Information-Driven Business Networks

Continued

Aluminum from Alcoa's Rolled Products Division is used to build airplanes, ships, trucks, and cars, as well as industrial products—from washing machines and refrigerators to iPods. As with many established companies, most of Alcoa's legacy systems were constructed to run within a single plant.

Kerney is part of a team of business-minded developers who are in the process of integrating these legacy systems and replacing them with more-modern, interconnected processes. "In today's global business environment, you're not only managing inventory within a plant, you're linking up warehouses and providing access from customer sites," he explains. "Your supply chain extends beyond the four walls of any single plant or even any one company."

One of the Division's goals is to model and automate material flows and then construct a physical supply chain based on that model to improve visibility up and down the line. "The number of items, customers, and entities that we manage is very large, so it is a very data-intensive process," says Kerney. "It's a huge undertaking just to make our first transaction."

If all goes well, the payback will come over time, as that first transaction is followed by millions more. Kerney is optimistic about their progress. "Once this system is fully deployed, we will be able to see metal at different phases of the supply chain, which will give us a better handle on managing inventory," he says. "One of our goals is to create partnerships with customers using vendor-managed inventory programs and warehouse programs, while more effectively managing the resources within our span of control."

Inventory on Demand

As the Rolled Products Division solidifies its data model and migrates supply chain information into one consistent database, supply chain managers will be able to add more data points. This will allow them to exchange specs on particular aluminum alloys, physical dimensions, manufacturing tolerances, tempers, strength, corrosion resistance, and a host of other factors. Exchanging this additional information will make the entire process more systematic and less error prone. This is the point at which clean, accurate data delivers a decisive edge.

This edge is particularly important in global industries due to the diverse set of sourcing strategies these companies use. Once associated primarily with low-cost manufacturing overseas, globalization now encompasses the outsourcing of many types of back-office processes. "Offshoring is no longer driven solely by cost but rather by a desire for market access to emerging economies, supported by more-nimble manufacturing and logistics," says Oracle's Muzumdar. "Today's CEOs are looking at information-driven business networks not only to create a more efficient workforce within the enterprise but also to seamlessly connect global operations across the value network of suppliers, business partners, and customers."

In the future, better visibility into requirements will help Alcoa optimize its assets and inventory. Further down the chain, where internal manufacturers produce metal for customers, it will help them to manage the order cycle. "Our new supply chain will put us in complete control of the order-to-cash cycle, from the time we take an order to the time we place the finished product on the customer's dock—along with all the associated information before, during, and after the fact," says Kerney.

Customers will appreciate the greater order-processing speed and responsiveness, while Alcoa enjoys a shorter order-to-cash cycle, Kerney adds. "It comes down to having less people involved, less material involved, and cycling through the order-to-cash cycle very quickly."