Jeffrey Svoboda, president of Moen, Inc., a North Olmsted, Ohio manufac- turer of plumbing fixtures, has used the elements of advanced supply chain to take advantage of recent changes in that market, as consumers have begun demanding upscale styling and features in what used to be a rather mundane business. Svoboda terms it a “9-to-5” strategy through which the 54-year- old company turns out new designs as fast as consumer preferences change. Beginning the process improvement, his instructions were to cut out the fat in Moen’s systems, speed new products through the supply chain, reduce inventories, and free up cash for new investments. The key to this transition was using the Internet. A particular success came in using the Web to design new and innovative products in record time.
By collaborating on designs with key suppliers over an extranet con- nection, a new Moen product can go from the design stage to a store shelf in 16 months, down from the traditional 24 months. “The time savings makes it possible for Moen’s 50 engineers to work on 3 times as many projects, and introduce 5 to 15 fashion (faucet) lines a year” (Keenan, 2001, p. EB 17). With more products reaching the market in less time, Moen has seen a 17% increase in annual sales and the company has vaulted from the third position in the industry to a virtual tie with Delta Faucet Company for the leading position.
Beginning in 1997, Moen’s technology chief, Tim Baker, and his Internet Program Office team set priorities for using the Web to achieve an advantage. Deciding one of the first moves had to be to streamline its product develop- ment cycle, the team set about improving the process steps in that function. Previously, the firm would take 6 to 8 weeks to design a new faucet. The design would be captured on a compact disk and sent to qualified suppliers
Mistake 3: Aversion to External Advice 53
in 14 countries. The suppliers might find they could meet the specifications or not, but often they would make changes, prepare a new CD, and return them to Moen. These changes would be combined with those received from other suppliers to get a complete design. If some of the changes were incom- patible, the process would have to start over. The total time was not acceptable for the new market thrust.
Carefully spending $1.5 million, Baker hired software developers to work with his team on internal work and external features like an online design room that allows customers to mix and match shower features. Now the input from the actual consumers is used as source data for the new designs. With this information, the designs were customized to the market demands. Beginning in 1998, Moen started “sending electronic files of the newest product designs by e-mail. A few months later, it launched Project Net, an online site where Moen can share digital designs simultaneously with sup- pliers worldwide. Every supplier can make changes immediately. Moen con- solidates all design changes into a master Web file. That way, design problems are discovered instantly and adjustments can be made just as fast, cutting the time it takes to lock in a final design to three days” (Keenan, 2001, p. EB 20). In a later move, the firm decided to improve the order management process, which was heavily dependent on mail and fax communications. In October 2000, the firm launched Supply Net, an extension of its extranet, which allows parts suppliers to check the status of Moen’s orders online. “Every time Moen changes an order, the supplier receives an e-mail. If a supplier can’t fill an order in time, it can alert Moen right away so the faucet maker can search elsewhere for the part. Today, the 40 key suppliers who make 80 percent of the parts that Moen buys use Supply Net. The result: the company has shaved three million dollars, or about 6 percent off its raw material and work-in-progress inventory since October” (Keenan, 2001, p. EB 20).
With these successes, Baker’s team has turned its attention to Customer Net, an ambitious effort to wire the firm’s wholesalers, which account for half of the company’s business. Using another calculated approach, the firm brought a select group online at the end of 2001, as they extended their extranet toward the consumer.
Summary
The concepts presented here will be revisited in Chapter 9 as we consider why collaboration is not more extensive, given its obvious benefits. For now,
54 The Supply Chain Manager’s Problem-Solver
let us understand that collaboration adds the kind of detailed analysis and finding of solutions that elude a firm determined not to accept external advice. It begins by erasing the cultural barrier that schools a firm and its people to think they have a lock on all the good ideas. With so much hap- pening so rapidly in today’s economy, the path to the future is best traversed with the help of willing trading partners who can share their best ideas with yours so the total becomes an enhanced network providing the kind of services sought by today’s consumers.
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