Supply-chain integration reduces costs, accelerates sales
Updated: June 6, 2005
Most business leaders today talk about the global economy. The business leaders at ABB push the global envelope. The Switzerland-based provider of products and services for utilities has 120,000 employees serving customers in more than 100 countries around the world. Its factories work with thousands of suppliers worldwide, a supply-chain management challenge of the first order.
ABB recognized that to manage the complexity of its relationships with suppliers and stay competitive, it had to replace its paper-based processes. They tried a rudimentary Web-based solution, but it "lacked the level of collaboration between ABB buyers and suppliers that we needed," says Herbert Brecheis, Head of Supply Chain Management Information Systems at ABB. "It did not deliver the business-to-business connectivity that we required."
So ABB turned to Microsoft and Hewlett-Packard to create a new, integrated platform that enables its buyers and suppliers to engage in collaborative planning, electronic transactions, and online reporting. The result: reduced order processing costs and faster transaction times.
When processes strangle the business
With theirold order-management system, ABB’s factories could not communicate effectively with suppliers. Their manual procurement processes were time-consuming and subject to human error. Often, ABB had to place orders through faxes and e-mail messages, resulting in delays, misplaced orders, and lost productivity.
Because their automated systems were not standardized or integrated with suppliers, ABB could not establish efficient business-to-business relationships. For a single supplier to support two different ABB factories required that supplier to connect to two separate systems. With thousands of suppliers filling orders, the situation was unmanageable.
ABB determined that to survive and thrive, it needed to improve supply chain efficiency.
Selecting a total solution partner
In early 2003, ABB undertook a project to implement an advanced collaborative commerce network to integrate its factories and their suppliers. Recognizing the long-term significance of this effort, the company carefully evaluated the world leaders in technology. And they chose Microsoft and Hewlett-Packard to deliver the solution.
"We wanted a partner who would be involved in the full project lifecycle, including planning, implementation, and support," says Herbert Brecheis, "And we needed a partner who could deliver a low total cost of ownership covering initial development, operation costs, and ongoing integrations."
Technology that works
In 2004, the Microsoft/HP solution was rolled out to 45 factories and 750 suppliers.
The new solution, Advanced Supply Chain Collaboration (ASCC) version Four, is based on Microsoft BizTalk Server 2002, Microsoft SQL Server 2000, and the Microsoft .NET Framework.
ABB’s Brecheis says that ASCC delivers the functionality his company needs. "With ASCC version Four, we can automate our time-consuming manual order process. And with improved collaboration, we have a clear view of our business operations thanks to accelerated supplier forecast and performance processes."
The ASCC infrastructure consists of two parts. The first is a Web portal, where suppliers can log on and connect to a particular ABB factory. They can call up different reports relating to forecasts, deliveries, and even complaints, all online.
The second part is the integrated business-to-business interface. Selected suppliers can now interface their ERP systems to ABB’s commerce network to receive orders and process order confirmations, shipment advices, and invoices automatically. Thanks to BizTalk Server and the .NET Framework, ABB’s factories and suppliers can all connect with each other regardless of the ERP systems they use.
Results that save time and money
By automating its supply chain processes, ABB estimates that it has significantly reduced the cost of completing transactions with its suppliers.
In addition, because it has automated and integrated its manual operations, ABB has seen a significant reduction in the amount of time it takes for suppliers to respond. That means ABB can deliver to its customers faster, cheaper, and more reliably.
"Reducing costs was a key goal for the project and we’re very pleased to have cut our average process costs so dramatically" concludes Herbert Brecheis. "It’s a massive achievement and one that we plan to build on in the future."
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