“We’ve found that properly accounting for causal factors can dramati-
cally improve the accuracy of our planning and forecasting processes.”
—Eric Clark, Vice President of Business Systems and Technology, Jack of All Games
and even companies.
In some cases, companies create centralized databases as a
foundation for integrating all of their business processes as well.
When properly constructed, every business function—including
marketing, sales, manufacturing, customer service, accounting,
and human resources—can share the same storehouse of information and leverage a common data model.
Of course, consolidated information is most valuable when
all of the associated business applications are engineered
to work together. That’s why market-leading firms rely on
enterprise resource planning (ERP) software such as Oracle
E-Business Suite to collect, process, and share information
across multiple lines of business. An e-business architecture
automates business flows across many departments and provides a single source of accurate data about products, customers, partners, and employees.
For example, in the manufacturing industry, e-business
systems can instantly reveal how a supply chain is faring, how
quickly inventory is moving, and what orders are in the pipeline. Once all these pieces come together, managers can devise a
single source of truth from which to make business decisions.
Market leaders succeed by mobilizing their entire value chain
around consolidated information. Value is derived not just by
streamlining internal business processes but also by integrating
these processes with the systems used by trading partners, distributors, and suppliers.
“Information is a key part of what makes us successful,”
says Craig Kerney, enterprise business system supply chain and
manufacturing systems manager for the North American Rolled
Products Division at Alcoa.
Aluminum from Alcoa’s Rolled Products Division is used
to build airplanes, ships, trucks, and cars, as well as industrial
products—from washing machines and refrigerators to iPods.
As with many established companies, most of Alcoa’s legacy
systems were constructed to run within a single plant.
Kerney is part of a team of business-minded developers
who are in the process of integrating these legacy systems and
replacing them with more-modern, interconnected processes.
“In today’s global business environment, you’re not only managing inventory within a plant, you’re linking up warehouses and
providing access from customer sites,” he explains. “Your supply
chain extends beyond the four walls of any single plant or even
any one company.”
One of the Division’s goals is to model and automate material
flows and then construct a physical supply chain based on that
model to improve visibility up and down the line. “The number
of items, customers, and entities that we manage is very large,
so it is a very data-intensive process,” says Kerney. “It’s a huge
undertaking just to make our first transaction.”
If all goes well, the payback will come over time, as that first
transaction is followed by millions more. Kerney is optimistic
about their progress. “Once this system is fully deployed, we
will be able to see metal at different phases of the supply chain,
which will give us a better handle on managing inventory,” he
says. “One of our goals is to create partnerships with customers using vendor-managed inventory programs and warehouse
programs, while more effectively managing the resources within
our span of control.”
INVENTORY ON DEMAND
As the Rolled Products Division solidifies its data model and
migrates supply chain information into one consistent database, supply chain managers will be able to add more data
points. This will allow them to exchange specs on particular
aluminum alloys, physical dimensions, manufacturing tolerances, tempers, strength, corrosion resistance, and a host of
other factors. Exchanging this additional information will make
the entire process more systematic and less error prone. This is
the point at which clean, accurate data delivers a decisive edge.
This edge is particularly important in global industries due
to the diverse set of sourcing strategies these companies use.
Once associated primarily with low-cost manufacturing overseas, globalization now encompasses the outsourcing of many
types of back-office processes. “Offshoring is no longer driven
solely by cost but rather by a desire for market access to emerging economies, supported by more-nimble manufacturing and
logistics,” says Oracle’s Muzumdar. “Today’s CEOs are looking at
information-driven business networks not only to create a more
efficient workforce within the enterprise but also to seamlessly
connect global operations across the value network of suppliers,
business partners, and customers.”
In the future, better visibility into requirements will help
Alcoa optimize its assets and inventory. Further down the chain,
where internal manufacturers produce metal for customers, it
will help them to manage the order cycle. “Our new supply
chain will put us in complete control of the order-to-cash cycle,
from the time we take an order to the time we place the finished
product on the customer’s dock—along with all the associated
information before, during, and after the fact,” says Kerney.
Customers will appreciate the greater order-processing speed
and responsiveness, while Alcoa enjoys a shorter order-to-cash cycle, Kerney adds. “It comes down to having less people
involved, less material involved, and cycling through the order-to-cash cycle very quickly.”