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Manufacturing makes most of knowledge sharing

This article appears in the issue February 2002 (100 Companies) [Volume 11, Issue 2]

By Kim Ann Zimmermann

Keeping orders flowing is key to the success of any manufacturing company. Through the use of knowledge management systems software, manufacturers are able to share information internally as well as with their customers and suppliers. In some cases, retailers and distributors can log onto an Internet-based knowledge database to find out about the status of orders. And manufacturers can keep track of the deals and discounts that are negotiated with distributors and retailers. Those deals often involve tens of thousands of dollars or more and can be costly to manufacturers if the paperwork is not handled properly.

"As we grew and expanded our relationships, we had more and more information that we needed to capture," says Rita Shaw, senior sales systems analyst for Potlatch. Potlatch is a forest products company with timberlands in Arkansas, Idaho and Minnesota. The company's products include lumber and panels, bleached pulp, paperboard, consumer tissue and printing papers.

The division that handles consumer products—including bathroom tissue, napkins and facial tissue—needed a way to streamline the flow of information. "The division is dealing with promotional expenses, billbacks and invoice allowances," Shaw explains. Potlatch turned to a KM system from I-many (imany.com) to help deal with all that data.

Jim Montrie, I-many's VP of sales, says the Internet has helped manufacturers gain efficiencies in marketing and distribution. "In manufacturing, the second largest expense is marketing, behind cost of goods. Manufacturers continue to look for ways to gain a better understanding of the relationship between themselves and customers," he says. "When manufacturers develop specific marketing, promotion and advertising programs with a retailer or distributor, they need to find effective ways to manage that relationship. They need to have some simple and effective controls as they look to expand that relationship."

Shaw notes that many wholesale grocery distributors and retailers are hiring outside auditing firms to be sure that the agreements they have made with manufacturers are being reflected in the invoices.

"Having access to the most up-to-date knowledge benefits everyone,” Shaw says. “There may be a circumstance where we took the appropriate discounts off of an invoice, but not knowing that the discounts had already been applied, the people in the accounting office took the discount again when they processed the payment. Or perhaps the invoice was sent out and there was a miscommunication about the deal that was arranged and the appropriate discounts weren't applied. This system gives us quick and easy access to the actual document outlining the deal and we can resolve problems much more quickly and efficiently."

Shaw continues, "This problem of managing the details of individual deals had been bugging us for a while. Then we were faced with a companywide staff reduction. We needed to find a way to continue to handle these deals without impacting customer service. We were able to reduce our accounts receivable staff from two to one person," "Forecasting is also an important part of what we're doing with the system now and in the future," he adds. "We're capturing sales by customer and new product. We're also using it to track whether it is promoted or not. We're still pulling information into the system."

JostensLike Potlatch, Jostens is using knowledge management to improve customer service. The company markets and manufactures items such as graduation caps and gowns, school rings and high school yearbooks.

"Within a 10- to 12-week period, we process hundreds of thousands of orders," says Steve Wood, VP of service operations for Jostens. The company implemented software from Captiva in August 2000.

Company officials estimate that they save $350,000 per year in time and expense with the new order processing system. Scanned order forms only need to be checked when they are put through the system for recognition, eliminating the need to manually key in data from order forms.

"It has really helped us reduce costs and become more flexible in the marketplace," Wood says. For the future, Jostens also wants to use the system to help manage workflow.

"As with a lot of service organizations, we get lots and lots of e-mails,” Wood explains. “One element we are looking to implement is a true workflow."

Tellabs

Tellabs (tellabs.com), which designs, builds and services optical networking, broadband access and voice equipment, is using a KM system to manage the installation of a new enterprise resource planning (ERP) system. The 26-year-old company standardized on SAP SAP in its plants throughout the world, including Finland, Ireland, Denmark, Texas, New York and Illinois, and they hired a consultant, et alia, to help with the project.

Kathy Murino, manager of information systems for Tellabs, led a team that was responsible for all logistics modules including warehouse management, materials management and production planning. During the installation, a problem developed with material that was “stuck” in the quality inspection consignment area of Tellabs’ SAP system, which the team didn’t know how to remove.

According to Murino, “We needed to move material out of the system during data conversion before we impacted our go-live date for the project, but it was lodged in an interim storage location in warehouse management, and the system would not let us back it out."

By that time, et alia's team members had moved onto other projects. However, Tellabs used et alia’s new Remote Online Consulting Service (ROCS), a Web-based consulting request and resolution system designed for SAP customers. The interactive system allows users to submit complex schematics and screen shots to a Web site to be analyzed in real time by et alia’s team of consultants. Inquiries are routed to the appropriate SAP expert or a consultant specifically requested by the user.

"We sent an urgent request through the system on the Web, along with all the relevant information on what was happening, including screen shots and specific material numbers," Murino says. "[The SAP consultant] replied within the hour with the process that we needed to use to back the transaction out, detailing the issues. He gave us exact step-by-step directions on how to resolve the problem. Then we were able to proceed with the cutover. It saved us from running over the project deadline--and potentially the project budget."

Kim Ann Zimmermann is a free-lance writer, 732-636-3612, e-mail kimzim2764@yahoo.com


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