Symbiosis offers CEOs and top business-unit managers at both suppliers and customers clear and critical benefits that all too often are impossible to obtain any other way in this difficult economic environment. Some of the benefits are:
• Improved Operating Performance. Royal Dutch/ Shell Group of Companies’ lubricant program is typical. This solution, which began in Shell’s Brazil operations and has since been extended to other Shell units around the world, is centered on using the company’s vast lubricant knowledge to measure viscosity changes and contamination buildup in its products by closely monitoring the machines that are oiled by Shell lubricants. The aim is to take over from the customer the job of scheduling oil changes and machine maintenance. This differs from the traditional approach of shipping lubricants formulated to customer specifications, but leaving the actual upkeep of the machines (and the use of lubricants to maintain them) in the hands of the customer. The potential improvements in operating performance for Shell’s customers from this solution are readily apparent: It promises superior machine uptime, fewer unscheduled repairs and in-house maintenance responsibilities, and lower lubricant bills. Shell gains as well because, although it actually reduces the amount of lubricant that is sold to each customer, it charges more for the added service and takes on an increased role in its customers’ operations, which ultimately leads to higher revenue.
• Increased Asset Effectiveness. Another benefit of solutions is the creative stretching of existing products, services, and skills to generate additional revenue and efficiency. The largest delivery companies — Federal Express, UPS, Penske, Ryder, and DHL — have been especially active in setting up solutions programs that allow them to handle more and more of the transportation management needs of their customers, often through Web-based communications and software they provide. But Ryder System Inc.’s logistics unit has taken this a long step further with a solution that inserts itself directly into a customer’s supply chain. Beyond just providing basic fleet management, inventory, scheduling, and routing — the typical logistics solutions package — Ryder offers customers an “events management program,” which, in effect, makes Ryder the intermediary between a customer and all of its suppliers. From its perch in the center of the network, Ryder monitors manufacturing and delivery transactions agreed to by its customers and their suppliers and makes sure that the schedule never slips.
One of Ryder’s first customers for this service was Lucent Technologies Inc., which needed both to cut costs and improve credibility with suppliers that had incurred late payments. Lucent uses Ryder-licensed TradeStream software to continually funnel to suppliers real-time manufacturing information and required delivery dates for materials. Ryder, in turn, manages Lucent’s logistics effort by constantly tracking activity on TradeStream and by keeping watch to ensure that each supplier will be able to ship on schedule. If Ryder learns that a shipment will be delayed, it instantly finds a replacement for the order by asking another supplier to speed up a delivery that’s already in the works or by locating a new source.
Interestingly, the way Lucent uses TradeStream to share information with its suppliers about which products are needed and when is, in itself, yet another example of a solution. Lucent’s suppliers can integrate this TradeStream data with their plant-management systems, which alerts them about when exactly they have to begin producing components so that they can deliver materials on time. This also shaves the expense of manufacturing and warehousing inventory until Lucent needs it.
• Expanded Market Share. This benefit occurs almost naturally because underlying most solutions is the motivation to generate more business from customers. New markets are created when a solutions-oriented company listens closely to customer needs and innovatively fills the vacuum — or at other times analyzes consumer sentiment skillfully enough that it offers new products customers may not even have known they wanted.