Case studies at the Center
Continuing series...
Subject:
Synchronized Logistics used to be a mail-order company
How to reduce the cost of orders from $ 14.00 to... 54 cents
April 5, 2002
Paul Latimer won't try to analyse the return on investment (ROI) of his company's B2B Exchange Portal. The fact that Ottawa-based Synchronized Logistics Inc. was literally saved from bankruptcy by a controversial multimillion-dollar IT project that included developing the advanced portal as one key element is all the return he needs to look at.
That investment, in the words of Serge Thibodeau, chief technical officer at GCIS Inc. "turned the company from a small mail-order catalogue business into a full-scale logistics business" that hundreds of mechanical, automotive, aviation parts manufacturers and airlines large and small depend on for ordering, inventory control and demand forecasting. He says the new approach ties Synchronized Logistics more tightly to important customers such as General Motors, Pratt & Whitney and Bombardier.
"Synchronized Logistics is now the logistics back end for many medium-sized and large companies," says Serge Thibodeau, whose company was retained to help with the whole development and deployment of it's new B2B Portal. "And we did it even though the logistics industry shrank a lot over the last three years."
In early 1999, with quarterly sales dropping fast and Synchronized Logistics starting to feel the pain, "we invested over $ 3.2 million to build this whole infrastructure, from the ground up", says Richard Kaiser, vice-president of information services at Synchronized Logistics. "Our competitors thought we were insane."
The positive results of this large project have been extremely encouraging. Synchronized Logistics Inc. reported that in the quarter that ended in March 2000, net profits rose 132 per cent year-to-year to $ 2.1 million, and net sales rose 65 per cent to $ 26 million. That represented a 180 degree turn from Synchronized Logistics's problems, which sprang from a failed and complex enterprise resource planning (ERP) integration that resulted in inventory getting seriously out of control.
Advanced B2B supply chain management adds forecasting & inventory control
When Kaiser joined the company in late 1998, "you couldn't properly order or ship
things. My job was to bring back operational profitability and long-term stability,"
he says. To do so, he implemented the CEO's vision of transforming Synchronized Logistics
into a provider of supply chain management services through the integration of
B2B Turnpike™, a powerful, integrated B2B (Business-to-Business)
supply chain management and portal solution developed by GCIS Inc.
Once completed, the combined B2B system had to deal with customized pricing charts for 5,500 customers who receive various types of discounts and with an inventory of well over 100,000 different mechanical and aerospace parts. The development of Synchronized Logistics's B2B exchange portal was one of the least expensive parts of the project, at a cost of about $ 1.5 million, Kaiser says. But it provides huge benefits. Web ordering now costs the company about $ 0.54 per order, compared with $ 14.00 per transaction if a Synchronized Logistics employee takes the order over the phone, Kaiser says.
New supply chain functions are also possible, such as the ability for customers to transfer their orders from an Excel spreadsheet directly to the B2B Portal. Customers can also receive price and availability information on aerospace or mechanical parts in less than four seconds — a real-time feature that hadn't been available before B2B Turnpike™ was installed, Kaiser says.
The process also frees the company's sales force from routine order-taking and follow-up, thus allowing them to spend more time developing important relationships with clients. Additionally, the new B2B Portal helps Synchronized Logistics build strong relationships with suppliers by providing them with customer ordering data that enables them to better match production with demand.
Synchronized Logistics's new B2B Portal now generates $ 3.4 million of the company's $ 37 million in annual revenue, or close to 10%, up from less than three per cent a year ago. "Over the next three to five years, it could become more than 30 per cent," Kaiser says.
Article by Keith Graham, tech writer, GCIS Inc.
The General Center for Internet Services (GCIS) can carefully design and build flexible and powerful B2B exchange portals, platforms and tools that will answer your most exacting and critical corporate needs in any industry. Upon contact, your GCIS technical representative will be more than happy to visit you and propose the best B2B Turnpike™ and exchange portal solutions for your company or organization.
USA & Canada, call toll free: 1-800-547-4149
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