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Halliburton Energy Services last month jumped into the second phase of its five-year strategy to optimize manufacturing, sourcing, and logistics. In phase one, which began in 2002, Halliburton Co.'s energy-equipment-maker division installed software from i2 Technologies Inc. to optimize capacity and utilization rates at manufacturing facilities. The move slashed delivery lead times of custom equipment to oil well sites, in some cases by 40% to 50%, says Brady Murphy, VP of supply-chain and management systems for Halliburton Energy Services.

IBM's supply-chain-services consulting group is guiding the deployment of Halliburton's sourcing and logistics strategy, as it did the first phase of the project. "IBM helped us design it, and we expect the approach to save us between $125 million and $150 million in 2005," Murphy says of the most-recent effort. Though no software vendor has been named for this part of the project, IBM has recommended technologies and process changes to help Halliburton gain efficiencies.

Forrester Research puts the market for supply-chain consulting services in North America at $5 billion by 2008, up from $1.3 billion last year. And as businesses reengineer supply networks, process- and change-management consulting will account for 55% of these consulting fees.

Supply-chain-services vendors must focus on helping companies review best practices and urge them to appoint executive leadership who can implement supply-chain processes across the organization, Forrester analyst Navi Radjou says. "Lowering costs doesn't mean a company has efficient business methods in place."

Philips Consumer Electronics North America, a Royal Philips Electronics division, has become more efficient since it began working with IBM's supply-chain consulting group in June 2002, says Danny Garst, VP of logistics and supply chain. IBM helped Philips look at processes from end to end, making sure to revise those related to both inbound and outbound shipments when analyzing best locations for distribution centers.

Planning revealed that Philips needed to relocate its El Paso, Texas, distribution center to Dallas to position 80% of its Texas customers within two-day delivery cycles. "Internal and external service levels are trending up, increasing between 10% and 15%," Garst says. "We've met our cost goals for both distribution and transportation." Philips also has reduced penalties from retailers for failing to meet delivery commitments by 75%.

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