Where's The Payoff?Where's The Payoff?

"Without the software, we wouldn't have been able to pull that off so quickly," says Rob McClellan, director of global supply-chain management and eServices for TaylorMade, a subsidiary of Adidas-Salomon AG. The company readjusted its production plans using tools such as i2's Supply Chain Management suite, which includes capabilities for master and inventory planning, and then automatically kicked that information out to suppliers to get things on track again.

The company expects to get additional value out of its system when it implements i2's Demand Chain Management suite this quarter. It will integrate the software with i2's Supply Chain Management suite to provide an end-to-end view of its operations. When it launches a Web site for retailers to book orders later this quarter, the company will "be able to make a commitment--a promise--on the availability of a product ordered," McClellan says. "Rather than saying, 'It looks like we'll have it to you in two weeks,' we can say, 'it will be ready on the 12th, and we'll ship it on the 17th.'"

Supply-chain projects aren't cheap. Large U.S. companies spend an average of $6.8 million per project, according to Forrester.

But the benefits are compelling. So far, Knowles Electronics has spent $8 million to $10 million on its supply-chain implementation, which includes software, hardware, and consulting. The price is worth it, says Randy Kjell, Knowles' senior director of information systems. "We're in position to start moving our supply-chain visibility beyond Knowles" to suppliers, he says. Before 2001, the company had no uniform supply-chain system and handled many orders by sending faxes or E-mails to its sourcing partners in China and its manufacturing centers in Malaysia.

"Everything was a guess, and there were a lot of arbitrary dates set," Kjell says. "If the customer needed something ASAP, the rep would tell the customer he'd call back. Then the rep would make a series of phone calls to find out when the product could be available."

After reviewing vendors, Knowles went with Oracle's E-Business Suite. Knowles put together a team of about 15 employees and 10 to 15 Oracle consultants who created a global design and ran a series of pilots. In June 2001, Knowles turned the switch on a live implementation that included financials, order management, and inventory systems at a London distribution center.

Now Knowles can instantly tell where an order is and check on inventory. The company's internal supply chain is so automated that it could quickly pick up and move production from one part of the world to another.

The software has helped Knowles maintain high levels of customer service, Kjell says. That's because customers can find out exactly when a product will be ready--vital information because many of them have reduced inventory levels to just a few weeks. "If we don't get product to them, we shut down their production lines," Kjell says.

Despite the hard-knocks economy, Fleming, Knowles, On Semiconductor, and TaylorMade continue to increase investments in supply-chain software. For a few years now, Fleming has been deploying Manugistics Group Inc.'s supply-chain and transportation management software and JDA Software Group Inc.'s E3 forecasting-procurement tools to increase visibility of the goods that move into its 24 distribution centers.

Now it's upgrading the Manugistics software, which will simplify communication between the two vendors' software packages to more tightly link processes in the transportation and procurement departments. Fleming just wrapped up installation of Manugistics transpor-tation-routing software to manage deliveries of goods to more than 20,000 customers. Up next: ongoing rollout of EXE Technologies Inc. warehouse-management software to all of Fleming's distribution centers and enhanced visibility into its supply chain so customers can check the status of their orders.

A tough economy won't deter Fleming. If anything, it's only spurring the company on. Says Ventling, "With our successful experience thus far, there's no reason to think that we won't realize greater benefits almost immediately."