Part 2: Speed Can Make Money -(A continuation of the High Service Sponge Story)

October 17

As David settled in for the long flight home, he pulled out his laptop. It had been three weeks since he Diane had tasked him with reviewing and reimagine DWC's customer fulfillment capabilities. She had e-mailed him the previous day, asking him to put together a quick update by the end of the week. David sighed deeply - his "day" job didn't leave much time for setting up and running a new task force.

He began to review the steps he had undertaken so far. His notes were organized using three questions to guide the re-imagination efforts:

Where are we?

oDocumented current performance vis--vis standards.

DWC was hitting its targets

oBenchmarked current performance against rivals.

DWC was doing well.

He had not been guilty of false advertising when he told Diane that DWC was an industry leader

Where do we want to be?

oIdentified Order Fulfillment benchmarks

The Supply Chain Council's SCOR model documented the standard order cycle

Anecdotal cases showed how other companies had addressed fulfillment crises.

Anecdotal is a report based on or consisting of reports or observations of usually unscientific observers. It uses contains anecdotes.

oPut together a list of key customers to meet with.

He wanted to know what they expected from DWC

He wanted to know how they perceived DWC's current performance

He wanted to know how they measured DWC

How are we going to get there?

oPut together a four-person team to work on the task force.

Team included

Paul Osterhaus - Information Technology

Trina Cody - Direct report to Doug Hassle and lead for account management team responsible for Monster Inc. relationship

Lise Johnson - financial analysist who had worked on a variety of supply chain projects in the past

As tired as he was, David's gaze settled on the anecdotes. One in particular caught his attention: Sony de Mexico. On his third call to investigate order cycle best practices, a colleague had joked "just be grateful you're not Sony de Mexico. Poor order fulfillment raised their costs and just about shut them down. Only SCM saved them" That statement had caught his attention, David had never heard the term SCM before. He had asked his friend to tell him more. David reviewed his notes form the discussion:

oSony's corporate headquarters had decided to shift capacity in Asia where labour costs were a fraction of those in Mexico. Low labour rates, minimal tariffs, and geographic proximity had not been strong enough reasons to justify Sony de Mexico's continued existence Note to self: What do we do here at DWC to justify our existence?

While others scoffed at the idea that Sony de Mexico could survive, Rey, Sony de Mexico's CEO, had made a final attempt to save the operation. Out of desperation, Rey and his team had adopted the Six Sigma mantra of "forget what you think you know and let the data prove it to you". He reasoned a blank-slate approach was the only way to change the destiny of Sony de Mexico.

The breakthrough insight came from the voice of the customer. What could Sony de Mexico offer that Sony in Asia couldn't? When asked, customers repeated two facts

oBased on existing performance levels - not much.

Despite the close location - just across the US/Mexico border - Sony de Mexico's order fulfillment cycle was eight weeks. Asian operations could meet or beat that!

Dealers were clearly baffled and frustrated

oDealer costs were high!

Because they couldn't anticipate customer demand across Sony's broad product line, dealers carried huge, expensive inventories

oNote to Self: Talk to DWC's customers. Find out what they value, what were their pain points

As Rey had processed the customer complaints, he had realized that his team also griped frequently about poor dealer forecasts. Note to Self: we do the same thing

As a result, Sony de Mexico carried a lot of inventory - 60 days of sales. The common denominator driving frustration for both Sony and its customers was long order delivery cycles. Rey had adopted the mantra "Instead of complaining about forecast accuracy, lets' build a supply chain robust enough to meet customer needs despite poor forecasts" Note to Self: That's our challenge. Rey's team had to find out why lead times were eight weeks.

Ultimately, Sony de Mexico had reduced lead times to two weeks - a 75% improvement. Both dealers and Sony de Mexico were able to slash inventories. Most important, Asian operations couldn't match the shorter lead times that enabled vastly improved customer performance. This fact - That Speed Could Make Money - had saved Sony de Mexico.

Almost imperceptibly, David realized the insight he was looking for was contained in that acronym: SCM. He now knew what the next step and quickly typed "map out our actual order cycle. What derives our lead time? What drives the variability that causes us the drop the ball?

With that epiphany, David tucked away his laptop and leaned his seat back, he wouldn't arrive home till almost 10:30, so a short nap wouldn't hurt.

Questions to Consider:

1.Using the Guide provided in the Case Writing Tools section below, make a SWOT Analysis Chart which evaluates the "as-is" and the "to-be" condition of DWC. Your chart should include at least 3 points for each part of SWOT.

2.What are the key activities/steps that must be managed to achieve world-class order fulfillment? List them in the order you would complete them.

3.What are the trade-offs David and his team can expect as they reimage DWC's order fulfillment capabilities?

Pros and Cons Chart of Order Fulfilment Capabilities- DWC's Case

DWC's Expected AdvantagesDisadvantages

Trade-off

Right Product - - -

Right Quantity - - -

Right Condition

Right Place

Right Time

Right Customer

Right price