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Revolutionizing E-Procurement: Honeywell Decreases Lead Time, Implements Multi-Tier Supplier Collaboration

Author(s):

Robin Giebner
Robin Giebner, E-Commerce Supply Management, Honeywell Engines & Systems, Tempe AZ 85284, 480-592-4346, robin.giebner@honeywell.com
Carole A. Baggerly
Carole A. Baggerly, Vice President Sales & Marketing, ESIS, San Diego, CA 92122, 858-625-0060, carole@esisinc.com

86th Annual International Conference Proceedings - 2001 

Abstract. During the last 3 years, Honeywell has implemented a very successful E-Commerce program with its suppliers. Long Term Agreements (LTA's) have been put in place with key suppliers, planning schedules and forecasts are transmitted to suppliers on a regular basis and the schedules are of sufficient quality that they are indeed used by the suppliers to work their business with Honeywell. Looking beyond the transmission of information to the supplier and working in a collaborative mode with the suppliers was the next step. This paper will address the implementation and challenges of working with the collaborative approach with the suppliers.

Opportunity. Honeywell had been transmitting its planning schedule and forecast data to its suppliers and was realizing some of the economies of information sharing. The purchasing department used a legacy process of printed reports, faxes, and phone calls to communicate and collaborate with suppliers regarding hardware forecasted requirements and supplier delivery schedules. This process contains tasks that have been done in the past and will continue to be done in the future that do not add value to the supply chain. The process is time and labor burdened. An electronic EDI (Electronic Data Interchange) WEB enabled process also sends forecasted requirements and supplier delivery schedules to the supplier. The Purchasing employees did not have access to the same Web data that the suppliers have and continued to use the legacy system. Having both processes confused the supplier and did not support the direction of Honeywell's goal to e-Commerce.

The purchasing department has been reducing its manpower and increasing the workload at a steady pace for the last twelve months. Purchased parts have increased by 45%. The purchasing department metric for supplier on-time delivery is currently reported monthly and the average supplier on-time delivery for 1999 was 96%. The year 2000 supplier on-time delivery metric has been falling each month and is now 92%. Last year's (1999) 96% was attributed to the implementation of lean strategies, supplier EDI and partnering with suppliers.

For the year 2001 the purchasing department has been directed to decrease operating cost, increase capacity and maintain a 96% or higher supplier on-time delivery.

Research Design. Six Sigma tools will be applied to this research with the first tools being the SIPOC (Suppliers, Inputs, Outputs, and Customers) tool and as-is process flow. After the current process is thoroughly understood, a FMEA (Failure Modes Evaluation and Analysis) will be applied to the process flow to help the researcher prioritize the areas of the process that the most improvements can be made. These Six Sigma tools will give the researchers a clear understanding of the current process and insure that the focus and data collection is in the correct areas.

Objectives. Our objective with this presentation is to present the methods used to get these results and to identify the various 'learning' experiences that we have had in the process.

Some of the key methods we have used have included

  • using our existing E-Commerce infrastructure
  • providing our buyers with the education regarding the new process
  • providing suppliers with the tools to electronically respond to our planning schedules
  • giving the suppliers the visibility of their prior responses
  • automating our internal systems with data received from the suppliers

Key learning experiences we will discuss include

  • getting a clear project definition
  • providing process education to the suppliers, use of teleconferences, tutorials
  • providing process education to the buyers, the use of tutorials
  • coordination of information systems and user communities
  • all changes during the testing/pilot process require documentation

Conclusion. At the conclusion of this presentation it is expected that the attendee will have a clear picture of the goals, the methods of implementation, the measurement criteria for success and the various learning experiences from implementing a supplier collaboration project.


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