Toronto-based CCL Custom Manufacturing, the world’s largest consumer goods contract manufacturer, counts even bigger companies as its customers: Unilever, Johnson & Johnson, Procter & Gamble. Its suppliers range in size from the massive Dow Chemical to small shops. How does CCL keep connected with so many and varied partners? A Web portal that, according to CIO Akhil Bhandari, makes communication easy and speeds the supply chain process. In an interview with Stefan Dubowski, Bhandari outlines how the portal project started in 2002, the subsequent build and the challenges. He also has advice that might help your firm make a success of Web-based collaboration.
IT Focus: What sorts of technological challenges does CCL face, working with so many different-sized partners and being in the middle of the supply chain?
Akhil Bhandari: Unless you are a Wal-Mart at the end of the chain, and unless you are very big like Wal-Mart, you have no direct influence over the processes. Wal-Mart can tell their suppliers to put RFID tags on every pallet coming into the warehouse, or they’ll only conduct business through EDI, as they did a few years ago, or Web services. They can set the standard. Most other companies don’t have that liberty. That’s the challenge. You’re dealing with trading partners who may have disparate systems, different technologies. The challenge is to be able to flow the critical business information in an effective way.
We created a portal that allows us to talk to customers and talk to suppliers, regardless of what they may have on their side. They may have one application; we may have another application. The idea was to find something that allows us to collaborate without direct, one-to-one system integration, which becomes very expensive and time consuming.
IT Focus: Direct system integration is also a tough sell for some companies.
Bhandari: Right….We can’t go out and tell people how to operate. If we start telling our suppliers, “Hey, you should do business this way, and we should have systems integration for files and data,” we’re less likely to be successful. If the supplier happens to be large like Dow Chemical, we’ll have very little chance of succeeding.
IT Focus: How did you create the Web portal?
Bhandari: We thought about the business process, defining it. We started with the suppliers. You have a better chance working with the suppliers than you do with the customers. We didn’t want to go to the customer without having some experience on the platform. We created this portal that integrates with our ERP system, which is on an (IBM Corp.) AS/400. The purpose was to separate the two platforms. We didn’t want to bring in direct access to the AS/400. We wanted to keep it secure. We download information (from the ERP system to the portal) on a real-time basis. For example, when we run our MRP (manufacturer resource planning) system, we download those orders into the portal, which has a database of its own.
Using the (Microsoft Corp.) .Net platform for development, it comes with certain utilities such as messaging, so you don’t have to reinvent the wheel. Now, the moment a purchase order hits the portal’s database, the portal sends an e-mail to the supplier with a hyperlink. It becomes a process trigger, as opposed to having the suppliers check the portal. As a supplier, it’s very difficult to keep track of your customers’ portals.
We trigger the e-mail only if there’s a transaction waiting for them. It goes to a designated contact at the supplier’s company, and if they choose, it also goes to a back-up contact. It comes with a hyperlink, which brings them to our portal where they key in their password, so they access only their information: list of purchase orders; a purchase order that has been generated that day for them. We started that way. Now we show them our production schedule and other pertinent information they may want to act upon.
IT Focus: If the production schedule changes, does CCL’s system send out an e-mail message to suppliers?
Bhandari: It can, yes, if the production schedule affects them. That’s one capability within the development platform. You can define that trigger, whatever you feel like. But certainly it generates an e-mail when a purchase order is waiting for them, or the purchase order changes.
That’s one piece. The other piece is as [the suppliers] come to the portal, they have the chance to collaborate or respond right there and then. Unlike EDI, which had no response-back mechanism, here they can say, “You’re requesting 10,000 widgets by next Monday, but we can only supply you 5,000 by then. You can have the other 5,000 by Friday.”
IT Focus: Are suppliers using that?
Bhandari: They are taking advantage of it, posting their comments. At that point it becomes an instant messaging platform. Right away our purchasing agents know what comments suppliers are putting in, and they can talk or negotiate or come to a consensus. If there’s no comment the supplier’s basically saying, “OK, we accept the purchase order,” and sends an order-confirmation to the purchasing agent.
IT Focus: How does the portal help CCL connect with customers?
Bhandari: We’ve started to receive forecasts, for example from Procter & Gamble, in XML format, a 30-day rolling forecast, instead of just purchase orders.…This supports their demand-driven manufacturing concept. More and more companies are moving towards demand-driven. They get the forecast from point-of-sale information they get from retailers such as Wal-Mart. In the past that information was never shared downstream with partners like us. They would take that information and use it for their own internal purposes. Now they’re passing their actual demand data to us. Based on that information we can produce our own production schedule in order to optimize our production capacity.
We can avoid huge production overruns. And as we produce the goods for them, we do the same thing: using our portal we send them a notification. “We have just finished producing 2,000 of this particular shampoo or mouthwash.” They now know in real time what the inventories on the shop floor are, so they can plan their logistics accordingly. When we ship things, we send a shipment notification through the portal, an XML file. As things move from production to shipment to every key state of the supply chain, they’re notified.
IT Focus: Was there any pushback from partners when CCL suggested the portal for communication?
Bhandari: Of course, we had to meet with them and explain. I think the challenge would have been greater if we had asked them to modify their systems. We didn’t ask them to do that. We created this portal instead, and since we notify them by exception only, we don’t expect them to be continuously checking the portal, that took away the resistance. They get an e-mail, follow a hyperlink and they get information that is useful to them, which they have asked us to provide in the first place. It helps them do their job, downstream logistics planning, better.
IT Focus: Why did CCL choose the .Net platform?
Bhandari: Microsoft was reasonably priced as opposed to the other development platforms available at the time, which were very expensive. The skill set is readily available. Microsoft has a lot of business partners… One could shop around and find a company whose rates are affordable. In other cases you had to deal directly with the vendor or a few partners whose cost structure was not really affordable for us. Microsoft was very helpful in having a couple of our people trained. We wanted the project leads and ongoing support people to be our own, as opposed to calling on a third party all the time.
IT Focus: What advice do you have for other manufacturers that might want to install a portal similar to CCL’s?
Bhandari: I think the key is business process. One has to understand the business model first, or how it will be adopted by business partners.
Make it easy to do business. If Web services, or a portal or any kind of technology makes it difficult, it’s not going to be accepted. If it requires a huge amount of training on their part, it won’t be accepted. If it requires some additional expenditure on their part, again there will be resistance. If you take away those things and make it easy to do business with you, then I think the project will succeed.