The Construction Company is a $5 billion firm that builds everything from apartments and sports arenas to high-rise office complexes and shopping malls. It is a reasonably profitable construction company that depends on subcon- tractors for completion of any project it undertakes. Relationships with these suppliers vary but are often contentious as the margins on each project are very small and profit depends on watching every dollar of expenditure.
The Chief Technology Officer decided an opportunity existed to enhance this firm’s capabilities if it could develop an improved working relationship with some of its key suppliers. He determined a PDL could be the vehicle for attaining that purpose. Working with Computer Sciences Corporation (CSC) as the facilitator of the PDL, he began by organizing the preliminary session and inviting members of his staff, operating personnel, purchasing representatives, and information technology associates to join the activity.
During the first session, a flow chart of several typical construction projects were considered and a decision made to use a high-rise (15-story or more) building as the center of focus. A process map depicting the current conditions was then developed and used to consider where the processing could be improved. As the critical path to completing such a building was discussed, it became apparent that one of the most important partners was the firm selected to install the elevators. Following another lengthy discussion of what constituted a viable PDL partner, an elevator company was selected as the potential partner for the PDL.
The group proceeded to contact the elevator company and determined there was interest to participate, but only if the construction company would listen to recommendations and there was something of value in the effort for the elevator company. The CTO agreed to both stipulations and an agenda and letter of invitation was prepared for the PDL. Contained within that letter were the scope and expected deliverables of the 2-day session and a specific list of potential benefits for both parties. A time and place were selected for the PDL and each attendee was asked to come prepared to answer a few questions about the relationship and what each firm wanted to accom- plish to help get the interaction started. Both firms agreed to come prepared with their latest version of a flow chart depicting the construction of a high- rise building. With agreement from both firms and a list of the possible improvements, a go-forward decision was made.
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At the two-day workshop, the group was polled to get the answers to their questionnaire. These answers and each participant’s objectives for the ses- sions were listed and used to later determine if the effort had been successful. The next 8 hours were devoted to developing the preliminary improvement ideas, which reached an astounding 80+ suggestions. Following an informal dinner, where the parties really became energized and shared ideas that would never have surfaced in the normal processing, the group returned to the workshop and began prioritizing what they had discussed.
After considerable discussion that included consulting other people within both organizations to get information on the potential benefits of some of the proposed actions, the group agreed on six specific initiatives that they believed had the highest mutual benefits. Each action was developed so that a specific sponsor was identified, a preliminary scope and charter was created, and both firms committed resources to the action steps. Timetables were established along with how the subsequent pilots would be structured and results reported. At the end of the workshop, the participants agreed the PDL had exceeded their expectations. But that is not where the story ends.
Following the workshop, teams from both companies have met numerous times to pursue such activities as reducing the cycle time for constructing a high-rise building, improving the communication flows between the firms, bringing the elevator company into earlier involvement with drawings and specifications, and even helping with bidding the new jobs. Another action included improving the working relationships with the architects, designers, and building owners to help reduce time for construction and total project cost. One effort has been particularly beneficial.
Working together, the firms have developed a new “fast track” model for such projects. Using heavy doses of information transfer (i.e., early and often sharing of drawings, specifications, and engineering changes), expedited by the newly established and custom designed extranet linking the firms, the partners now approach building owners and designers with the concept of bringing their project to completion in 25% less time and with the possibility of considerable cost savings. Accomplishing fast track projects is possible by the dramatic improvements the group found to reducing cycle times and improving data transfer between the firms.
Summary
Once a firm discovers the Internet and realizes its true potential, it can begin working with supply chain constituents to use Web technology and
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collaboration to enhance the linked processing. Collaboration across the extended enterprise starts with selecting willing and trusted allies with whom the process steps in the end-to-end network can be analyzed and worked on for improvement. It proceeds toward finding enhancement of value to the intended customers and consumers.
While there are limited success stories for such efforts, we have considered both a framework within which they can be developed and a tool for initiating such alliances. The secrets to success lie in determining what the mutual benefits might be, how to share best practices across enterprises, and how to initiate e-commerce activities that lead to a new business model that differ- entiates the network in the eyes of the final customers and consumers.
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