EC & SCM AT ETA FABRIQUES D’EBAUCHES SA

Presented By: Lito Baysa Lito Baysa Jim Lindfors Jim Lindfors Steve Powell Steve Powell

PRESENTATION OUTLINE Introduction Introduction Concepts in Business networking Concepts in Business networking Case Study Case Study Implications for designing EC/SCM solutions Implications for designing EC/SCM solutions Conclusion Conclusion

INTRODUCTION Transformation from the old to the ‘new economy’ Transformation from the old to the ‘new economy’ Rise of new intermediaries, deconstruction of value chains, new business rules, and new requirements to meet customer demands in terms of speed, availability, cost and service. Rise of new intermediaries, deconstruction of value chains, new business rules, and new requirements to meet customer demands in terms of speed, availability, cost and service. Business networking through integrated EC and SCM Business networking through integrated EC and SCM

INTRODUCTION Integrated EC and SCM approach Integrated EC and SCM approach Combination of EC and SCM Combination of EC and SCM Industrial physical goods Industrial physical goods Existing business networks Existing business networks

EC AND SCM IN BUSINESS NETWORKING Concepts of business networking Concepts of business networking Extends the scope of BPR methodologies Extends the scope of BPR methodologies Assumes that production occurs not within vertically integrated companies but in networks where different partners concentrate on their core activities Assumes that production occurs not within vertically integrated companies but in networks where different partners concentrate on their core activities Addresses new strategic options, new possibilities for processes as well as technical issues Addresses new strategic options, new possibilities for processes as well as technical issues

EC & SCM IN BUSINESS NETWORKING EC: Building the Links EC: Building the Links Phases of Transactions Phases of Transactions Information – identification of vendors and products Information – identification of vendors and products Contracting – negotiation and decision making Contracting – negotiation and decision making Settlement – finalization order entry Settlement – finalization order entry

EC & SCM IN BUSINESS NETWORKING SCM: Building the Chain SCM: Building the Chain Four Processes in SCM Four Processes in SCM Plan – demand and supply planning, inventory Plan – demand and supply planning, inventory Source – sourcing and material acquisition Source – sourcing and material acquisition Make – production, material request and receipt Make – production, material request and receipt Delivery – order, warehouse and transportation management. Delivery – order, warehouse and transportation management.

EC & SCM IN BUSINESS NETWORKING Comparison of Concepts Comparison of Concepts Aspects of Complementarity Aspects of Complementarity Process: Transaction processes link individual business processes Process: Transaction processes link individual business processes Scope of design: EC takes a transactional perspective whereas SCM takes flow perspective Scope of design: EC takes a transactional perspective whereas SCM takes flow perspective

CONCEPTS OF BUSINESS NETWORKING Transformation Transformation

CASE STUDY

ETA SA Fabriques d’Ebauches Global producer of watches for Swatch brands Global producer of watches for Swatch brands Consists of a number of companies that focus on finished movements, component production and R&D Consists of a number of companies that focus on finished movements, component production and R&D Swatch brands produce and distribute finished products Swatch brands produce and distribute finished products World’s Third Largest manufacturer of movements World’s Third Largest manufacturer of movements 10,000 employees production sites revenue = 1 billion SF 10,000 employees production sites revenue = 1 billion SF

Goals -- Solutions

STRATEGICALLY IMPORTANT PROBLEMS Redesign of the Introduction Process for New Movements Redesign of the Introduction Process for New Movements New distribution strategy for movements and spare parts New distribution strategy for movements and spare parts Installation of a new distribution channel for spare parts and movements Installation of a new distribution channel for spare parts and movements

MAIN PROBLEMS ENCOUNTERED Customers lacked Customers lacked information on interchangeability of parts (Swatch Group) information on interchangeability of parts (Swatch Group) comprehensive technical documentation for assembly, storage, etc of movements and spare parts comprehensive technical documentation for assembly, storage, etc of movements and spare parts

MAIN PROBLEMS (continued) Low level of customer service Low level of customer service long cycle times long cycle times misunderstandings during order processing misunderstandings during order processing long delivery times long delivery times Rudimentary customer information available Rudimentary customer information available

SOLUTION Implement a new distribution channel for spare parts Implement a new distribution channel for spare parts EC/SCM Solution EC/SCM Solution direct order entry direct order entry new supply chain for direct deliveries to customers new supply chain for direct deliveries to customers

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MAIN BENEFITS of EC Efficiency of information and contracting services Efficiency of information and contracting services All relevant information on existing and new products on same channel as order entry All relevant information on existing and new products on same channel as order entry ( technical, prices, sales conditions, interchangeability) ( technical, prices, sales conditions, interchangeability) Improved customer service Improved customer service additional: electronic order payment options, technical document downloads, and electronic order tracking additional: electronic order payment options, technical document downloads, and electronic order tracking planned: customer profiling, individual customer homepages and communities, FAQ, and auctions for refurbished parts planned: customer profiling, individual customer homepages and communities, FAQ, and auctions for refurbished parts Efficiency of order processing Efficiency of order processing homogenization of master data reduces matching effort, and hence, reduced misunderstandings homogenization of master data reduces matching effort, and hence, reduced misunderstandings can handle more volume with more time for personalized customer service can handle more volume with more time for personalized customer service

RE-ENGINEERING the SPARE PARTS SUPPLY CHAIN Significant number of transaction direct deliveries Significant number of transaction direct deliveries Concentration of inventories at ETA SA Concentration of inventories at ETA SA Elimination of warehouses at brands and retailers Elimination of warehouses at brands and retailers Delivery guarantees for customers Delivery guarantees for customers

COMPLEMENTARY of CONCEPTS --- SCM IMPORTANCE Supply chain performance – a selling proposition Supply chain performance – a selling proposition ETA Online higher priorities and delivery guarantees ETA Online higher priorities and delivery guarantees Credit card payment introduced Credit card payment introduced Track shipments and provide accurate shipping cost (3 rd party) Track shipments and provide accurate shipping cost (3 rd party)

Traditional Solution Redesigned Solution EC Consistent product catalogs unavailable Consistent product catalogs unavailable Inefficient order entry (fax, mail,..) and order processing Inefficient order entry (fax, mail,..) and order processing Electronic product catalog (easy to use and maintain) Electronic product catalog (easy to use and maintain) Order entry via same channel Order entry via same channel SC M Long delivery times Long delivery times Manual integration of ERP (manual re-entry of orders Manual integration of ERP (manual re-entry of orders Multiple warehouses and channels Multiple warehouses and channels Delivery guarantees Delivery guarantees Direct link between EC solution and ERP system Direct link between EC solution and ERP system Concentration of warehouses Concentration of warehouses Less complex fulfillment chain due to smaller number of business partners Less complex fulfillment chain due to smaller number of business partners

COMPLEMENTARITY of EC / SCM Process – improved information and contracting, direct customer contact (browse catalog and enter order) EC focus on catalog and order entry channel SCM focus on order processing, delivery and payment (settlement phase). EC provides efficient link between internal supply processes and the customer.

COMPLEMENTARITY of EC / SCM Scope of design New solution for transactions between ETA and customers Catalog makes interface to customers more efficient Transaction process covers entire customer process – marketing to after sales Supply chain activities include Order flow from online shop to ERP, physical goods delivery, financial goods from customer

IMPLICATIONS for DESIGNING EC/SCM SOLUTIONS Apply principles of Business Process Re-engineering. Apply principles of Business Process Re-engineering. Master Data Management Master Data Management Communicate Win-Win Situation. Communicate Win-Win Situation.

IMPLICATIONS for DESIGNING EC/SCM SOLUTIONS Apply principles of Business Process Re-engineering. Apply principles of Business Process Re-engineering. Structure (Illustrate) the Organizational, Functional, and Data Dimensions. Structure (Illustrate) the Organizational, Functional, and Data Dimensions. Strategy Level – Win-win, ROI Strategy Level – Win-win, ROI Process Level – creation of functional efficiency. Process Level – creation of functional efficiency. Systems Level – applications reliability Systems Level – applications reliability

IMPLICATIONS for DESIGNING EC/SCM SOLUTIONS Master Data Management as, “Hidden Success Factor” Master Data Management as, “Hidden Success Factor” Identify applicable standards for handling orders via customer counter. Identify applicable standards for handling orders via customer counter. Control of interchangeable information, pricing information, and parts description integrity. Control of interchangeable information, pricing information, and parts description integrity. Although EC/SCM does not explicitly require it, ETA calls standardization it’s “Hidden Success Factor” Although EC/SCM does not explicitly require it, ETA calls standardization it’s “Hidden Success Factor”

IMPLICATIONS for DESIGNING EC/SCM SOLUTIONS Communication of Win-Win Situation – ROI. Communication of Win-Win Situation – ROI. Set-up costs. Set-up costs. Running costs. Running costs. Benefits. Benefits.

CONCLUSION AND NEXT STEPS Integration of EC and SCM is changing the way businesses work internally and with each other. Integration of EC and SCM is changing the way businesses work internally and with each other. The future will prove whether B2B relationships will remain committed. The future will prove whether B2B relationships will remain committed. Potential to extend EC/SCM strategy to broader line of products. Potential to extend EC/SCM strategy to broader line of products.