADMAP BEGINS WITH PLAYER CONSOLIDATION
Collaboration as a business technique, particularly one to help a firm and its
business allies progress into advanced supply chain management, has been
widely discussed, with very mixed reviews, not all of which match the advantages
described in the preceding case. While we acknowledge the difficulties
in getting companies to truly cooperate with one another, we have found a small
number of firms that have been able to achieve good results by working with
a very limited number of very trusted business associates to reach higher performance.
Michael Bauer, Director of CSC Lean Enterprise, has been very
helpful in this research, and we will use much of his expertise as we outline
how leaders accomplish the task.
The first step in that process is to discover why collaboration breaks down
and to prepare a methodology that will work. We find that most of the problems
occur because processes are often duplicated across an enterprise system, and
the players refuse to leverage the best techniques, tools, and systems, preferring
instead to support their own system, even when it is less effective for network
purposes. At other times, the traditional linkages rely too much on technology,
especially commercial off-the-shelf software and not co-developed enabling
systems, oriented around BPMS and the particular needs of the network.
With an understanding of the need to conquer these essentially cultural
inhibitions and to use collaboration effectively, the next move is to consolidate
the critical processes, regardless of the number, into a single enterprise process,
leveraging the best player at each step
As the interacting increases, they begin exchanging data on such things as new
design introductions and how substitute materials can be used. In the transact
level, the allies are conducting business in a fundamental but collaborative
manner, including order entry and fulfillment, expediting to meet demands, and
reporting on exceptions and returns.
In the fourth level, which is now being considered, the partners work on
delivering, to the targeted customers and consumers, making the key players a
part of the overall business effort. Now the provision of services includes joint
diagnostics, review of reports, collaborative design and engineering, and joint
inventory management. Visibility into the end-to-end systems becomes an
essential element in this latter part of the effort. In the highest level, a community
effort has appeared, and the players fully utilize their co-developed business
and operating model to cross-company interactions and to personalize the solutions
being brought to the targeted customers/consumers.
Figure 6.8 presents a small list of the companies that have successfully made
their way through the progression, with the help of trusted allies, and the results
that were achieved. Although these cases are mostly involved with early types
of collaborative effort (the design and introduction of new products and services),
the magnitude of the improvements stands to illustrate what can be
accomplished when firms bring their best and brightest together to enhance
what they do together.
business allies progress into advanced supply chain management, has been
widely discussed, with very mixed reviews, not all of which match the advantages
described in the preceding case. While we acknowledge the difficulties
in getting companies to truly cooperate with one another, we have found a small
number of firms that have been able to achieve good results by working with
a very limited number of very trusted business associates to reach higher performance.
Michael Bauer, Director of CSC Lean Enterprise, has been very
helpful in this research, and we will use much of his expertise as we outline
how leaders accomplish the task.
The first step in that process is to discover why collaboration breaks down
and to prepare a methodology that will work. We find that most of the problems
occur because processes are often duplicated across an enterprise system, and
the players refuse to leverage the best techniques, tools, and systems, preferring
instead to support their own system, even when it is less effective for network
purposes. At other times, the traditional linkages rely too much on technology,
especially commercial off-the-shelf software and not co-developed enabling
systems, oriented around BPMS and the particular needs of the network.
With an understanding of the need to conquer these essentially cultural
inhibitions and to use collaboration effectively, the next move is to consolidate
the critical processes, regardless of the number, into a single enterprise process,
leveraging the best player at each step
As the interacting increases, they begin exchanging data on such things as new
design introductions and how substitute materials can be used. In the transact
level, the allies are conducting business in a fundamental but collaborative
manner, including order entry and fulfillment, expediting to meet demands, and
reporting on exceptions and returns.
In the fourth level, which is now being considered, the partners work on
delivering, to the targeted customers and consumers, making the key players a
part of the overall business effort. Now the provision of services includes joint
diagnostics, review of reports, collaborative design and engineering, and joint
inventory management. Visibility into the end-to-end systems becomes an
essential element in this latter part of the effort. In the highest level, a community
effort has appeared, and the players fully utilize their co-developed business
and operating model to cross-company interactions and to personalize the solutions
being brought to the targeted customers/consumers.
Figure 6.8 presents a small list of the companies that have successfully made
their way through the progression, with the help of trusted allies, and the results
that were achieved. Although these cases are mostly involved with early types
of collaborative effort (the design and introduction of new products and services),
the magnitude of the improvements stands to illustrate what can be
accomplished when firms bring their best and brightest together to enhance
what they do together.
ARVINMERITOR� ILLUSTRATES THE POSSIBILITIES
ArvinMeritor� is a Michigan-based U.S. manufacturer and distributor of automotive
and truck parts and components. Bauer worked with this firm as it
followed the five-step collaborative process, to achieve notable results, working
with some of its key suppliers, with a focus on the automotive market. The
corporation had a defined product development process and supply chain management
process. It was also migrating from legacy ERP systems to a new
system. Three business units and several joint ventures were involved, with 150
plants and 30 engineering facilities. The product lines included light vehicle,
commercial vehicle, and aftermarket products. Among the issues faced were
several design and supply chain systems, incompatible change management
systems, a variety of bill of material techniques, and a rapidly proliferating parts
list. The goal established for the change team was to create a collaborative
platform that enables the stakeholders to plan, design, source, make, and deliver
the products anywhere. The project approach was intended to establish the
collaborative platform and implement a common product cost and change request
system using the five-step approach.
As shown in, the firm began by agreeing on the principles of
collaboration. In this tripart model, suppliers were linked into a supplier management
system, which further linked into operations and its ERP system.
Product data management (PDM) databases were used to link engineering as
well, and the loop was completed through the strategic sourcing data warehouse
(SSDW). The illustrated topics were considered areas where knowledge could
be exchanged, and the group agreed on how the data processes worked, who
had ownership, and how the data would be shared. with linkage to the corporate
engineering committee and a supplier advisory group. The engineering directors,
in this case, were given responsibility for driving the effort toward a
common process and setting the performance improvement goals
All current processes were reviewed and critiqued
so agreement could be reached on practicality, opportunity for automation,
piloting, and then readiness for implementation.
The five blocks on top of the collaborative platform were deemed
to be the keys to success. Beneath each heading are the elements involved in
the redesign and transformation process. The goal was to develop an integrated
intra- and inter-enterprise platform, which would be accepted as a continuous
improvement process and not just an event.
Access
to the details contained in these files was given to appropriate individuals, and
all changes were handled electronically.
and truck parts and components. Bauer worked with this firm as it
followed the five-step collaborative process, to achieve notable results, working
with some of its key suppliers, with a focus on the automotive market. The
corporation had a defined product development process and supply chain management
process. It was also migrating from legacy ERP systems to a new
system. Three business units and several joint ventures were involved, with 150
plants and 30 engineering facilities. The product lines included light vehicle,
commercial vehicle, and aftermarket products. Among the issues faced were
several design and supply chain systems, incompatible change management
systems, a variety of bill of material techniques, and a rapidly proliferating parts
list. The goal established for the change team was to create a collaborative
platform that enables the stakeholders to plan, design, source, make, and deliver
the products anywhere. The project approach was intended to establish the
collaborative platform and implement a common product cost and change request
system using the five-step approach.
As shown in, the firm began by agreeing on the principles of
collaboration. In this tripart model, suppliers were linked into a supplier management
system, which further linked into operations and its ERP system.
Product data management (PDM) databases were used to link engineering as
well, and the loop was completed through the strategic sourcing data warehouse
(SSDW). The illustrated topics were considered areas where knowledge could
be exchanged, and the group agreed on how the data processes worked, who
had ownership, and how the data would be shared. with linkage to the corporate
engineering committee and a supplier advisory group. The engineering directors,
in this case, were given responsibility for driving the effort toward a
common process and setting the performance improvement goals
All current processes were reviewed and critiqued
so agreement could be reached on practicality, opportunity for automation,
piloting, and then readiness for implementation.
The five blocks on top of the collaborative platform were deemed
to be the keys to success. Beneath each heading are the elements involved in
the redesign and transformation process. The goal was to develop an integrated
intra- and inter-enterprise platform, which would be accepted as a continuous
improvement process and not just an event.
Access
to the details contained in these files was given to appropriate individuals, and
all changes were handled electronically.
Data, Applications, and Technology
Increasing the level of supply chain maturity is driven by process. This is where
the value is generated. This can only happen with the will of the organizations
involved, and organization and location follow, to institutionalize and socialize
the changes. The enablers that underpin this condition and make the management
of complexity possible are data, applications, and technology, but they are
enablers and increasingly will be invisible to the business users.
As the processes begin to flow across the boundaries, the extended chain
will need real-time visibility of key partner data (such as stock dispositions and
demand forecasts). The role of BPM and the architectures such as CSC e4SM
becomes paramount.
All applications are plugged into the service layer with lightweight
adaptors, making their data available to the rest of the enterprise.
_ All the process rules are managed by the business process manager at
the heart of the architecture, which sits between the applications and the
user, who no longer needs to know with which applications she or he
is working. Written in a process language that obeys the protocols
discussed earlier, this process engine can now talk to other process
engines in the value chain.
_ Business users see the system through the coordination layer. They are
presented by the business process manager with the information they
need to execute their process, which then shares back the results with
the appropriate applications. Of course, if the technology managers want
All applications are plugged into the service layer with lightweight
adaptors, making their data available to the rest of the enterprise.
_ All the process rules are managed by the business process manager at
the heart of the architecture, which sits between the applications and the
user, who no longer needs to know with which applications she or he
is working. Written in a process language that obeys the protocols
discussed earlier, this process engine can now talk to other process
engines in the value chain.
_ Business users see the system through the coordination layer. They are
presented by the business process manager with the information they
need to execute their process, which then shares back the results with
the appropriate applications. Of course, if the technology managers wanted.
the value is generated. This can only happen with the will of the organizations
involved, and organization and location follow, to institutionalize and socialize
the changes. The enablers that underpin this condition and make the management
of complexity possible are data, applications, and technology, but they are
enablers and increasingly will be invisible to the business users.
As the processes begin to flow across the boundaries, the extended chain
will need real-time visibility of key partner data (such as stock dispositions and
demand forecasts). The role of BPM and the architectures such as CSC e4SM
becomes paramount.
All applications are plugged into the service layer with lightweight
adaptors, making their data available to the rest of the enterprise.
_ All the process rules are managed by the business process manager at
the heart of the architecture, which sits between the applications and the
user, who no longer needs to know with which applications she or he
is working. Written in a process language that obeys the protocols
discussed earlier, this process engine can now talk to other process
engines in the value chain.
_ Business users see the system through the coordination layer. They are
presented by the business process manager with the information they
need to execute their process, which then shares back the results with
the appropriate applications. Of course, if the technology managers want
All applications are plugged into the service layer with lightweight
adaptors, making their data available to the rest of the enterprise.
_ All the process rules are managed by the business process manager at
the heart of the architecture, which sits between the applications and the
user, who no longer needs to know with which applications she or he
is working. Written in a process language that obeys the protocols
discussed earlier, this process engine can now talk to other process
engines in the value chain.
_ Business users see the system through the coordination layer. They are
presented by the business process manager with the information they
need to execute their process, which then shares back the results with
the appropriate applications. Of course, if the technology managers wanted.
Organization and Location
Value chain organizations reflect cooperation and collaboration between partners.
As we have seen, the collaborating organizations will put in place governance
models that manage the shared affairs of the extended enterprise. The
authors believe that these foundations will pave the way for a few value chains
to achieve level 5.
Such governance models require the provision of performance data to be
collected across the extended enterprise How else will they govern? Increasingly,
this will become the province of automated processes, written under
appropriate BPML protocols, which will automatically collect the relevant
information from the various enterprise systems and present it in a collated form
as and when needed. Again, the foundations of process management are seen
to be an essential part of the inter-enterprise collaboration.
Private Implementations (one for each partner). The Public Interface
is common to the partners and is supported by protocols such as
ebXML, RosettaNet, and BizTalk. The Private Implementations are
specific to every partner and are described in any executable language.
BPML is one such language.
Without an agreed and shared way of describing processes, changing from
one partner to another in the chain or improving the operation of processes
across the process boundaries becomes more and more complex and will be a
real drag on the value chain�s ability to improve and compete. With a shared
protocol, the inhibitions are removed and the extended enterprise processes run
straight through as though they are part of a single enterprise.
A simple order-to-cash process in one company
can not only be replicated in other companies in the value chain, but can also
provide the clear interface points between companies: order placing and accepting,
goods dispatch and receipt, and invoice to payment.
With a proper set of process protocols in place, noncore processes can be
alternatively sourced, without the fear of interfacing problems or becoming
locked into an unsatisfactory situation.
As we have seen, the collaborating organizations will put in place governance
models that manage the shared affairs of the extended enterprise. The
authors believe that these foundations will pave the way for a few value chains
to achieve level 5.
Such governance models require the provision of performance data to be
collected across the extended enterprise How else will they govern? Increasingly,
this will become the province of automated processes, written under
appropriate BPML protocols, which will automatically collect the relevant
information from the various enterprise systems and present it in a collated form
as and when needed. Again, the foundations of process management are seen
to be an essential part of the inter-enterprise collaboration.
Private Implementations (one for each partner). The Public Interface
is common to the partners and is supported by protocols such as
ebXML, RosettaNet, and BizTalk. The Private Implementations are
specific to every partner and are described in any executable language.
BPML is one such language.
Without an agreed and shared way of describing processes, changing from
one partner to another in the chain or improving the operation of processes
across the process boundaries becomes more and more complex and will be a
real drag on the value chain�s ability to improve and compete. With a shared
protocol, the inhibitions are removed and the extended enterprise processes run
straight through as though they are part of a single enterprise.
A simple order-to-cash process in one company
can not only be replicated in other companies in the value chain, but can also
provide the clear interface points between companies: order placing and accepting,
goods dispatch and receipt, and invoice to payment.
With a proper set of process protocols in place, noncore processes can be
alternatively sourced, without the fear of interfacing problems or becoming
locked into an unsatisfactory situation.
TRANSITION FROM LEVEL 3 TO LEVEL 4: THE BENEFIT CASE
Because there are few true examples of the level 4 extended enterprise, value
data on the benefits achieved are light. However, the results that have been
achieved are significant and point the way for others.
The level 4 value chain is characterized by:
_ The whole chain is agile, lean, and resilient, with quality at the highest
possible level.
_ Key processes flow up and down the chain between the enterprises, so
that
_ The flow of key commodities is coordinated and, for those key commodities,
_ Costs and inventories have been minimized.
_ The value to all participants in the chain is increased and
_ The end customer is experiencing excellent service and satisfaction.
One of the best examples of a level 4 value chain is the one built by Dell.
By implementing supply chain software from i2, Dell can now procure inventory
from suppliers over the Web in real time and pull materials into the
factories every two hours based on customer orders.
To meet the demands of these orders and to build the customized systems
in a timely manner, Dell created efficiencies in its materials management system.
With the implementation of i2�s supply chain tools, Dell has enhanced its
procurement processes so that almost 90% of the company�s purchases from
suppliers are on-line and there are only two hours of inventory on the factory
floor.
A key component of Dell�s supply chain management is having materials
in close proximity to Dell factories; therefore, suppliers are required to have
inventory hubs near the manufacturing plants. A huge benefit of this supply
chain solution is communicating with these hubs in real time to deliver the
required materials needed for every two hours of Dell customer orders.
Dell launched valuechain.dell.com, a secure extranet that acts as a portal for
Dell suppliers to collaborate in managing the supply chain. This site offers
suppliers a customized view of their materials at Dell, including reports on
material quality, performance management scorecards, negotiated and forecasted
cost reports, engineering change orders, supply/demand forecasting tools, and
material demand.
data on the benefits achieved are light. However, the results that have been
achieved are significant and point the way for others.
The level 4 value chain is characterized by:
_ The whole chain is agile, lean, and resilient, with quality at the highest
possible level.
_ Key processes flow up and down the chain between the enterprises, so
that
_ The flow of key commodities is coordinated and, for those key commodities,
_ Costs and inventories have been minimized.
_ The value to all participants in the chain is increased and
_ The end customer is experiencing excellent service and satisfaction.
One of the best examples of a level 4 value chain is the one built by Dell.
By implementing supply chain software from i2, Dell can now procure inventory
from suppliers over the Web in real time and pull materials into the
factories every two hours based on customer orders.
To meet the demands of these orders and to build the customized systems
in a timely manner, Dell created efficiencies in its materials management system.
With the implementation of i2�s supply chain tools, Dell has enhanced its
procurement processes so that almost 90% of the company�s purchases from
suppliers are on-line and there are only two hours of inventory on the factory
floor.
A key component of Dell�s supply chain management is having materials
in close proximity to Dell factories; therefore, suppliers are required to have
inventory hubs near the manufacturing plants. A huge benefit of this supply
chain solution is communicating with these hubs in real time to deliver the
required materials needed for every two hours of Dell customer orders.
Dell launched valuechain.dell.com, a secure extranet that acts as a portal for
Dell suppliers to collaborate in managing the supply chain. This site offers
suppliers a customized view of their materials at Dell, including reports on
material quality, performance management scorecards, negotiated and forecasted
cost reports, engineering change orders, supply/demand forecasting tools, and
material demand.
THE MUTUAL SEARCH IS FOR HIGHER LEVEL IMPROVEMENTS
The basic question to be answered, as a firm is poised to move with the help
of willing and trusted business allies into what can only be described as virgin
territory, is: Why should we make the trip? For most firms, reaching level 4
and gaining the results we have cited is progress enough, and further ventures
will seem impossible, too risky, or as involving too much alteration to the
existing business culture to pursue. Since an extremely high level of trust is the
necessary ante for participation, most firms will rule themselves out of the
game. The idea that a major retailer, for example, would be willing to work
closely with a few key suppliers to determine how they can find higher level
savings, share the benefits, and work closely to draw more revenues to both
parties is simply an alien concept in many business circles.
Here we see that the
various business applications reach the highest state in the maturity model.
Design, development, and product/service introduction reach the point where
the linked constituents in the value network come together and co-develop new
introductions. Combining the expertise across several capable business allies,
the focus is on joint design and development using a full business functional
view, which provides any party that can contribute useful information to the
effort a format from which to do so. Boeing typified this type of effort when
that firm decided it could cut the normal production time on its new 7E7 aircraft
from over a year to four months, by allowing key suppliers to take responsibility
for major components of the plane. These suppliers not only provide key subassemblies,
but were very active in the design of the aircraft and its development
process.
Purchasing, procurement, and sourcing reach the point where network sourcing
is done through the best constituent, which means that raw materials and
services are secured from the best possible source (regardless of global location)
through the member of the network most able to secure the best arrangement.
Often, members use each other to manage specific categories of the buy, so the
task is spread across more participants, and the best arrangements bubble to the
top of the effort. In this advanced level, the normal emphasis on price negotiation
is set aside so that the most strategic suppliers can contribute to the
sourcing methodology in a way that benefits both buyer and seller.
As two writers describe the condition, �Supply chain managers need a
sourcing methodology that will not only satisfy the near-term cost concerns but
also position the organization for long-term operational success and profitability.�
Their idea is �to extend operational efficiency while not losing sight of the
core competencies that sustain profitable growth.� We contend that such a
situation is achieved when collaboration between buyers and their best sources
establishes a plan that has mutual advantage. Such an approach can be termed
�predictive sourcing,� under conditions where �the company�s sourcing strategy
is linked with its overall business strategy� (Bernhard and Vittori, 2004, p. 58).
We would add that the linkage should be across network strategies, requiring
the network participants to share information on the best sourcing strategy,
resulting in a joint business plan with industry-best objectives as the end result.
Kyocera Wireless, the Japanese manufacturer of telecommunications products,
offers a good example at its San Diego operations facility. This firm
decided to source manufacturing in the United States based on an assessment
�of where the company adds value for its customers.� For Kyocera, predictive
sourcing meant �looking at manufacturing, logistics, and demand planning needs
collectively � instead of basing sourcing decisions only on manufacturing
costs� (Bernhard and Vittori, 2004, p. 61).
Marketing, sales, and customer service also reach a higher plateau, where
an electronic consumer response system is in effect across the full value chain.
Now the targeted best consumer groups are contacted directly and provided
customized services through a variety of channels: store, catalogue, telephone,
Internet, or personalized delivery. The movement results in what is being called
the �demand-driven supply network� (DDSN). According to AMR Research,
such a condition results in a �system of coordinated technologies and processes
that senses and reacts to real-time demand signals across a network of custom
of willing and trusted business allies into what can only be described as virgin
territory, is: Why should we make the trip? For most firms, reaching level 4
and gaining the results we have cited is progress enough, and further ventures
will seem impossible, too risky, or as involving too much alteration to the
existing business culture to pursue. Since an extremely high level of trust is the
necessary ante for participation, most firms will rule themselves out of the
game. The idea that a major retailer, for example, would be willing to work
closely with a few key suppliers to determine how they can find higher level
savings, share the benefits, and work closely to draw more revenues to both
parties is simply an alien concept in many business circles.
Here we see that the
various business applications reach the highest state in the maturity model.
Design, development, and product/service introduction reach the point where
the linked constituents in the value network come together and co-develop new
introductions. Combining the expertise across several capable business allies,
the focus is on joint design and development using a full business functional
view, which provides any party that can contribute useful information to the
effort a format from which to do so. Boeing typified this type of effort when
that firm decided it could cut the normal production time on its new 7E7 aircraft
from over a year to four months, by allowing key suppliers to take responsibility
for major components of the plane. These suppliers not only provide key subassemblies,
but were very active in the design of the aircraft and its development
process.
Purchasing, procurement, and sourcing reach the point where network sourcing
is done through the best constituent, which means that raw materials and
services are secured from the best possible source (regardless of global location)
through the member of the network most able to secure the best arrangement.
Often, members use each other to manage specific categories of the buy, so the
task is spread across more participants, and the best arrangements bubble to the
top of the effort. In this advanced level, the normal emphasis on price negotiation
is set aside so that the most strategic suppliers can contribute to the
sourcing methodology in a way that benefits both buyer and seller.
As two writers describe the condition, �Supply chain managers need a
sourcing methodology that will not only satisfy the near-term cost concerns but
also position the organization for long-term operational success and profitability.�
Their idea is �to extend operational efficiency while not losing sight of the
core competencies that sustain profitable growth.� We contend that such a
situation is achieved when collaboration between buyers and their best sources
establishes a plan that has mutual advantage. Such an approach can be termed
�predictive sourcing,� under conditions where �the company�s sourcing strategy
is linked with its overall business strategy� (Bernhard and Vittori, 2004, p. 58).
We would add that the linkage should be across network strategies, requiring
the network participants to share information on the best sourcing strategy,
resulting in a joint business plan with industry-best objectives as the end result.
Kyocera Wireless, the Japanese manufacturer of telecommunications products,
offers a good example at its San Diego operations facility. This firm
decided to source manufacturing in the United States based on an assessment
�of where the company adds value for its customers.� For Kyocera, predictive
sourcing meant �looking at manufacturing, logistics, and demand planning needs
collectively � instead of basing sourcing decisions only on manufacturing
costs� (Bernhard and Vittori, 2004, p. 61).
Marketing, sales, and customer service also reach a higher plateau, where
an electronic consumer response system is in effect across the full value chain.
Now the targeted best consumer groups are contacted directly and provided
customized services through a variety of channels: store, catalogue, telephone,
Internet, or personalized delivery. The movement results in what is being called
the �demand-driven supply network� (DDSN). According to AMR Research,
such a condition results in a �system of coordinated technologies and processes
that senses and reacts to real-time demand signals across a network of custom
. A BLUEPRINT FOR BUILDING CUSTOMER VALUES
As supply chain efforts mature, and a few companies do move to the most
advanced levels of performance, one distinction becomes apparent. Firms that
embrace the inherent concepts, as part of a total extended enterprise optimization
effort, have gained the high ground. The leaders have used advanced
techniques to focus first on operational excellence and then on customer satisfaction,
to open a serious gap between less able competitors, with several
companies beginning to dominate their industries. Positions achieved by such
leaders as Wal-Mart, Procter & Gamble, Toyota, Intel, Nike, and Dell bear
witness to the values being added through a concerted enterprise-wide improvement
effort. These leaders have discovered the advantages offered by moving
their supply chains into a position of having superior capabilities, gained through
greater access to knowledge across what becomes an enterprise-wide intelligent
value chain network.
When that knowledge is combined with an effort to develop greater customer
intimacy and satisfaction, especially with the most important customers,
the advantage becomes an ultimate distinction in most industries and markets.
To complete this chapter, we want to explore the advantages to be gained by
applying all of the premises presented earlier in this text to a business system
that operates in an intelligent network environment � a true level 5 operation.
To establish the goal of such a network, we would cite a statement made by
Debra Hofman of AMR Research: �Companies need to optimize the demand
and supply side of the network so there is a transparent flow of information that
brings the components together into a finely tuned network that is synchronized,
high performing, agile and responsive to changes in the signal� (Hofman, July
2003). We could not agree more, and when these conditions are attained, a
market advantage is the reward
advanced levels of performance, one distinction becomes apparent. Firms that
embrace the inherent concepts, as part of a total extended enterprise optimization
effort, have gained the high ground. The leaders have used advanced
techniques to focus first on operational excellence and then on customer satisfaction,
to open a serious gap between less able competitors, with several
companies beginning to dominate their industries. Positions achieved by such
leaders as Wal-Mart, Procter & Gamble, Toyota, Intel, Nike, and Dell bear
witness to the values being added through a concerted enterprise-wide improvement
effort. These leaders have discovered the advantages offered by moving
their supply chains into a position of having superior capabilities, gained through
greater access to knowledge across what becomes an enterprise-wide intelligent
value chain network.
When that knowledge is combined with an effort to develop greater customer
intimacy and satisfaction, especially with the most important customers,
the advantage becomes an ultimate distinction in most industries and markets.
To complete this chapter, we want to explore the advantages to be gained by
applying all of the premises presented earlier in this text to a business system
that operates in an intelligent network environment � a true level 5 operation.
To establish the goal of such a network, we would cite a statement made by
Debra Hofman of AMR Research: �Companies need to optimize the demand
and supply side of the network so there is a transparent flow of information that
brings the components together into a finely tuned network that is synchronized,
high performing, agile and responsive to changes in the signal� (Hofman, July
2003). We could not agree more, and when these conditions are attained, a
market advantage is the reward
CO-MANAGING VALUE:THE ESSENTIAL LEVEL 5 DIFFERENTIATOR
Moving from level 4 to level 5 in the extended enterprise is analogous to
moving from level 1 to level 2 in the stand-alone company.
The authors recall a conversation with the logistics manager of one of the
U.K.�s major retailers. The retailer had just announced that its distribution
centers were about to go stockless. When questioned about how this had been
achieved, the manager said that suppliers would deliver more frequently, in
smaller lots, closely matched to the most recent store demand data. Later in the
conversation, the question of value arose. Had the value in the chain overall
gone up or down? Not only did the manager not know, but the question had
not occurred to him. If the value had been reduced, at the suppliers� expense
of the extra less efficient deliveries, then this would eventually find its way back
into the value chain�s economics. The suppliers would gang up on the retailer
to force more profitable dealings, they would fail as their profits were reduced,
So how should a level 5 extended enterprise manage value? We suggest one
approach, based on an example of the value chain to deliver a bottle of carbonated
soft drink to the end customer. The supply chain for this simple product
is surprisingly complex, from plastic at the upstream end through the bottling
and packaging processes to the supermarket shelf. Even two or three years ago,
we would not have contemplated treating this as a single entity. For one thing,
we did not have the necessary tools. Now, the Internet and effective process
management mean we can move information to where we need it, and fast
schedulers give us the power to synchronize the flow of materials through the
whole network.
The challenge we face is bringing it to life, winning the extra value and
sharing it equitably between the partners. And that requires doing no more than
we have done many times before at level 1 � except that now the �functions�
are the businesses in the extended supply chain
Given that we can map the extended enterprise, we can also create an
economic model for it, a pseudo-profit-and-loss statement and balance sheet. By
combining these, we can build an economic value added (EVA) model, similar
to and with the same role as the level 1 return on net assets model, with the
exception that, for the extended enterprise, we must factor in the cost of capital
for each of the partners
We do this so we can see where value is gained and lost across the chain, so
as to manage it fairly. This is analogous to the investment in the active ingredient
plant in the Zeneca example in Chapter 3, where the value was �gained�
elsewhere in the chain.
A little research into most value chains will uncover many value-creating
opportunities. The interesting thing is that an understanding of the value chain
and its value models will show that EVA is not equally spread. In the case of
our soft drink bottle, it is heavily skewed to the downstream, as shown in Figure
7.7. No proposition will succeed if it relies on persuading one player to give
up part of its value. But it just might succeed if, by collaborating, we raise the
whole EVA curve and generate more value for everyone!
Ultimately, the level 5 extended enterprise will outstrip its lower level
competitors in cost, quality, and time to market. The entry ticket is a willingness
to engage, and the prize is a share in the increased value in the entire extended
enterprise.
moving from level 1 to level 2 in the stand-alone company.
The authors recall a conversation with the logistics manager of one of the
U.K.�s major retailers. The retailer had just announced that its distribution
centers were about to go stockless. When questioned about how this had been
achieved, the manager said that suppliers would deliver more frequently, in
smaller lots, closely matched to the most recent store demand data. Later in the
conversation, the question of value arose. Had the value in the chain overall
gone up or down? Not only did the manager not know, but the question had
not occurred to him. If the value had been reduced, at the suppliers� expense
of the extra less efficient deliveries, then this would eventually find its way back
into the value chain�s economics. The suppliers would gang up on the retailer
to force more profitable dealings, they would fail as their profits were reduced,
So how should a level 5 extended enterprise manage value? We suggest one
approach, based on an example of the value chain to deliver a bottle of carbonated
soft drink to the end customer. The supply chain for this simple product
is surprisingly complex, from plastic at the upstream end through the bottling
and packaging processes to the supermarket shelf. Even two or three years ago,
we would not have contemplated treating this as a single entity. For one thing,
we did not have the necessary tools. Now, the Internet and effective process
management mean we can move information to where we need it, and fast
schedulers give us the power to synchronize the flow of materials through the
whole network.
The challenge we face is bringing it to life, winning the extra value and
sharing it equitably between the partners. And that requires doing no more than
we have done many times before at level 1 � except that now the �functions�
are the businesses in the extended supply chain
Given that we can map the extended enterprise, we can also create an
economic model for it, a pseudo-profit-and-loss statement and balance sheet. By
combining these, we can build an economic value added (EVA) model, similar
to and with the same role as the level 1 return on net assets model, with the
exception that, for the extended enterprise, we must factor in the cost of capital
for each of the partners
We do this so we can see where value is gained and lost across the chain, so
as to manage it fairly. This is analogous to the investment in the active ingredient
plant in the Zeneca example in Chapter 3, where the value was �gained�
elsewhere in the chain.
A little research into most value chains will uncover many value-creating
opportunities. The interesting thing is that an understanding of the value chain
and its value models will show that EVA is not equally spread. In the case of
our soft drink bottle, it is heavily skewed to the downstream, as shown in Figure
7.7. No proposition will succeed if it relies on persuading one player to give
up part of its value. But it just might succeed if, by collaborating, we raise the
whole EVA curve and generate more value for everyone!
Ultimately, the level 5 extended enterprise will outstrip its lower level
competitors in cost, quality, and time to market. The entry ticket is a willingness
to engage, and the prize is a share in the increased value in the entire extended
enterprise.
The Elements of Credible Web Hosting
When you are looking for the best web hosting service provider to host your site, you may want to short-cut the process by going over reviews of web hosting companies. In this case, you should know the elements of credible reviews so you will not be misguided when deciding on a web host.
One of the first things you should be watching out for is the tone of the review. How is it written? Does it have a professional tone? Is it specific? Is it detailed? If you answer yes to these questions, then most likely the review site is written by someone who has done extensive research on the subject.
On the other hand, if the review has an advertising tone to it, chances are it is written by someone who is an affiliate of the web hosting service provider. By affiliate, it means that the person is looking to earn a commission when he is able to get customers to try the services of the web hosting service provider he is affiliated with. Thus, you can expect the review to be more like an advertising campaign, citing only the positive features of the web host.
Professional raters know the most important features of a web hosting company, which include the uptime guarantee, bandwidth, disk space, speed, technical support, and cost, and these should be explained in great detail in the review. It is quintessential for a potential client to know the uptime percentage guaranteed by the web host, and the reviewer should be very specific when it comes to this. An uptime guarantee of below 99.00% is not good enough as it means frequent downtimes. A customer who is seriously pursuing the success of his online business would certainly want to see this being covered in the review.
At the same time, the bandwidth, disk space, and speed, should not be ignored and should also occupy considerable space on the review. If you want to operate a big business website with e-Commerce capabilities, one of the first things you would wish to find out is if the web host offers unlimited bandwidth and disk space to accommodate the needs of your website.
A good web host review would not miss out evaluating the technical support of the company either, knowing how valuable the information is to website owners. Potential clients would certainly want to know if technical support is rendered 24/7 and if phone support and live chat support are available, too. Why this is important is because there could be technical problems along the way and clients would expect their web hosts to immediately attend to these problems.
The last element that should be covered in every review is the cost of the service. The price is always one of the deciding factors when choosing a particular product or service. If you are looking for a good web host, it is only natural that you would want to find out first if you'll be able to afford the monthly fee that comes with the service.
One of the first things you should be watching out for is the tone of the review. How is it written? Does it have a professional tone? Is it specific? Is it detailed? If you answer yes to these questions, then most likely the review site is written by someone who has done extensive research on the subject.
On the other hand, if the review has an advertising tone to it, chances are it is written by someone who is an affiliate of the web hosting service provider. By affiliate, it means that the person is looking to earn a commission when he is able to get customers to try the services of the web hosting service provider he is affiliated with. Thus, you can expect the review to be more like an advertising campaign, citing only the positive features of the web host.
Professional raters know the most important features of a web hosting company, which include the uptime guarantee, bandwidth, disk space, speed, technical support, and cost, and these should be explained in great detail in the review. It is quintessential for a potential client to know the uptime percentage guaranteed by the web host, and the reviewer should be very specific when it comes to this. An uptime guarantee of below 99.00% is not good enough as it means frequent downtimes. A customer who is seriously pursuing the success of his online business would certainly want to see this being covered in the review.
At the same time, the bandwidth, disk space, and speed, should not be ignored and should also occupy considerable space on the review. If you want to operate a big business website with e-Commerce capabilities, one of the first things you would wish to find out is if the web host offers unlimited bandwidth and disk space to accommodate the needs of your website.
A good web host review would not miss out evaluating the technical support of the company either, knowing how valuable the information is to website owners. Potential clients would certainly want to know if technical support is rendered 24/7 and if phone support and live chat support are available, too. Why this is important is because there could be technical problems along the way and clients would expect their web hosts to immediately attend to these problems.
The last element that should be covered in every review is the cost of the service. The price is always one of the deciding factors when choosing a particular product or service. If you are looking for a good web host, it is only natural that you would want to find out first if you'll be able to afford the monthly fee that comes with the service.
Features of a Cheap Web Host
When you have a business that has not gone online yet, that only means one thing - you are way behind of your competitors. It's really high time that you get your business on the World Wide Web. The virtual environment is where almost everybody hangs out in, and unless you want to be out of the rat race, that's exactly where you ought to be, too.
You may be concerned however that you have no idea on how to go about it. You don't have the technical skills, to begin with, but don't worry because going about the process of getting your business on the World Wide Web is no longer as overwhelming as it used to be - not when you have a wealth of information practically at your fingertips. The very first thing you would want to do is to choose a web hosting service provider. It's a basic requirement, but one that is by and large the most important step because once this has been taken care of you can be almost certain that things are going to run smoothly.
There are thousands upon thousands of web hosting providers out there, and they all come with a wide range of plans for every budget size. Apparently, there is cheap web hosting, too, for those who are on a really tight budget but who recognize the importance of partnering with a web host. If you are thinking of operating a business website, some people may criticize you for going for cheap web hosting when you can engage in professional services instead and save yourself all the trouble. They are on the contention that cheap is tantamount to saying substandard or poor quality which is just totally wrong. There are numerous cases when you are able to find great deals at a price you can very well afford - you only have to explore all your options as much as possible.
As it is, your choice of web host is very significant in the success of your online business. Some people give more attention to the design and content of the website, not realizing that without a good web host, everything else has no meaning, no value, and no significance at all. A web host, you see, is the very thing that will put your business on the internet and ensure that it gets all the exposure it needs.
You may be concerned however that you have no idea on how to go about it. You don't have the technical skills, to begin with, but don't worry because going about the process of getting your business on the World Wide Web is no longer as overwhelming as it used to be - not when you have a wealth of information practically at your fingertips. The very first thing you would want to do is to choose a web hosting service provider. It's a basic requirement, but one that is by and large the most important step because once this has been taken care of you can be almost certain that things are going to run smoothly.
There are thousands upon thousands of web hosting providers out there, and they all come with a wide range of plans for every budget size. Apparently, there is cheap web hosting, too, for those who are on a really tight budget but who recognize the importance of partnering with a web host. If you are thinking of operating a business website, some people may criticize you for going for cheap web hosting when you can engage in professional services instead and save yourself all the trouble. They are on the contention that cheap is tantamount to saying substandard or poor quality which is just totally wrong. There are numerous cases when you are able to find great deals at a price you can very well afford - you only have to explore all your options as much as possible.
As it is, your choice of web host is very significant in the success of your online business. Some people give more attention to the design and content of the website, not realizing that without a good web host, everything else has no meaning, no value, and no significance at all. A web host, you see, is the very thing that will put your business on the internet and ensure that it gets all the exposure it needs.
A Primer on Web Hosting
Web hosting is a vital element in Internet business. Hosting your website allows you to put up your presence on the Internet. The webpage you host acts as your profile page that contains information about you and your company.
If you have your personal webpage, you can consider hosting it. Hosting a personal webpage has many benefits. It is the simplest way by which you can establish connections with your friends through the Internet. It can also come in handy for applying job, as the prospective employer can know about you by just going through your personal webpage.
You can also create a website to do business and earn money. You can use the website to promote your business and the products or services that you are offering. You must host your website with a professional service provider.
You can choose a website hosting service as per the need and the purpose of your website. There is plethora of services available in the market, like dedicated hosting, file hosting and paid hosting.
Majority of hosting companies basically provide a server that will guide your business website activities. Web providers provide server space plus Internet connectivity to their clients. In case if the clients own the server, the web hosts provide only technical support as well as the space.
Factors to look for while choosing a web hosting service provider:
Price:
The foremost thing to consider while choosing a web hosting service provider is the price they are charging for their services. Every body wishes the money they invest is completely worth it. It is therefore essential that you carefully compare the features of the web hosting companies and choose a company that best suits your needs.
Category of disk space they offer:
You should choose a web hosting company that provides your disk space as your needs. Choose a company that allows you to use as much space as you want without any additional charges.
The past service records of the company:
Before choosing a web hosting service provider it is essential that your check their past records. You can check with their other clients if the suffer from frequent downtime or not. This is essential because if the visitor to your website constantly comes across this page is currently unavailable message it would put them off and this could mean you are loosing out on a customer.
Apart from the above mentioned factors look for a web hosting service providers who offer domain name registration and its renewal in their package.
If you have your personal webpage, you can consider hosting it. Hosting a personal webpage has many benefits. It is the simplest way by which you can establish connections with your friends through the Internet. It can also come in handy for applying job, as the prospective employer can know about you by just going through your personal webpage.
You can also create a website to do business and earn money. You can use the website to promote your business and the products or services that you are offering. You must host your website with a professional service provider.
You can choose a website hosting service as per the need and the purpose of your website. There is plethora of services available in the market, like dedicated hosting, file hosting and paid hosting.
Majority of hosting companies basically provide a server that will guide your business website activities. Web providers provide server space plus Internet connectivity to their clients. In case if the clients own the server, the web hosts provide only technical support as well as the space.
Factors to look for while choosing a web hosting service provider:
Price:
The foremost thing to consider while choosing a web hosting service provider is the price they are charging for their services. Every body wishes the money they invest is completely worth it. It is therefore essential that you carefully compare the features of the web hosting companies and choose a company that best suits your needs.
Category of disk space they offer:
You should choose a web hosting company that provides your disk space as your needs. Choose a company that allows you to use as much space as you want without any additional charges.
The past service records of the company:
Before choosing a web hosting service provider it is essential that your check their past records. You can check with their other clients if the suffer from frequent downtime or not. This is essential because if the visitor to your website constantly comes across this page is currently unavailable message it would put them off and this could mean you are loosing out on a customer.
Apart from the above mentioned factors look for a web hosting service providers who offer domain name registration and its renewal in their package.
Cloud Hosting
To fully comprehend the true meaning of cloud hosting, you first need to define it and understand what cloud computing is. Cloud hosting has been recently broken down and clarifies as Public, Private and Enterprise.
Public cloud is similar to shared hosting in that it is more affordable. However, when you buy a shared hosting plan, you are stuck with the limitations of the plan that you selected. On the other hand, public cloud is scalable so you can start with a little and then expand your resources as you need more.
Cloud computing, in layman's terms, separates the software from the hardware requirements.
All the information that you create and/or use within these programs are stored online across multiple servers. You may also get into this data from anywhere around the world that you have internet. It's services may vary from a small application on a public cloud to entire virtual networks running inside a private cloud. The specific characteristics of cloud computing is that the applications and all of the data are spread across multiple servers. In reality, it's a cluster of computers that act as a whole, yet instead of a RAID array of drives, you actually have what I would call RAIDed servers.
With a private cloud, any downtime or failing moments on any server won't affect your applications. Not to mention, you're only benefiting from the bandwidth levels and power of processing. This translates into an unlimited amount of bandwidth, storage, or processing power as a result of a system of hosting with a wide spread amount of space capacity.
Given, cloud hosting might sound a little bit like shared hosting, but don't get them confused, for the are completely different, leaving cloud hosting the best way to go. Shared hosting deals with your applications and it's related data on a single big server with tens and maybe even hundreds of separate websites. You are at risk of security and share among many other sites.
But with cloud hosting, all of the sites, applications, and data are uploaded and spread across the entire infrastructure. The hosting provider then makes a decision on what websites need what processor power and bandwidth by identifying how much traffic they are receiving. This type of setup guarantees plenty of space in the system. If your site instantly needs more power and/or bandwidth, the provider adapts by adding what resources are needed.
While this sounds great and amazing, you still need to make the big decision of what company to host with. CariNet is a leader in the cloud hosting field with a wide variety of cloud services to supplement our traditional servers and server clusters. We've hosted the world for over a decade, and are fluent in all things Internet related. We build own and operate all of our datacenters and facilities in the United States and are capable of handling customers and demands of any size. We give you the best dedicated server, managed server, or cloud server you'll find today. We'll take good care of you. That's a promise
Public cloud is similar to shared hosting in that it is more affordable. However, when you buy a shared hosting plan, you are stuck with the limitations of the plan that you selected. On the other hand, public cloud is scalable so you can start with a little and then expand your resources as you need more.
Cloud computing, in layman's terms, separates the software from the hardware requirements.
All the information that you create and/or use within these programs are stored online across multiple servers. You may also get into this data from anywhere around the world that you have internet. It's services may vary from a small application on a public cloud to entire virtual networks running inside a private cloud. The specific characteristics of cloud computing is that the applications and all of the data are spread across multiple servers. In reality, it's a cluster of computers that act as a whole, yet instead of a RAID array of drives, you actually have what I would call RAIDed servers.
With a private cloud, any downtime or failing moments on any server won't affect your applications. Not to mention, you're only benefiting from the bandwidth levels and power of processing. This translates into an unlimited amount of bandwidth, storage, or processing power as a result of a system of hosting with a wide spread amount of space capacity.
Given, cloud hosting might sound a little bit like shared hosting, but don't get them confused, for the are completely different, leaving cloud hosting the best way to go. Shared hosting deals with your applications and it's related data on a single big server with tens and maybe even hundreds of separate websites. You are at risk of security and share among many other sites.
But with cloud hosting, all of the sites, applications, and data are uploaded and spread across the entire infrastructure. The hosting provider then makes a decision on what websites need what processor power and bandwidth by identifying how much traffic they are receiving. This type of setup guarantees plenty of space in the system. If your site instantly needs more power and/or bandwidth, the provider adapts by adding what resources are needed.
While this sounds great and amazing, you still need to make the big decision of what company to host with. CariNet is a leader in the cloud hosting field with a wide variety of cloud services to supplement our traditional servers and server clusters. We've hosted the world for over a decade, and are fluent in all things Internet related. We build own and operate all of our datacenters and facilities in the United States and are capable of handling customers and demands of any size. We give you the best dedicated server, managed server, or cloud server you'll find today. We'll take good care of you. That's a promise
Choosing Web Hosting Plan
If you want to have your own website after buying a domain, you are going to need a hosting account. When you look for hosting, you might notice that there are different types that you can purchase. Two of the most common types of hosting plans are shared hosting and dedicated hosting. If you are new to all this, you probably need some understanding on what all this means so that you can make the best decision for your site.
What is shared hosting?
To understand what this is, you need a basic knowledge of what a host actually is. In reality when you have a site online, it is sitting on a computer otherwise known as a server somewhere. This computer holds the data for the website and delivers the content to those connecting to the site. A shared hosting plan means that you and other people with other sites are all using that same computer to store and host your websites. This means that they tend to be cheaper since more are using the same machine.
What is dedicated hosting?
Dedicated hosting on the other hand means that you are just using that one machine alone. Since you are not sharing the computer's resources, you can get much better performance just like having one program open on your machine at a time can get you better performance. Since you are essentially renting the entire machine alone, it is going to cost more.
Which one should you get?
If you are just starting your site, there is no need to get dedicated hosting. Shared hosting is much cheaper and provides everything you need.
As your site gets more visitors or as you start adding scripts to the site to perform certain function, you will start to have a need for a dedicated plan. Typically most hosting companies will inform you when you are starting to dominate the shared resources and ask you to move to a dedicated plan.
What is shared hosting?
To understand what this is, you need a basic knowledge of what a host actually is. In reality when you have a site online, it is sitting on a computer otherwise known as a server somewhere. This computer holds the data for the website and delivers the content to those connecting to the site. A shared hosting plan means that you and other people with other sites are all using that same computer to store and host your websites. This means that they tend to be cheaper since more are using the same machine.
What is dedicated hosting?
Dedicated hosting on the other hand means that you are just using that one machine alone. Since you are not sharing the computer's resources, you can get much better performance just like having one program open on your machine at a time can get you better performance. Since you are essentially renting the entire machine alone, it is going to cost more.
Which one should you get?
If you are just starting your site, there is no need to get dedicated hosting. Shared hosting is much cheaper and provides everything you need.
As your site gets more visitors or as you start adding scripts to the site to perform certain function, you will start to have a need for a dedicated plan. Typically most hosting companies will inform you when you are starting to dominate the shared resources and ask you to move to a dedicated plan.
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