Warehouse

Marketing’s Relationship with other Functions
Functions within an organization

The marketing function within any organization does not exist in isolation. Therefore it’s important to see how marketing connects with and permeates other functions within the organization…. marketing interacts with research and development, production/operations/logistics, human resources, IT and customer service.

Research and development

Research and development is the engine within an organization which generates new ideas, innovations and creative new products and services. For example cell phone/mobile phone manufacturers are in an industry that is ever changing and developing, and in order to survive manufacturers need to continually research and develop new software and hardware to compete in a very busy marketplace. Think about cell phones that were around three or four years ago which are now completely obsolete. The research and development process delivers new products and is continually innovating.

Innovative products and services usually result from a conscious and purposeful search for innovation opportunities which are found only within a few situations.

Peter Drucker (1999)

Research and development should be driven by the marketing concept. The needs of consumers or potential consumers should be central to any new research and development in order to deliver products that satisfy customer needs (or service of course). The practical research and development is undertaken in central research facilities belonging to companies, universities and sometimes to countries.

Marketers would liaise with researchers and engineers in order to make sure that customer needs are represented. Manufacturing processes themselves could also be researched and developed based upon some aspects of the marketing mix. For example logistics (place/distribution/channel) could be researched in order to deliver products more efficiently and effectively to customers.

Production/operations/logistics

As with research and development, the operations, production and logistics functions within business need to work in cooperation with the marketing department.

Operations include many other activities such as warehousing, packaging and distribution. To an extent, operations also includes production and manufacturing, as well as logistics. Production is where goods and services are generated and made. For example an aircraft is manufactured in a factory which is in effect how it is produced i.e. production. Logistics is concerned with getting the product from production or warehousing, to retail or the consumer in the most effective and efficient way. Today logistics would include warehousing, trains, planes and lorries as well as technology used for real-time tracking.

Obviously marketers need to sell products and services that are currently in stock or can be made within a reasonable time limit. An unworkable scenario for a business is where marketers are attempting to increase sales of a product whereby the product cannot be supplied. Perhaps there is a warehouse full of other products that our marketing campaign is ignoring.

Human resources

Human Resource Management (HRM) is the function within your organization which overlooks recruitment and selection, training, and the professional development of employees. Other related functional responsibilities include well-being, employee motivation, health and safety, performance management, and of course the function holds knowledge regarding the legal aspects of human resources.

So when you become a marketing manager you would use the HR department to help you recruit a marketing assistant for example. They would help you with scoping out the job, a person profile, a job description, and advertising the job. HR would help you to score and assess application forms, and will organise the interviews. They may offer to assist at interview and will support you as you make your job offer. You may also use HR to organise an induction for your new employee. Of course there is the other side of the coin, where HR sometimes has to get tough with underperforming employees. These are the operational roles of HR.

Your human resources Department also have a strategic role., human resources sees people as a valuable asset to the organization. they assist with a global approach to managing people and help to develop a workplace culture and environment which focuses on mission and values.

They also have an important communications role, and this is one aspect of their function which is most closely related to marketing. For example the HR department may run a staff development programme which needs a newsletter or a presence on your intranet. This is part of your internal marketing effort.

IT (websites, intranets and extranets)

As marketers we are concerned with how technology is used to treat information i.e. how we get information, how we process it, how we store the information, and then how we disseminate it again by voice, image or graphics. Obviously this is a huge field but for our part we need to recognise the importance of websites, intranets and extranets to the marketer.

A website is an electronic object which is placed onto the Internet. Often websites are used by businesses for a number of reasons such as to provide information to customers. So customers can interact with the product, customers can buy a product, more importantly customers begin to build a long-term relationship with the marketing company. Information Technology underpins and supports the basis of Customer Relationship Management (CRM),

An intranet is an internal website. An intranet is an IT supported process which supplies up-to-date information to employees of the business and other key stakeholders. For example European train operators use an intranet to give up-to-date information about trains to people on the ground supporting customers. An extranet is an internal website which is extended outside the organization, but it is not a public website. An extranet takes one stage further and provides information directly to customers/distributors/clients. Customers are able to check availability of stock and could check purchase prices for a particular product. For example a car supermarket could check availability of cars from a wholesaler.

Customer service provision

Customer service provision is very much integrated into marketing., customer service takes the needs of the customer as the central driver. customer service function revolves around a series of activities which are designed to facilitate the exchange process by making sure that customers are satisfied.

Today customer service provision can be located in a central office or actually in the field where the product is consumed. For example you may call a software manufacturer for some advice and assistance. You may have a billing enquiry. You might even wish to cancel a contract or make changes to it. The customer service provision might be automated, it could be done solely online, or you might speak to a real person especially if you have a complex or technical need.

Customer service is supported by IT to make the process of customer support more efficient and effective, and to capture and process data on particular activities. So the marketer needs to make sure that he or she is working with the customer service provision since it is a vital customer interface. The customer service provision may also provide speedy and timely information about new or developing customer needs. For example if you have a promotion which has just been launched you can use thebcustomer service functions to help you check for early signs of success.

Finance department

The marketing department will need to work closely with the finance department to ensure that: There is an adequate budget to meet the needs for research, promotion and distribution. The finance department has a whole organisation brief to ensure that all the business operates within its financial capabilities. They will want all departments to work within their allocated budgets.

Like all departments, marketing may wish to overspend if profitable marketing opportunities emerge over the year. The marketing department is likely to concentrate on sales volume and building market share, while the finance department may be more focused on cash flow, covering costs and paying back investment as quickly as possible. The Marketing-Finance approach has been helpful to understand better the impact of the crisis on firms and at the same time provide tools for firms to respond to the crisis so that firms can turn it (at macro level) into an opportunity for the firm to create value.

Inventory control systems maintain information about activities within firms that ensure the delivery of products to customers. The subsystems that perform these functions include sales, manufacturing, warehousing, ordering, and receiving. In different firms the activities associated with each of these areas may not be strictly contained within separate subsystems, but these functions must be performed in sequence in order to have a well-run inventory control system.In today’s business environment, even small and mid-sized businesses have come to rely on computerized inventory management systems. Certainly, there are plenty of small retail outlets, manufacturers, and other businesses that continue to rely on manual means of inventory tracking. Indeed, for some small businesses, like convenience stores, shoe stores, or nurseries, purchase of an electronic inventory tracking system might constitute a wasteful use of financial resources.

But for other firms operating in industries that feature high volume turnover of raw materials and/or finished products, computerized tracking systems have emerged as a key component of business strategies aimed at increasing productivity and maintaining competitiveness. Moreover, the recent development of powerful computer programs capable of addressing a wide variety of record keeping needs—including inventory management—in one integrated system have also contributed to the growing popularity of electronic inventory control options. Given such developments, it is little wonder that business experts commonly cite inventory management as a vital element that can spell the difference between success and failure in today’s keenly competitive business world. Writing in Production and Inventory Management Journal, Godwin Udo described telecommunications technology as a critical organizational asset that can help a company realize important competitive gains in the area of inventory management. He noted that companies that make good use of this technology are far better equipped to succeed than those who rely on outdated or unwieldy methods of inventory control.

1 Computers and Inventory

Automation can dramatically impact all phases of inventory management, including counting and monitoring of inventory items; recording and retrieval of item storage location; recording changes to inventory; and anticipating inventory needs, including inventory handling requirements. This is true even of stand-alone systems that are not integrated with other areas of the business, but many analysts indicate that productivity—and hence profitability—gains that are garnered through use of automated systems can be increased even more when a business integrates its inventory control systems with other systems such as accounting and sales to better control inventory levels.

As Dennis Eskow noted in PC Week, business executives are “increasingly integrating financial data, such as accounts receivable, with sales information that includes customer histories.The goal: to control inventory quarter to quarter, so it doesn’t come back to bite the bottom line. Key components of an integrated system … are general ledger, electronic data interchange, database connectivity, and connections to a range of vertical business applications. “

The Future Of Inventory Control Systems

In the latter part of the 1990s, many businesses invested heavily in integrated order and inventory systems designed to keep inventories at a minimum and replenish stock quickly.But business owners have a variety of system integration options from which to choose, based on their needs and financial liquidity. At the same time that these integrated systems have increased in popularity, business observers have suggested that “stand-alone” systems are falling into disfavor. A 1996 study by the International Mass Retail Association (IMRA), for example, concluded that stand alone Warehouse Management System (WMS) packages acquired to perform individual functions will soon become obsolete because they do not integrate well with other systems.

Another development of which small business vendors should be aware is a recent trend wherein powerful retailers ask their suppliers to implement vendor-managed inventory systems. These arrangements place the responsibility for inventory management squarely on the shoulders of the vendors. Under such an agreement, the vendors obtain warehouse or point of sale information from the retailer and use that information to make inventory restocking decisions.

2 Warehouse Layout And Operation

The move toward automation in inventory management naturally has moved into the warehouse as well. Citing various warehousing experts, Sarah Bergin contended inTransportation and Distributionmagazine that “the key to getting productivity gains from inventory management … is placing real-time intelligent information processing in the warehouse. This empowers employees to take actions that achieve immediate results. Real-time processing in the warehouse uses combinations of hardware including material handling and data collection technologies.

But according to these executives, the intelligent part of the system is sophisticated software which automates and controls all aspects of warehouse operations. ” Another important component of good inventory management is creation and maintenance of a sensible, effective warehousing design. A well-organized, user-friendly warehouse layout can be of enormous benefit to small business owners, especially if they are involved in processing large volumes of goods and materials. Conversely, an inefficient warehouse system can cost businesses dearly in terms of efficiency, customer service, and, ultimately, profitability.Transportation and Distributionmagazine cited several steps that businesses utilizing warehouse storage systems can take to help ensure that they get the most out of their facilities. It recommended that companies utilize the following tools: Stock locator database—”The stock locator database required for proactive decision making will be an adjunct of the inventory file in a state-of-the-art space management system. A running record will be maintained of the stock number, lot number, and number of pallet loads in each storage location.

Grid coordinates of the reserve area, including individual rack tier positions, must therefore be established, and the pallet load capacity of all storage locations must be incorporated into the database. ” Grid coordinate numbering system—Warehouse numbering system should be developed in conjunction with the storage layout, and should be user-friendly so that workers can quickly locate currently stocked items and open storage spaces alike. Communication systems—Again, this can be a valuable investment if the business’s warehouse requirements are significant.Such facilities often utilize fork lift machinery that can be used more effectively if their operators are not required to periodically return to a central assignment area. Current technology makes it possible for the warehouse computer system to interact with terminal displays or other communications devices on the fork lifts themselves. “Task assignment can then be made by visual display or printout, and task completion can be confirmed by scanning, keyboard entry, or voice recognition, ” observed. Transportation and Distribution. Maximization of storage capacity—Warehouses that adhere to rigid “storage by incoming lot size” storage arrangements do not always make the best use of their space.

Instead, businesses should settle on a strategy that eases traffic congestion and best eases problems associated with ongoing turnover in inventory. Some companies choose to outsource their warehouse functions. “This allows a company that isn’t as confident in running their own warehousing operations to concentrate on their core business and let the experts worry about keeping track of their inventory, ” wrote Bergin.Third-party inventory control operations can provides companies with an array of valuable information, including analysis of products and spare parts, evaluations of their time sensitivity, and information on vendors. Of course, businesses weighing whether to outsource such a key component of their operation need to consider the expense of such a course of action, as well as their feelings about relinquishing that level of control.

Read more:

1. Inventory Control Systems – cost, Computers and inventory, Warehouse layout and operationhttp://www. referenceforbusiness.com/small/Inc-Mail/Inventory-Control-Systems. html#ixzz19yNe0cgT

This acknowledgment transcends the reality of formality when I would like to express deep gratitude and respect to all those people behind the screen who guided, inspired and helped me for the completion of my project work. I consider myself lucky enough to get such a good project. This project would add as an asset o my academic profile. I express my sincere gratitude to our respectful for enabling me to make use of laboratory and library facilities liberally, that helped me a long way in carrying out my project work successfully.

I would like to express my thankfulness to my project guide, Mr.. Wallabies Albert for his constant to my parents who have encouraged me with their blessings to do this project successfully. Finally I would like to thank to all my friends, all the teaching and non- teaching staff members of the IT Department, for all the timely help, ideas and encouragement which helped throughout in the completion of project. Hotel management reservation systems have become a common trend in today’s business organizations. With the coming of the internet/intranet everything is Just a click away.

As the Hotel began its quest for the development of Hotel management reservation system that would be used to serve the whole of England, it becomes every web developers ‘and programmers responsibility to tackle the challenge and this challenge still goes on. As pioneers took on the task, it created a platform for others and it’s from those existing system that new development are based. The new Hotel management reservation system should be designed in a way that guarantees the security of the users’ data and it should be designed in the most user friendly way possible, putting in consideration all the accessibility requirements.

A hotel booking system has been developed with enhancements that cover some of the loopholes discovered in the existing hotel management reservation systems. The objective of this project is to create a hotel management reservation system where customers can request for services and accommodation on specified dates. They can et information regarding time, cost, room and other services offered all at the same time and place. The system displays all the available services, and room reservation.

This system would help the hotels to better serve its customers by catering to their needs. The system would use a Database to hold this information as well as the price of the rooms and availability information for the hotel. Hotel reservation system plays a great role and has a potential effect on day to day performance measures, this type of system have highly evolved from decades due to sigh demand for their use, effective and efficiency in any given institutions and Hotel industries.

Due to the rapid change of technology the use of such management system has become a necessity to any given high learning institution for better performance and is used with quite a large number of users at the same time but it can save time, resources and creates awareness of the evolving technology. Therefore a Hotel Management Reservation System will be developed to provide simple and fast online solution for Customers, Workers, Hotel administrators and Managers in managing orders and reservation made by customers.

It will allow interaction of hotel organizations and customers on single platform, allowing customer booking and validation with the simple system. The system will be developed to ease the manual process which involves a lot of paper work and it occupies a lot of space and it’s tiresome to employees. The researchers believe that the knowledge gained in the development of the system will be an effective tool in providing the needed IT skills of the students in the hotel industries. It will be beneficial to the Hotels since the use of the system as a working tool will improve the delivery of instruction and prove to be cost-efficient. 2 Background of the Study The project on “Hotel Management Reservation System” is one of the interactive This system can handle almost the entire task required in the Hotel Management being one of the key to raise the organization prestige and status as it saves processing time and help to provide better management system. Using this system one can make their managerial aspect of hotel strong and fast. Mainly the program is divided into three aspects, one for administration, staff and another for customer.

Hotel Management Reservation System is broadcasted throughout in the hotel local outwork during working hours so that all customers receding can know in detail about hotel and can reserve through the computer found in their rooms. This system facilitates the manager to keep details rate of any items and services and also edit them as per requirement. It also enables to calculate all the daily financial transaction which includes reservation and booking, billing, restaurant billing, and other accounting module. Using this system one can keep detail on check in and checkout time of every customer visiting the hotel.

This system also keeps record of joking the hotel services by the customer so that manager can easily handle such task in less time. Hotel Management Reservation System will be designed aiming to keep good interaction between manager and customers, through the graphical presentation so that both parties will be benefited. The system is developed for easy management of the following types of accommodation like Hotels, Guesthouses, Conference rooms, Villas, resorts and any other room booking which is to be managed on a day-to-day basis.

One of the most important skills of Hotel Management Reservation System researcher will have the knowledge of using an on- nine hotel reservation system. Hotel reservation system will be designed to simplify the task of on-line booking and to enable hotel to compete in today’s demanding and competitive market. The system will provide the customers and clients with a unique, innovative and easy to use interface that improves the way people use the system today. Online users will have to compare prices and facilities in the hotel.

Throughout this Project Proposal on Hotel Reservation Management System we will be describing about objectives of this project, functions of the program, flowchart, algorithm, budget and schedule for the project. . 2 Problem statement This system is intended to automate the activities of hotel including transactions and service delivery. Most hotels currently use manual and paper work systems to deliver services to their customers. This requires intending customer to physically appear at the Hotel reception desk avail the data required to prepare his or her accommodation in the hotel rooms.

Some of this services provided in hotel are absolutely tedious and indeed involve a lot of writing and recording. Consequently this leads to wastage of resources in terms of papers, ink and time. The paper work has been associated with a lot of errors, redundancy of data, and misapplication of rooms and lose of funds. Also the records are subjected to theft and catastrophes like fire, earthquakes and hence the need for a system to cater for all these problems. As well as hospitality services such as accommodation.

Bearing in mind that the most critical and necessary activity in any service delivering institution is quality of service in which is relative to the time spent in delivering it. Then the system will absolutely quicken and optimize these processes in hotels. Furthermore, from the management perspective, the managers will be in a position to control, monitor and manage the business in the shortest time possible, accurately and in efficient manner. Therefore, there is a need of an automated system which will enable them to administrate and monitor all the services in the hotel. . 4 Objectives The main objectives of the project will be concentrated towards the development of such project that will help in reduce the problems encountered with the customer’s record keeping method and reservation facilities for the costumers in hotel. This yester will be focused on both hotel staff and customer who can manages all hotel tasks in reliable way, saving the precious time. The objectives of this system can be divided into two categories, which are being explained as follow: I.

Specific Objectives 0 To develop a Hotel management and Reservation system 0 To provide interaction between both the both hotel staffs and customer. To keep the details record of hotel. 0 To keep the detail record of customers. 0 To provide easy way to view details rate of each room in the hotel’s and reservation for customer. To provide reliable and easy way of booking facilities to customer. TOT manage and edit the different rates of services. 0 To keep the proper accountancy record of the hotel. 0 To provide proper billing system for customer. To test and validate the system after it has been developed. TOT evaluate the system and highlight the benefits the system can provide to the hotels and its workers. 1. 3 Aim Considering today’s need in the field of Hotel Management System and other Reservation System, I as the student of DID have planned to developed a system named “Hotel Management and Reservation System” which will meet almost all the demands required in the field of hotel. This is the system which is mainly made to be in the management of a Hotel and Reservation of Hotel.

To achieve this goal of preparation of the system it is very necessary to choose appropriate programming language which meets the goal in given time and budget. Taking all this in mind I database of the system. Access is one of the most widely used programming languages used in creating database all time. As it provides low-level access to memory, it required minimal run-time support. Through the use of Microsoft access it’s going to divide whole complex program into a number of function which make ark simpler.

My system will provide lots of services to user like viewing info, editing info, reserving, accounting etc. All these things can be divided into sub-routine which has clearly defined purpose. Microsoft Access is also going to provide file handling system which will be main key to develop my system. My system is the comprehensive system which is going to be consisting of an integrated module for various aspects of Hotel Management and reservation System. As entire modules necessary to hotel are integrated tightly at no additional cost, it saves both time and money for the user.

Through this system, the Hotel administration can easily manage their loyalty programs in an effective way. The project Hotel management and Reservation will manage and maintain the records of customers, room in hotels, booking information and other financial transaction of hotel on a database which will be used to store information. The system will provide high security on the data stored on the data base will not be manipulated. The administrator will have the authority to make any change on the data base.

The fore strong password will be used to protect the data. Thebe. Et script language will be used in front-end while Access language will be used use in the back-end. In this system, the researcher is going to create a user friendly interface, so that normal persons can add, delete and edit the entries of customers and handle all the transaction easily. 1. 5 Scope of the project The main aim of the researcher coming up with this project is to create a database management system that will be more efficient and easy to use in the hotel.

The researcher will focus the study at “A-hero Beach Resort”, and other related different hotels located within Kampala and Entente town. The system will be implemented by use of different method of research such as questionnaires and survey in order to interact with workers and customers to get the required information about my area of study. The researcher wills also Interviews on workers and the customers to facilitate my research on this project. Also direct observation will be used in this case and also have an access to the store documents and records found in the hotels.

Five years ago, salespeople at Whirlpool said the company’s supply chain staff were “sales disablers” Now, Whirlpool excels at getting the right product to the right place at the right time-while keeping inventory low. What made the difference? by Reuben C Slone a Supply Chain Turnaround eading T hings would be very different today-for me, my colleagues, and my company – if the votes of Whirlpool’s North American leadership team had swung in a different direction on May 3,2001.

It was a move I hadn’t expected; Mike Todman, our executive vice president at the time, decided to go around the table and ask each member of his staff for a thumbs-up or thumbs-down on the investment that Paul Dittmann and I had just formally proposed. Did I look worried? I can’t imagine I didn’t, even though we’d spent hours in individual meetings with each of them, getting their ideas and buy-in. We thought we had everyone’s support. But the facts remained: Our proposal had a bigger price tag than any supply chain investment in the company’s history. We were asking for tens of millions during a period of general belt-tightening.

Some of it was slated for new hires, even as cutbacks were taking place elsewhere in the company. And Paul and I, the people doing the asking, were coming from the supply chain organization. Let me be clear: The supply chain organization was the part of the business that Whirlpool’s salespeople were in the habit of calling the “sales disablers” in 2000. We were perpetually behind the eight ball, tying up too much capital in finished goods inventory – yet failing to provide the product availability our customers needed. Our availability hovered around 87%. Our colleagues grimly joked that in surveys on the delivery performance f the four biggest appliance manufacturers in the U. S. , we came in fifth.

The 2Xst-Century Supply Chain. spotlight And here, with all the credibility that track record conferred on us, we were proposing an ambitious new suite of IT solutions – something, too, for which the company had little appetite. It had been just 20 months since Whirlpool North America had flipped the switch on a massive new ERP system, with less than desired effect. Normally, Whirlpool ships close to 70,000 appliances a day to North American customers.

The day after we went live with SAP, we were able to ship about 2,000. A barrage of bad press followed. Even though the situation was soon righted (SAP remains a valued partner), the experience of being treated as a sort of poster child for ERP folly had left scars. So imagine our relief when we heard the first voice say “yes. ” It was the executive who headed up sales to Sears. Paul and I looked anxiously to the next face, and the next. The heads of our KitchenAid, Whirlpool, and value brands followed suit-a watershed, given that the funding would have to come from their budgets.

I could see that J. C. Anderson, my boss and senior vice president of operations, was happy, too. He had tried to voice his support at the beginning of the meeting, but Mike Todman had asked him to wait. Now that it was his turn to vote, he did it with a fiourish:”I am fully committed,”he said,”to moving our supply chain from a liability to a recognized competitive advantage. ” Only after Todman had heard from everyone in the room – brands, sales, finance, human resources, and operations-did he cast his vote. costs. Sales had risen to record levels in 2000 as our launch of some nnovative products coincided with an uptick in housing starts. With the rest of the company chugging on all cylinders, there was only one thing holding us back: our supply chain. Jeff called me into his office and gave me a two-word order: “Fix it. ” If that constitutes a mandate, we had one. But it was up to us to figure out what fixing the supply chain would entail. At the top level, of course, it’s a simple formulation: getting the right product to the right place at the right time – all the time. That gets complicated very quickly, however, when you consider the scale of the challenge.

Whirlpool makes a diverse line of washers, dryers, refrigerators, dishwashers, and ovens, with manufacturing facilities in 13 countries. We sell those appliances in lOO countries, through retailers big and small and to the construction companies and developers that build new homes. In the United States alone, our logistics network consists of eight factory distribution centers, ten regional distribution centers, 60 local distribution centers, and nearly 20,000 retail and contract customers. M We needed to formulate a battle plan that would include new information technology, processes, roles, and talents.

But before we could begin to imagine those, we needed to define our strategy. Looking to the future, what would it mean to be world-class in supply chain performance? The decision we made at this very early point in the process was, 1 think, a pivotal one. We decided that we could answer that question only by focusing on customer With that last yes, the tension broke, and everyone was requirements first. Our approach to developing our supsmiling and nodding. Paul and I had a sense of triumphply chain strategy would be to start with the last link-the but also trepidation.

Because now, we knew, there could consumer-and proceed backward. be no excuses. We were on the hook to deliver some serious value. It’s an obvious thought, isn’t it? Fxcept that it wasn’t. The overwhelming tendency in a manufacturing organization is to think about the supply chain as something Devising the Strategy that originates with the supply base and moves forward. It’s understandable; This is the part of the chain over y responsibility at Whirlpool today is for the which the company has control. But the unfortunate performance of the global supply chain.

But effect is that supply chain initiatives typically run out of in 2001,1 was focused only on North America, steam before they get to their end point-and real point. and I was utterly new to the supply chain organization. Whether or not they make customers’ lives easier be(I had come into the company a few years earlier to lead comes an afterthought. its e-business efforts. ) By contrast, Paul Dittmann, the vice president of supply chain strategy, was a Whirlpool vetUnderstanding Customers’ Needs. If you start with the eran with a tenure pning a quarter century. ustomer, the customer can’t be an afterthought. The way I expressed this to my colleagues was to say,”Strategic relOur lots were cast together in October 2000 by Jeff Fetevance is all from the consumer back. ” And conveniently, tig. Jeff is now Whirlpool’s chairman and CEO, but at the we had new research to consult on the subject of contime he was president and COO – and he was good and sumer needs. Whirlpool and Sears had recently engaged tired of hearing about spotty service and high logistics Boston Consulting Group to study consumers’ desires Reuben E.

Slone iReuben_E_Sone@Wbirlpool. com) is the with regard to appliance delivery. The top-line finding vice president of Global Supply Chain at Whirlpool Corpo- was that people value what I call “delivery with integrity. ” That is, your ability to get it there fast is important, but ration in Benton Harbor, Michigan.

Leading a Supply Chain Tux*naround not as important as your ability to get it there when you said you would. “Give a date, hit a date” is what they’re asking for. This sounded familiar to me, coming from the automotive industry. In my previous position at General Motors, I’d been involved in several studies that emphasized the psychology of delivery date commitments. Identifying Trade Partners’ Priorities. Moving upstream, we needed to understand the desires of our direct customers better. We conducted our own interviews to define requirements by segment. As well as looking at smaller retailers versus larger ones, we focused individually on Sears, Lowes, and Best Buy, our three biggest customers. And within the contract-builder market, we studied many subdivisions, from contract distributors and apartment developers to ingle-family-home builders. We asked about their overall availability requirements, their preferences in communicating with us, and what they would like to see along the lines of e-business. We asked about inventory management and how they might want Whirlpool to assist in it. In all, we discovered 27 different dimensions along which our performance was being judged, each varying in importance according to the customer. Benchmarking the Competition. Naturally, our customers’ expectations and perceptions were shaped in large part by what others in our industry were doing.

So we benchmarked our competitors-primarily GE, which was our biggest rival. We obtained cross-industry information and competitive intelligence from AMR, Gartner, and Forrester Research to make sure we had a broad and objective assessment of supply chain capabilities. Then we mapped out what would be considered world-class (versus sufficient or transitional) performance for each of the 27 capabilities and how much it would cost us to reach that top level. It turned out that to prevail on every front would require a total investment of more than $85 million, which we knew wasn’t feasible.

It was time to get serious about priorities. Now that we had established the cost of world-beating performance, we asked ourselves: For each capability, what improvement could we accomplish at a low level, and at a medium level? We quickly staked out the areas where a relatively small investment would yield supremacy, usually due to an existing strength. A few areas we simply decided to cede. Our plan was to meet or beat the competition in most areas, at minimum cost. Building for the Future. Strategy, of course, does not simply address the needs of the moment.

It anticipates the challenges of the future. A final component of our supply chain strategy was identifying the probable range of future operating scenarios based on industry, economic, and technological trends. The point was to assure ourselves that our proposal was robust enough to withstand these various scenarios. To date, the planning has worked. Having set a course, we’ve been able to deal with situations we hadn’t conceived of and to continue evolving in the same basic direction. Selling the Revolution I t’s always a difficult decision-when to involve your internal customers in the planning of a major capital investment.

Their time is scarce, and they typically 117 HBR T h e Spotlight Chain. don’t want to be embroiled in the details of what you, after all, are getting paid to do. You must have your act together and have a solid plan to which they can respond. On the other hand, you can’t be so far along in the process that you’ve become inflexible. You need to maintain a careful balance between seeking their guidance and selling your vision. Paul and 1 liked to think we had that mandate from Jeff Fettig to get the supply chain fixed. But it wasn’t the kind of mandate that comes with a blank check.

Like most well-managed companies, Whirlpool will not undertake a capital investment without a compelling business case. As a cost center in the company, we had to justify our project wholly on expense reductions and working capital improvements. Even if we believed that better product availability would boost sales, we couldn’t count those chickens in the business case. We spent an enormous amount of time talking with the brand general managers and others who would be needed. They said they had nothing more to add. But we persisted. I remember telling Paul, “If they won’t let us in the door, we’ll go through the window.

And if they lock the window, there’s always the air vent ” Along the way, we’d been particularly concerned about cherry-picking. We knew that, in a company of smart businesspeople, the first reaction to a multimillion-dollar price tag would be, “OK, what can I get for 80% of that total? ” And indeed, from a project management standpoint, we knew it was important to break out each component of the plan into a stand-alone initiative, justified by its own business case. Yet we knew the whole thing came together as a sort of basket weave, with each part supporting and relying on multiple other parts.

What helped here was our competitive analysis, in which we had plotted our capability levels against others’. We charted our current position against our number one competitor on each dimension valued by customers, then extrapolated to show how, depending on the level We staked out the areas where a relatively small investment would yield supremacy, usually due to an existing strength. affected by the changes we were proposing. The Japanese call this kind of consensus-building nemawashi (literally, it means “root binding”), and it is impossible to overstate its importance.

Yet it is often neglected in the midst of a complex project. Note that, at the same time we needed to be meeting with key decision makers, we were also in the thick of the analysis and design of the solution. In those early months, the project needed leadership in two directions – the kind of work people typically refer to as needing a “Mr. Inside” and “Mr. Outside. ” I made sure we had sufficient consulting resources for the inside work while Paul and I devoted 50% of our time to the outside work – interfacing with the trade, outside experts, and internal stakeholders.

In our initial meetings with these key people, we’d essentially say, “Here’s what we’re doing. What do you think? “Typically,the executive would half pay attention, half blow us off. But we’d get some input. In a second meeting, we’d show how our work had evolved to incorporate their ideas and others’. Usually, we’d see more engagement at this point. By the time we were asking for a third meeting, reactions were mixed. People were more or less on board, but some felt another meeting wasn’t 118 of investment, we could overtake that company or allow the gap to widen.

Sure enough, the competitive instincts of our colleagues kicked in. No one wanted to fall behind. Getting Focused O ne of the earliest successes in the turnaround of Whirlpool’s supply chain was the rollout of a new sales and operations planning (S&OP) process. Our previous planning environment had been inadequate. What passed for planning tools didn’t go far beyond Excel spreadsheets. Now, we had the ability to pull together the long-term and short-term perspectives of marketing, sales, finance, and manufacturing and produce forecasts that all the participants could base their game plans on.

We soon pushed our forecasting capability further by launching a CPFR pilot. The acronym stands for collaborative planning, forecasting, and replenishment, with the collaboration happening across different companies within a supply chain. The idea is straightforward. Traditionally, we forecast how many appliances we will sell through a trade partner (Sears, for example) to a given HARVARD BUSINESS REVIEW Leading a Supply Chain TumarouiuL market And at the same time, that trade partner develops its own forecast.

Each of us has some information that the other lacks. With CPFR, we use a Web-based tool to share our forecasts (without sharing the sensitive data behind them), and we collaborate on the exceptions. As simple as it sounds, it isn’t easy to pull off. But we have, and it’s been a real home run. Within 30 days of launch, our forecast accuracy error was cut in half. Where we had close to 100% error (which isn’t hard, given the small quantities involved in forecasting individual SKUs for specific warehouse locations), today we’re at about 44% or 45%.

To put this in perspective, a one-point improvement in forecast accuracy across the board reduces our total finished goods position by several million dollars. These were just two of many initiatives we launched in rapid succession after May 2001. A couple things were absolutely critical to keeping them all on track: a highly disciplined project management office and stringent performance metrics. The key was to think big but focus relentlessly on near-term deadlines. We organized the change effort into 30-day chunks, with three new capabilities, or business releases, rolling out monthly-some on the supply side, some on the demand side.

The job of the project management office was to ensure the completion of projects on time, on budget, and on benefit. Paul oversaw this for me. Also keeping us honest were new metrics – and the man 1 brought in to enforce them. My colleague John Kerr, now general manager of quality for the North America division, was then in charge of Whirlpool’s Six Sigma program. He’s a real black belt when it comes to performance management. It took some persuading, aimed at both John and the North American leadership team, before he was freed up and allowed to dedicate himself to the supply chain turnaround.

But we absolutely needed his data-driven perspective. When one of my team would say, “We need to take this action tofixthis issue,” John would always counter with,”Please show me the data that allowed you to draw that conclusion. ” Were these demands sometimes a source of irritation? I’d be lying if 1 said they weren’t. But they forced all of us to rebuild the metric “fact base” and hone our problem-solving skills. By the third quarter of 2001, we had already done a lot to stabilize product availability and reduce overall supply chain costs.

And, after a challenging fourth quarter, we took a huge step forward by implementing a suite of software products from i2, which specializes in supply chain integration tools. That was in January 2002. Six months later. Whirlpool had historic low inventories and a sustained high service level. Before the year was out, we were delivering very near our target of 93% availability across ail brands and products. (Momentum has since carried us OCTOBER 2004 well into the mid-nineties. ) We delivered slightly more than promised by reducing finished goods working capital by 10% and improving total cost productivity by 5. 1%.

Our customers were voicing their approval. By May 2002, a blind Internet survey given to our trade partners showed us to be “most improved,””easiest to do business with,” and “most progressive. ” I remember that after these results came out, our VP of sales said, “You’re good nowbut more important, you’re consistently good. ” It was a turning point in the trade’s perception of Whirlpool. Engaging Talent I ‘ve touched on the state-of-the-art technologies we’ve employed in our turnaround-the Web-based collaboration tools, the planning software, i2’s rocket-science optimization-but let me correct any impression that this is a tory about technology. More than anything. Whirlpool’s supply chain turnaround is a talent renaissance. It’s sometimes hard for us to remember how demoralized this 3,000-person organization had become. In 2000, many people in supply chain roles had been with the company for years and had watched in frustration as competitors outspent and outperformed us. Part of the problem was the massive effort required by the ERP implementation. As an early adopter of enterprise systems in our industry (SAP and other vendors got their start with process-manufacturing concerns like industrial chemicals).

Whirlpool had bitten off a lot. With limited attention and resources to spare, it put other projects on hold. We took our eye off the ball in supply chain innovation and fell behind. As a newcomer, I tried to inject some fresh energy into the organization and give people a reason to be confident Paul Dittmann told me this project gave him a “second career wind. ” He’s a brilliant guy, with a PhD in operations research and industrial engineering, and suddenly, he had the opportunity to innovate in ways he had only dreamed of in his first 20 years at the company.

Other people benefited from changes to how we develop, assess, and reward talent. With help from Michigan State University and the American Production and Inventory Control Society (APICS), we developed a supply chain “competency model. ” This is essentially an outline of the skills required in a top-tier organization, the roles in which they should reside, and how they need to be developed over time. And we created a new banding system, which expanded the compensation levels in the organization. Now people can be rewarded for increasing their expertise even if they are not being promoted into supervisory roles. 19 The 21st-century Supply Chain^ We also put a heavy emphasis on developing people’s project management skills. Here, we relied on a model developed by the Project Management Institute (PMI), a sort of standard for assessing and enhancing an organization’s project management capabilities. I wanted as many supply chain professionals as possible to become PMI-certified, and not just because of the glut of projects we were facing at the moment. My view is that project management’s disciplined planning and execution is just as vital to ongoing operations management.

After all, the only real difference between running an operation and running a project is the due date of the deliverable. Over time, my operating staff stopped dismissing project management as a lot of “overhead” from a former management consultant and car guy. Now they’re the ones insisting on things like project charters and weekly project reviews. Meanwhile, we hired at least 13 new people on the business side and at least as many more on the information systems side, and I made sure that every one of them was top-notch.

To fill out our project management ranks, we recruited young people from companies with strong supply chains and from premier operations-oriented MBA programs like Michigan State and the University of Tennessee. Perhaps we were lucky that our talent drive coincided with a downturn in the consulting industry. On the other hand, it might have been the excitement of a turnaround situation that drew the best and brightest to Whirlpool. Finally, I wasn’t so arrogant as to believe that my senior team and 1 didn’t need development ourselves. We assembled a supply chain advisory board and chartered its members to keep challenging us.

The group includes academics Don Bowersox of Michigan State and Tom Mentzer of the University of Tennessee, and practitioners Ralph Drayer (the Procter & Gamble executive who pioneered Efficient Consumer Response) and Larry Sur (who mastered transportation and warehouse management in a long career at Schneider National and GENCO). Get a group like this together, and you can count on creative sparks flying. These experts keep us on our toes in a way no consulting firm could. Sustaining Momentum refrigerators, washing machines, and other products that appeal to a broad range of consumers.

They are the equivalent of a supermarket’s milk and eggs; running out of them has a disproportionately negative impact on customers’ perceptions. We’re now formulating a supply chain strategy that allows us to identify these SKUs across all of our trade partners in all of our channels and to ensure that the replenishment system for our regional warehouses keeps them in stock. That constitutes the “plan to sell” part of the program. At the same time, for our smallest-volume SKUs, we are taking out all the inventory and operating on a pure pull basis, with a new, more flexible build-toorder process. The inventory avings on the small-volume SKUs helps offset the costs of stocking up on the highvolume SKUs. We’re also working on the capability to set service levels by SKU. That is, instead of having one availability target for all our products, we are recognizing that some products are of greater strategic importance than others. Some of them, for instance, are more profitable. Some hold a unique place in our brand strategy. Again, it’s easy to grasp the value of being able to vary service levels accordingly. But in a sprawling business like ours, shipping thousands of different SKUs daily, it’s a very difficult thing to accomplish.

We continue to develop new Web-based tools. Recently, we’ve been focused on system-to-system transactions, in which our system talks directly to a customer’s system for purposes of transmitting orders, exchanging sales data, and even submitting and paying invoices. We’ve rolled out this capability with a number of trade partners over the past i8 months. At the same time, we keep enhancing our Partner Store, which allows customers to check availability and place orders via the Internet. The site allows them to find near equivalents of models, for those times when a SKU is out of stock or retired. They can even find deals on obsolete inventory.

By the time this article appears in print, we’ll also have implemented event-management technology, which will allow us to be more on top of the movement of goods through the supply chain. An event manager provides an alert whenever an action in the process has taken place-for example, when a washer is loaded into a container in Schomdorf, when that container full of washers is loaded onto a ship in Rotterdam, when the ship departs, when the ship arrives, when the container is unloaded from the ship in Norfolk, when the container leaves the port via truck, and, finally, when the washer is unloaded at the Findlay, Ohio, warehouse.

The result is that people’s attention is directed to what needs to be done. We’ll also be further along in our application of HARVARD BUSINESS REVIEW T 120 hree years into the project now, we continue to assign ourselves and deliver three new capabilities per month. This doesn’t get simpler over time, either. As I write this, for example, we’re focused on something we call “Plan to Sell/Build to Order. ” Here, the notion is that certain high-volume SKUs should never be out of stock. These are the heart-ofthe-line dishwashers. .l^ading a Supply Chain Turnaround ean techniques (usually associated with manufacturing operations) to our total supply chain. This involves using pull concepts and kanbanlike triggers to speed up processes, reduce inventory, and enhance customer service. On the Hoz4zon W hirlpool has much to show for its supply chain efforts. By the end of 2003, our product availability had reached over 93%, up from 88. 3% in 2001. (Today it’s more than 95%. ) That allowed us to attain an order fill rate for key trade partners of over 96%. The number of days’ worth of finished goods we were holding in inventory had dropped from 32. 8 to just 26.

We drove freight and warehousing total cost productivity from 4% to 7. 2%. From 2002 to 2003, we lowered working capital by almost $100 million and supply chain costs by almost $20 million. Does all this add up to value in excess of the expense our leadership team approved? Absolutely. In fact, total payback on that original investment occurred within the first two years. Still, our work is far from finished. In October 2001, just months after we kicked off our turnaround, we were fortunate in that the new executive vice president brought in to run Whirlpool’s North America region had deep supply chain knowledge.

Dave Swift, who came to us from Kodak, believes strongly in the strategic importance of the supply chain both for building brands and for creating sustainable competitive advantage. Immediately after joining us, he elevated our sales and operations planning process by personally chairing monthly executive S&OP meetings. These meetings have become the model for the company and the basis for much of our just-started global supply chain efforts. In the future, we’ll face greater demands for end-toend accountability. We’re already responsible for the resale of any returns. Soon we’ll be accountable for the disassembly of products in Europe.

It’s only a matter of time before similar laws are enacted in the United States. And we’ll be taking an even closer look at the design of the products themselves. If we can redesign a productOCTOBER 2004 make it in a smaller plant, make it with smaller parts, ship it in smaller pieces – we can dramatically affect supply chain economics. It’s great to improve forecasts, optimize transportation, and speed up our processes with existing SKUs. But what if we could push the end stages of production closer to the consumer and get higher leverage from those SKUs? That’s the kind of thing that can change the rules of the game.

It’s a wonderful thing about our business: We have fierce competition all over the world, and on top of that we have very smart trade partners who deal with numerous other suppliers. We may be a white goods, big box supplier, but because our customers also buy electronics and apparel and so on, we’re constantly being challenged by the benchmarks of other, more nimble industries. Technologies continue to evolve, channel power continues to shift, and the bar is constantly being raised.