Business Basics
Home Page


Who is Bill Gaw?
And why should we
listen to him?

 

lean manufacturing principles and techniques training

Bill Gaw's 3-Step, World Class
Manufacturing Training Program
World Class Manufacturing

Increase the effectiveness of your
Lean Manufacturing Program

Manufacturing Simulation Game 

Manufacturing and Distribution
Part 3 of 5


privacy policy

Lean Manufacturing, Basics, Principles, Techniques

For my latest
Goggle.Knol article:
Click Here

 To review Bill's training
 programs, click on 
  the links below: 

Lean Manufacturing Solutions

Performance
Management Training

Production Quality

Supply Chain
Management
Training

Lean Six
Sigma Process

Strategic Planning
Training

World Class Manufacturing

Kaizen Training

     Other Options:   

Manufacturing Simulation Game

Thinking Outside the Box

Implementation, Methodology, and Excellence Improvement Training

Balanced Scorecard Training Program

Kaizen Blitz Event

Lean Manufacturing Operations 

Six Sigma Management

Manufacturing Supply Chain Management

Strategic Planning Management

Quality
M
anufacturing

Lean Management
Certification Program

Lean Manufacturing Seminar

Lean Manufacturing Jobs

Process Improvement Training

Best of Gaw Lean Management Articles

IMPLEMENTATION

Many of today's manufacturers and distributors are EDI-capable only with their trading partners that produce a high volume of transactions. On average about 80 percent of an organization's business-to-business transactions occurs from only 20 percent of their trading partners. Con­sequently, EDI makes a lot of sense to automate and standardize the information exchange between these businesses. The issue now lies in the remaining 80 percent of their business-to-business trading part­ners. Although these businesses represent only 20 percent of their trans­actions, they are 80 percent of their costs to process these transactions. In this scenario, it makes sense to leverage the existing EDI infrastruc­ture and integration by extending it to the Web.

 

One current project is to enable Vtech Ltd., a manufacturer and distributor of toys, phones, and computers, to use the Web and EDI-enable their smaller retail customers, therefore lowering Vtech's cost of doing business.

 

The electronic orders are received from the Web and processed through the same existing EDI stream used for the EDI-capable trading partners. The investment into EDI integration can be leveraged by extending its role to interact with EDI-based Web applications and documents.

 

The buyer now has more timely information at their fingertips. Or­der and shipment information about a current open order is available over the Web, along with the history of past orders. Pricing changes to the order system are updated quickly by integrating the order system with the EDI price catalog document.

 

The EDI transaction used was a purchase order (document identifi­cation code 850) to create the order. A purchase order acknowledg­ment (document identification code 855) is used to confirm, reject, or accept the order based on validation with the legacy system for data such as possible ship dates, terms, pricing, product codes, etc. The price catalog (document identification code 832) is transmitted to the Web applications from the legacy system to update inventory items, delete inventory items, or add inventory items.

 

One of the goals of this implementation is to use the same pipeline used for EDI because the legacy integration is completed. As you can see from figure 6, the processing of these Web documents into Vtech's legacy application is simple. The small to medium-sized trading part­ners are usually of a lower volume transaction, so the manual entry of information over the Web is acceptable, especially when useful status and reporting information is made available to the retailers. Over time, the high-volume trading partners, currently using the legacy network of private VANs, will migrate to the Internet. The cost savings are tre­mendous. Budgets for VAN services by many large businesses can and do exceed $1 million annually.

 

As manufacturers extend their electronic commerce capabilities via the Internet, they too can sell directly to the consumers and retailers with Vtech's example. The logistics of distribution can then be moved to public warehouses that will handle the distribution for the manufac­turer without marking up the price. In return the manufacturer can in­crease its profits and at the same time sell the goods at a lower price. Many fear that this will dis-intermediate the business of their suppli­ers. The suppliers will always maintain their position if they offer value-added services on top of the products they are marketing. This is a valid expectation by the manufacturers and by the suppliers themselves. Suppliers are responsible for keeping pace with advancements in tech­nology, process, and service to best represent the manufacturers; oth­erwise, the manufacturers will seek new, modern-day suppliers or al­ternate methods to distribute their goods.

 

Atlas Cold Storage is a public warehouse for frozen goods and stores goods for multiple manufacturers; therefore, they have knowledge of the goods ordered. This makes Atlas a perfect extension of the elec­tronic commerce arm of the manufacturers as well as a perfect consoli-dator of information for both the buyer and the seller.

 

The EDI transactions to facilitate the movement of inventory in­clude warehouse ship orders, stock transfers, and shipping advice. Fur­thermore, the EDI product activity document (transaction identifica­tion 852) can be used to link into a buyer's point-of-sale system. This allows for suppliers to determine real-time stocking levels of the buyer and implement vendor managed inventory and report on product sales to the manufacturers to assist with their production scheduling.

 

When the information is presented to the buyers, they will receive consolidated reports on their inventory cycles for all products supplied by the agent. This is a service benefit to the buyer; otherwise, they would have to go to each manufacturer separately to attain such infor­mation. The manufacturer also benefits from this service by virtually outsourcing this function along the supply chain to the supplier. For Atlas, the extra service benefits both buyer and seller and further en­sures their necessary position of the agent in the supply chain. Agents who do not provide such creative and valuable information services face the danger of being replaced by others that will provide this type of service as a competitive advantage.

To Be Continued


STAY CONNECTED

To stay current on Lean Management Basics and Best Practices, subscribe to our weekly MBBP Bulletin... and we'll send you our PowerPoint presentation, "Introduction to Kaizen Based Lean Manufacturing™." All at no cost of course. 

 

First Name:
Your E-Mail:

 Your personal information will never 
be disclosed to any third party.


privacy policy

Here's what one of our 13,000 plus subscribers
wrote about the MBBP Newsletter:

"Great manufacturing articles. Thanks for the insights. I often share portions of your articles with my staff and they too enjoy them and fine aspects where they can integrate points into their individual areas of responsibilities. Thanks again."

               Kerry B. Stephenson. President. KALCO Lighting, LLC


"Back to Basics" Training for anyone ... anywhere ... anytime

Business Basics, LLC
6003 Dassia Way, Oceanside, CA 92056
West Coast: 760-945-5596 

© 2001-2009 Business Basics, LLC