Post a CommentCase Study: Demand-side forecasting in consumer electronics
For European consumer-service venture, "hub" is a profitable business connection.
By Tim Ratliff, Hubspan -- Electronic Business, 9/4/2007
| Related article: Moving in: electronics companies shift—with some pain—to the consumer world |
Integrating third-party supplier information into the supply chain is a challenging, but well-established, practice, and many electronic business leaders drive higher efficiency by requiring key suppliers to conform to their technical integration preferences. In many cases, batch-oriented EDI messaging has been used to link organizations and their data, and while not progressive, this has been good enough to do the job.
But demand-side integration is a different story. Customers and retail partners hold the relationship power and many can even demand that businesses conform to their preferred integration method. But with a plethora of integration protocols it is extremely challenging to connect everyone. Securing live data and driving processes in real-time is paramount because shoppers want to know immediately if and when their selections are available. Integrating into this dynamic environment presents both huge business opportunities and significant technical challenges.
Integration as a service, or IaaS, has emerged to facilitate B2B integration. Like its close relative, Software-as-a-Service (SaaS), IaaS delivers the functionality companies need without the headaches of license purchase, complex deployments, and ongoing maintenance. Equally important, with the widespread acceptance of Service Oriented Architectures (SOAs), IaaS provides a single hub that connects all trading partners, regardless of technology and business processes.
One venture that's convinced the approach works is Tradeplace, Europe's first joint service venture for household appliance and consumer-electronics manufacturers. Composed of BSH Bosch und Siemens Hausgerate GmbH, Electrolux Major Appliances Europe, Philips Consumer Electronics, Indesit Company, Whirlpool Europe, HooverCandy Group UK, Glen Dimplex, Miele UK and Servis UK, the consortium represents nearly 60 percent of the European appliance and electronics industry and more than $65 billion in global sales.
These manufacturers realized that integrating and automating business processes could strengthen retailer and end-customer partnerships and dramatically reduce operating costs. However, they knew it would be problematic, as individuals, to integrate small chains, individual retailers, and large buying groups with differing degrees of technological sophistication. They also knew that success would require lowering barriers to participation through ease of use and excellent support.
The vision and how they got there
Consortium members envisioned a powerful portal, execution of complete transactions via "straight-through" connections, and machine-to-machine messaging designed to improve customer service, eliminate inefficiencies and reduce costs. Also included in their criteria was an aggressive time-to-market schedule of less than four months, superior security, technology flexibility, and minimal risk.
The consortium chose to build a B2B "hub" to drive shared information and transactions based on an IaaS solution from Hubspan. This subscription-based service offered features and functionality such as support for virtually any transport, messaging standard, or protocol; a connection kit to enable even small retailers to rapidly connect with and test the integration hub; and industry-specific XML to reduce integration complexity.
This integration model delivered positive business results immediately. Time-to-market met the four-month specification, maximizing return on investment. Subscription pricing and the reduced risk of a proven solution met desired financial and business targets. Within 12 months of deployment, consortium members had reduced demand chain costs more than €6 million through improved order accuracy and reduced call center traffic. Today, the organizations are experiencing a combined 22 percent increase in operational efficiencies through this B2B connectivity.
"Philips does business with retailers and distributors across Europe and Russia," says Konstantinos Vouzas, senior manager commercial operations of Philips Consumer Electronics. "Until Tradeplace, we had no uniform way to communicate with our customers. Some of them still use legacy EDI or even fax and e-mail. Now, with Tradeplace, we need not concern ourselves with these variations. Data travels smoothly through the Hubspan connection into our back office systems, giving us the visibility we need to make profitable business decisions and also provide the timely price, product, and availability information our customers need to satisfy their customers."
Value in "on-demand" customer integration
Cross-enterprise business integration has come far since simple electronic data exchange and flat file transmission. Customer demand for better service, the use of disparate systems and file formats, and the need for competitive differentiation have driven the creation of scalable integration solutions to support increasingly complex business processes and reduce operating costs.
Enterprises—such the members of Tradeplace—who have adopted IaaS are seeing substantial revenue increases, because their retail and distributor customers favor them over competitors. Salespeople can focus on selling rather than handling administrative minutiae. Customer service and accuracy improve. Operating costs decrease, and organizations pay for what they use. And, they have streamlined their sales and fulfillment processes without compromising their own infrastructures and business processes.
Tim Ratliff is senior marketing director at Hubspan.
