The Mainstreaming of Supply Chain Management:

Transcription

1 WINNING STRATEGIES FOR THE DISTRIBUTION AND MANUFACTURING INDUSTRIES The Mainstreaming of Supply Chain Management: Simpler, More Affordable Integration for Mid-Size Organizations >> Compliments of Microsoft Business Solutions

2 Contents 1 Abstract 2 The Growing Need for Supply Chain Management Among Small and Medium-Size Businesses 3 Supply Chain Management at the Top has Defined the Need and Revealed the Problems 4 Removing the Obstacles to Mainstream Adoption of Supply Chain Management 8 Microsoft Business Solutions Delivers the Mainstream Supply Chain Management Solution 10 Case Study: Herzog Meets the Changing Demands of Customers Faster and Easier 12 Case Study: Southfield Packs in Double Revenue 13 Footnotes

3 >> Abstract For more than a decade, the embrace of Supply Chain Management by major manufacturers and distributors has been driven by cost-cutting pressures from large customers. As the customer-driven demand-planning trend moves deeper into the marketplace, small and medium-size manufacturers and distributors are experiencing a growing need for Supply Chain Management, as well. Those who wait too long to implement Supply Chain Management face the prospect of being left behind losing their best customers by failing to comply with stringent requirements for demand planning, inventory management and other supply chain functions. But the cost and complexity of Supply Chain Management solutions create substantial challenges for small and medium-size players many of whom are still confused as to what actually constitutes Supply Chain Management. This paper examines the need for a standardized or mainstream model that makes Supply Chain Management more approachable and cost-justified by small and medium-size organizations. Such a model must address the investment end of the ROI equation (cost of ownership), as well as the return (increased margins, lower operating costs, improved AR/AP flows, etc.), but should also take into account the extended value of an integrated Supply Chain Management solution (impact on other enterprise applications, strategic agility, risk reduction, etc.) Microsoft Business Solutions >> The Mainstreaming of Supply Chain Management 1

4 >> I. The Growing Need for Supply Chain Management among Small and Medium-size Businesses The proliferation of Supply Chain Management (SCM) solutions among large manufacturers and distributors is a response to the demand for greater value from large customers. And that customer demand trend is rapidly moving downmarket, creating a challenge for small and medium-size manufacturing and distribution organizations. The Primary Pain Point: Customer Demand for Collaboration For many Small to Medium Enterprises (SMEs), the operational and financial efficiencies offered by Supply Chain Management are largely theoretical, especially in the face of industry reports that detail mixed reviews on ROI in larger organizations. For smaller companies, the more immediate value of Supply Chain Management centers on simply keeping customers customers who are now demanding that suppliers play a more collaborative role in automating product flow, including: > Demand planning > Managed inventory > Commitment-to-ship dates > Collaborative forecasting The penalties for non-compliance can include greater risk of discounts, charge-backs, back orders, lost sales and lost customers. The Challenge Unlike Fortune 2000 companies who have large budgets and competitive stability, Small to Medium Enterprises can t afford long and expensive Supply Chain Management deployments. They are typically restricted by tight cash flow and shallow IT departments, and usually require near-term return on new IT investments. Therefore, an Supply Chain Management solution must: > Be simple to integrate > Offer a low total cost of ownership (TCO) > Provide accurate information about customer and supplier requirements > Include easy-to-use tools for timely analysis > Include inventory management that is efficient and accurate > Provide simple upgrades as needs change In short, small and medium-size manufacturers and distributors need a mainstream Supply Chain Management solution. This solution must be one that is simple to deploy and manage, is flexible to accommodate changing requirements, and provides the needed visibility into customer and supplier enterprises all at a small fraction of the cost typical of Supply Chain Management solutions in large organizations 2 The Mainstreaming of Supply Chain Management >> Microsoft Business Solutions

5 >> II. Supply Chain Management at the Top has Defined the Need and Revealed the Problems News and analysis concerning Supply Chain Management are focused primarily on the portion of the market where the bulk of the technology development has occurred in large corporations, primarily those manufacturing and distribution organizations with annual sales in excess of $500 million (as evidence of this upper-end focus, many studies actually define the mid-market as companies with sales of $500 million to $1 billion). Even so, the lessons and trends of Supply Chain Management adoption in the top tiers of the market provide important clues to how Supply Chain Management models must be re-thought for mass deployment in the lower tiers. As a business strategy, Supply Chain Management has been around since the late 1980s, driven by such mega companies as Wal-Mart and GM. With their enormous buying power, such organizations have pursued ever-lower costs by requiring key vendors to shorten the time required for goods to move through the supply chain. As a result, major manufacturers and distributors have been compelled to assume a lot of new responsibilities on behalf of customers, including demand forecasting and inventory management. Additionally, they must provide real-time reports and analysis for major customers at one end of their business, as well as for suppliers at the other end. Supply Chain Management, by its nature, must be highly customized to suit the unique requirements of each organization. Supply Chain Management investment can vary significantly, based on enterprise environment, business segment, customer base, supplier base, and dozens of other factors. Such variances in integration complexity contribute to Supply Chain Management s spotty record for ROI. But best-in-class performance studies indicate that, when deployed efficiently, Supply Chain Management delivers a powerful advantage. To cite just one study 1 : > % of on-time delivery of orders: up 14% > Inventory (months): reduced by 60% > Cash-to-cash cycle: reduced by 62% > Net asset turns: up by 280% > Total Supply Chain Management cost (% of revenue): reduced by 75% to 80% Critical Mass, and Big Budgets In pursuit of these advantages, the majority of upper-tier organizations (companies with annual revenues of $500 million or more) have committed to Supply Chain Management, as noted in a recent survey by Forrester Research, Inc. 2 Just as important, the same survey reveals that the budget for an Supply Chain Management project among these organizations averaged between $4.6 million and $7.6 million. The high price tag is a function of the complexity of these deployments and is a red flag to many smaller organizations deliberating over the viability of Supply Chain Management in their more modest business environments. Microsoft Business Solutions >> The Mainstreaming of Supply Chain Management 3

6 >> III. Removing the Obstacles to Mainstream Adoption of Supply Chain Management Encountering Speed Bumps Downmarket Of the trillions of dollars in goods and services exchanged each year, only a small fraction is managed via integrated Supply Chain Management processes. This reflects the fact that, despite the strong upper-tier penetration, vast numbers of companies in the lower tiers have yet to adopt Supply Chain Management processes. Industry analysts recognize the Small to Medium Enterprise market is still a vast frontier where Supply Chain Management is concerned, and generally agree that cost and complexity are the main inhibitors of adoption. Gartner contends that even though external collaboration will be the biggest demand faced by Small to Medium Enterprises beyond 2004, only 30% will meet the challenge. 3 In a fast-moving connected economy, such a meager rate of progress is unacceptable and, fortunately, can be corrected. Clearly, customer demand for collaboration is increasing, and requires that smaller organizations provide Supply Chain Management solutions or risk being left behind. And while it is largely accepted that Supply Chain Management offers the potential to reduce the costs and uncertainties of business, it is essential to reduce the costs and uncertainties of Supply Chain Management itself so that smaller organizations can reap the benefits. First, a Streamlined, Easy-to-understand View of Supply Chain Management For the small or medium-size company doing its due diligence, Supply Chain Management can look intimidating in its complexity often depicted with intricate diagrams with sub-components and functions that have little relevance to many organizations. To make Supply Chain Management manageable for smaller firms, a solution set should have power and functionality compressed into a relative few primary processes. Basically, Supply Chain Management is the combination of art and science that goes into improving the way a company finds the raw components it needs to make a product or service, manufactures that product or service and delivers it to customers. The following are the basic components for Supply Chain Management Plan: This is the strategic portion of Supply Chain Management. You need a strategy for managing all the resources that go toward meeting customer demand for your product or service. A big piece of planning is developing a set of metrics to monitor the supply chain so that it is efficient, costs less and delivers high quality and value to customers. 2. Source: Choose the suppliers that will deliver the goods and services needed to create a product or service. Develop a set of pricing, delivery and payment processes with suppliers and create metrics for monitoring and improving the relationships. And put together processes for managing the inventory of goods and services received from suppliers, including receiving shipments, verifying them, transferring them to manufacturing facilities and authorizing supplier payments. 3. Make: This is the manufacturing step. Schedule the activities necessary for production, testing, packaging and preparation for delivery. As the most metric-intensive portion of the supply chain, measure quality levels, production output and worker productivity. 4. Deliver: This is the part that insiders refer to as logistics. Coordinate the receipt of orders from customers, develop a network of warehouses, pick carriers to get products to customers and set up an invoicing system to receive payments. 5. Return: The problem part of the supply chain. Create a network for receiving defective and excess products back from customers and supporting customers who have problems with delivered products. These foundation processes, as depicted in Diagram 1, provide a company a range of visibility that extends from its supplier s supplier to its customer s customer. 4 The Mainstreaming of Supply Chain Management >> Microsoft Business Solutions

7 Diagram 1: From My Supplier s Supplier to my Customer s Customer ERM > Human resources management < > Finances management < > Asset management < CRM > Marketing < > Salesforce automation < > Customer support < EXECUTE OPERATIONS SUPPLIERS SOURCE > Direct procurement > Indirect procurement MAKE > Manufacturing/ Production > Scheduling > Execution > Management DELIVER (TO CUSTOMERS) & SELL (TO FINAL CUSTOMERS) > Materials mgt. - Sales order mgmt - Purchase order mgmt - Inventory mgmt > Logistics mgt. - Warehouse mgmt - Transportation mgmt > Returns mgmt. > Direct Ops (B2C, Catalog) > Store Ops - Core POS > Merchandizing SUPPLIERS HUB* PLAN OPERATIONS Demand planning and forecasting, Mfg planning, Inventory planning, Transportation planning HUB* COLLABORATE Execution: Supply-chain visibility > Plan: Collaborative planning and forecasting *VALUE-ADDED INTERMEDIARY FACILITATING SUPPLIER INTERACTION, E.G. FORMAT TRANSLATION SERVICE, SUPPLIER AGGREGATION, PUBLIC EXCHANGE, PRIVATE NETWORK, PEER-TO-PEER INFRASTRUCTURE Rethinking ROI and Performance so Supply Chain Management Makes Business Sense for Smaller Companies As shown in the diagram 5 below, once primary Supply Chain Management processes are properly customized and integrated, the prevailing assumptions dictate that ROI will ensue due to positive impact on both net income and invested capital. Diagram 2 GROSS MARGIN > LOWER MARKDOWNS < > IMPROVED AVAILABILITY < > REDUCED COGS < NET INCOME SG&A > LOWER INTEREST EXPENSES < > MORE EFFICIENT PROMOTIONS < RETURN ON INVESTED CAPITAL WORKING CAPITAL > FASTER INVENTORY TURNS < > ADVANTAGED AR/AP FLOWS < INVESTED CAPITAL ASSETS > OPTIMIZED NETWORK < > ASSET UTILIZATION < Microsoft Business Solutions >> The Mainstreaming of Supply Chain Management 5

8 While these assumptions are valid, there little in the way of standard guidelines that tell small and medium enterprises how to best get all the pieces in place to reach this benefit stage. Plus, Small to Medium Enterprises need insight into what variables contribute to the scale of the investment (cost), as well as the performance issues that can positively impact income. Such details can reveal important control points and provide Small to Medium Enterprises greater confidence in approaching Supply Chain Management. The revised diagram below includes those essential mainstreaming factors that can make Supply Chain Management simpler, less expensive and more productive for smaller organizations: Diagram 3 LOWER COST OF ENTRY IMPROVED FUNCTIONALITY & PERFORMANCE EXTENDED ENTERPRISE VALUE NET INCOME GROSS MARGIN > LOWER MARKDOWNS < > IMPROVED AVAILABILITY < > REDUCED COGS < VALUE SG&A > LOWER INTEREST EXPENSES < > MORE EFFICIENT PROMOTIONS < VALUE RETURN ON INVESTED CAPITAL WORKING CAPITAL > FASTER INVENTORY TURNS < > ADVANTAGED AR/AP FLOWS < VALUE INVESTED CAPITAL ASSETS > OPTIMIZED NETWORK < > ASSET UTILIZATION < VALUE > Lower license fees > Broad distribution (channel) > More predictable installation costs > Competitive service and support options (channel) etc... > Faster time to market = faster time to benefit > Familiar operating environment for easier training and use > Easier propagation to customers and suppliers > Standardized environment for ISV enhancement > Easier customization across diverse inventories > Seamless visibility contributes to effectiveness of CRM and other key applications > Scalability enables rapid growth > Greater adaptability improves strategic agility: to meet competitive challenges, or move into new markets, etc... Lower Total Cost of Ownership (TCO) Lower license fees: License fees are the most visible cost obstacles for many Small to Medium Enterprises. A streamlined mainstream Supply Chain Management suite allows for much lower license fees, because it establishes a level of standardization, while still providing the foundation for highly tailored solutions. Simpler integration: A Small to Medium Enterprise-friendly solution should provide an open, scalable architecture to make integration easier, less experimental and less expensive. Easier training and use: Common code sets and built-in functional compatibility with other business applications as well as simple, intuitive user interfaces keep training and user support requirements to a minimum. Faster time to benefit: With simpler integration and ease of use, a Supply Chain Management solution can be up and running faster, to meet urgent customer demand and accelerate ROI. Broad channel support: A broad expert channel assures that the integration talent pool is large enough to assure ready support, and it introduces healthy competitive pressures. This results in real choices for organizations of all sizes, as well as lower, more predictable integration costs. 6 The Mainstreaming of Supply Chain Management >> Microsoft Business Solutions

9 Improved Performance and Functionality Internet foundation: An Internet backbone allows a flexible network infrastructure for Supply Chain Management, plus it leverages emerging industry standards for messaging and security. Easier propagation to customers and suppliers: The attributes that contribute to easy internal integration and user-friendliness also enable faster, more seamless expansion of Supply Chain Management functions to new customers and suppliers. Easier customization/market segmentation: Open architecture and strong support from vertically specialized integrators provide simpler and more precise market segmentation, which, in turn, leads to more effective customer service. An environment for functional enhancement: A standardized Supply Chain Management environment spawns development tools and encourages the development of additional, best-of-breed functionality from third-party vendors giving users a greater opportunity to provide added value to customers. Extended Enterprise Value Stronger customer relationships: Successful collaboration through Supply Chain Management processes secures customer (and supplier) relationships that are more stable, and more valuable. Integration with other business applications: Within an integrated framework, important data used in Supply Chain Management processes can be shared and leveraged among other business applications, including Customer Relationship Management, financials and HR further enhancing the value and effectiveness of the overall enterprise. Strategic market agility: The integrated, open-systems approach allows for the development of unique services for market differentiation, and enables faster and easier adaptability to changing market environments. Enhanced company value: Lower cost of operations, improved profitability, and greater market staying power all add up to increased financial stability and greater shareholder value. Microsoft Business Solutions >> The Mainstreaming of Supply Chain Management 7

10 >> IV. Microsoft Business Solutions Delivers the Mainstream Supply Chain Management solution The previous-described ideal Supply Chain Management approach is a vision pursued and achieved by Microsoft Business Solutions. Microsoft Business Solutions now offers a broad array of robust and integrated Supply Chain Management solutions all designed for small and medium-size firms, and all highly customizable to the needs of distinct market segments. The Extended Operating Environment Both Supply Chain Management suites from Microsoft Business Solutions draw on market-proven applications that cover every major Supply Chain Management process, from demand planning, to inventory management, to purchase order management. In addition, they link seamlessly to other vital business applications from Microsoft Business Solutions, such as financials, Customer Relationship Management and Human Resources. These applications that have been finely integrated within the Microsoft operating environment, and work with other Microsoft business applications, including Microsoft Office and Outlook, as well as with Microsoft.NET. This places Supply Chain Management processes within a proven environment that leverages information across the enterprise and is already familiar to users in organizations at all points in the supply chain. Establishing the Standard for Affordability The use of proven applications in an established integrated operating environment reduces license and deployment costs to a fraction of what has been typical in large Supply Chain Management projects and puts the benefits of Supply Chain Management within the reach of even relatively small organizations. And to further clear away cost obstacles, Microsoft Business Solutions even provides financing of complete solutions, through the Microsoft Capital program. An Army of Experts at the Ready An important and unique feature of the Microsoft Business Solutions approach is a large and well-established expert channel over 4,500 partners worldwide, with deep technical and business experience that covers virtually every market segment imaginable. This vast resource makes top-grade Supply Chain Management consulting, integration and support available and affordable for companies of all sizes, in all geographic markets. The Microsoft Business Solutions Commitment The effectiveness of these applications has been proven by thousands of distributors and manufacturers around the world. With more than 40 years of combined experience and over 250,000 customers, Microsoft Business Solutions is known worldwide for delivering quality, easy to use, and high value business applications and services. Our goal is to empower companies to: > Make smarter, faster business decisions > Improve employee and business productivity > Gain a competitive advantage 8 The Mainstreaming of Supply Chain Management >> Microsoft Business Solutions

11 Diagram 4: Microsoft Business Solutions for Distribution Microsoft Business Solutions for Distribution connect easily with the Microsoft platform a highly versatile environment that scales to meet nearly any business software protocol. From Windows applications to specific industry programs, Microsoft integrates seamlessly with your existing and future enterprise systems, providing solid and reliable performance. Diagram 5: Microsoft Business Solutions for Manufacturing Microsoft Business Solutions for Manufacturing connect easily with the Microsoft platform a highly versatile environment that scales to meet nearly any business software protocol. From Windows applications to specific industry programs, Microsoft integrates seamlessly with your existing and future enterprise systems, providing solid and reliable performance. Microsoft Business Solutions >> The Mainstreaming of Supply Chain Management 9

12 >> V. Case Study: Herzog Meets the Changing Demands of Customers Faster and Easier Herzog GmbH, a small just-in-time manufacturer of precision machine parts and driving gear based in Germany, illustrates how Supply Chain Management solutions from Microsoft Business Solutions can improve supply chain efficiency and secure customer loyalty. Herzog serves such top-name customers as Bosch, Siemens and Black & Decker. Customers come to us because they know that we can meet their demands at short notice. We can help with design, and we can deliver one item or a million items, says Herzog IT manager, Joachim Baum. Being able to meet any customer demand at short notice has certain consequences for the way Herzog operates. Raw materials need to arrive on time and production must be swift. All machinery and expertise is located in one facility to streamline operations. And contingency plans are in place: the company has 30 suppliers on stand-by at least two or three per process in case it needs to outsource when customer demand exceeds in-house capacity. The Need for Speed and Accuracy With greater customer demands for flexibility and on-time delivery, the company knew in 1998 that its existing Unix based system was not capable of taking the company forward. Baum clarifies: It couldn t give us the overview we needed over materials, work in progress, production processes, delivery and stocks. It wasn t flexible enough to cope with short-term changes in demand or capacity, and it was expensive and time-consuming to adapt to new requirements, like adding functionality or designing new reports. Baum looked at 10 potential new systems, but either they didn t fulfill the needs of Herzog, or they were just too heavy, inflexible and expensive. By contrast, Microsoft Business Solutions is slim and agile, quick to implement, easy to learn, extremely flexible and cheap to customize. It was the most modern and professional solution for our needs, and still is. Live Within Three Months Installation, customizations, transferring of data and training were completed in just three months. Our old system looked very different, but the workers picked up the new one with two full days of training. On January 1, 1999, we turned on our new system and turned off our old system. The changeover went well. Sure, the first three weeks we were busy with support, but since then it s been fine. And it s very easy to customize. We can make new reports, alter user permissions and change or collate forms easily in-house. Most new functionality can be made within half a day or a full day. With the old Unix system it took two to eight weeks! Just-in-time Collaboration with Partners In general, the plans that Herzog receives from its customers are quite variable. A typical plan might ask for 100,000 parts over six months, delivered weekly in batches of anywhere from 2,000 to 8,000. Herzog s customers send their long-term order plans by post, or fax. One uses an e-marketplace. Another prefers to send and receive all order documentation electronically via an Electronic Data Interchange (EDI) solution. Herzog can handle it all with Microsoft Business Solutions and quickly share the information with suppliers. We send our yearly production plan to our key raw materials suppliers by directly from within the program. That s something we could never do in our old system. Our Microsoft Business Solutions system is also much more flexible in that we can just send each 10 The Mainstreaming of Supply Chain Management >> Microsoft Business Solutions

13 supplier exactly the part of the production plan that is relevant to them. They can see straight away what we re asking for, a year ahead, buy in bulk and get better prices. When it comes to making a firm order most often the day before they need the materials Herzog can see which supplier will be able to make the delivery requirements. They simply make the choice in the system and them again. Deliveries are checked as they come off the trucks and the parts, once accepted, can go straight into production. Better Information at Hand Reduces Waste As each order makes its way through the various production processes, it is accompanied by a printed production plan that includes bar codes. By scanning these bar codes with a pen, the worker can see all the information he needs. He can see the product drawing, all the quality control material which might draw his attention to the diameter of the part and so on. He knows what processes have happened before and what s coming next. This has given us a 2% increase in quality equivalent to 900,000 Euros ($945,000 USD) this year. Supply Chain Visibility Enables Rapid Adaptability to Change If the worker finds out when he starts the job that he can t get it done in the allotted time or maybe he can do more in the allotted time then he can just change the figure on the screen. If the change means that we can t meet the agreed delivery time then the program indicates spare capacity including outsourced capacity and the process manager chooses which resource will do the job. With the old system, it was nearly impossible to keep up with all the changes. But now we re on top of it, with great visibility into all our processes. The system tells us when we re working behind schedule and when we re ahead of schedule. When we re behind, we can make the necessary changes to meet the delivery requirements. When we re ahead, we can bring production of other jobs forward. We don t need to have machines and people idle. We ve been able to increase productivity by 15-20% and cut lead times by around 2.5-5%. And our customer relationships are better because we can meet a lot of their wishes that we couldn t before. Happy Customers At the end of a job, the worker enters the number of items he s made into Microsoft Business Solutions. Once the items have been checked for quality, this can also be entered into the system. This allows us to document our processes. We can demonstrate to customers how we assure quality at each and every stage. It gives them confidence in us. Most finished items shipped out within half a day. Herzog delivers either direct to the customer s premises or to a consignment warehouse located near the customer. The customer draws on this stock only when it needs to, sending the details of the withdrawal in a credit note, which is used to update inventory in the system and generate an invoice. The system tells us what we have in-house, on consignment, on credit, delivered, invoiced, paid, unpaid, everything, exclaims Baum. Everything is traceable. Microsoft Business Solutions >> The Mainstreaming of Supply Chain Management 11

14 >> VI. Case Study: Southfield Packs in Double Revenue Southfield Packaging packs and distributes promotional materials for many of the USA s leading hair care, cosmetics, and health and beauty manufacturers. With Microsoft Business Solutions, the company was able to seamlessly link Supply Chain Management functions with financial management systems and increase revenue without adding administrative staff. Southfield s inventory management system program was not linked to the company s financials, which made it difficult to obtain even a general overview of business performance. Billing and purchase order processing were completely separate, further adding to the systems disconnect. A Neat Package Working closely with a Microsoft Business Solutions partner, Southfield began developing custom applications and processes to integrate the financial, manufacturing and inventory systems. Once complete, they turned their attention to production, order processing, customer records, purchase orders and banking. The training went smoothly, especially for those with experience in a Microsoft Windows operating system environment. The user interface was simply one of the best that we saw when looking around, says Mark V. Melfi, III, Southfield s executive vice president. It gave us the information we needed to do our jobs without bogging us down with extra junk. It drew us in and was a major reason that we were able to get up and running on the system so quickly. That same familiarity carries across all of the Microsoft Business Solutions modules. Unwrapping the Benefits Microsoft Business Solutions capabilities yielded far more benefits than Southfield anticipated. For the first time, Southfield was able to monitor each job individually at each step and provide updates to its clients quickly and easily. In addition, with all of the different processes tied into one unified system, the company has been able to cut the costs associated with fulfillment and purchase orders in half. Southfield has doubled in revenue since installing Microsoft Business Solutions almost six years ago without hiring any additional administrative staff. The tight integration between Microsoft Business Solutions and the company s other systems also enables Southfield to capture and analyze information at a much more detailed level. In fact, the company has reduced its estimate-to-cost differential to less than 2%. Southfield s solutions partner has since customized a report screen that shows all of the programs currently in production, the cost-to-date per unit, and a project profit-and-loss analysis in real-time all of which translates into better business decisions for both Southfield and its customers. Customer service has been a hallmark of Southfield since our inception. To us, it is common business sense, explains Melfi. The more timely, the more accurately and the more easily we can provide our clients with information on the status of their projects, the more valuable we are to them. Microsoft Business Solutions has made that business practice exponentially easier for us to accomplish. Enhancing Customer Service Since the initial installation, Southfield has further enhanced its services by integrating the anytime, anywhere capabilities of the Internet with Microsoft Business Solutions. Clients can now check the status of their programs from any computer 24 hours a day, further solidifying the company s excellent reputation in customer service. Logistics dictate that we handle a lot of inventory that doesn t belong to us, said Melfi. Still, the materials going through our production center have a definite impact on our customers, and we need to be able to provide real-time information to them when it is needed without losing sight of the fact that we, too, are a business. By using Microsoft Business Solutions, we are now able to link our production and inventory information with our financial data, providing a real-time picture of our operation with just a few clicks of the mouse. 12 The Mainstreaming of Supply Chain Management >> Microsoft Business Solutions

15 >> VII. Footnotes 1 Perspectives on Supply Chain Management, McKinsey & Company (citing The Performance Management Group), July 18, Midmarket Opportunities For Supply Chain Management Vendors, Forrester Research, November 15, SMB Leaders to Focus on Collaboration and Interoperability, Bob Anderson/Joe Outlaw The Gartner Group, December 6, The ABCs of Supply Chain Management, Christopher Koch The Supply Chain Management Research Center, CIO.com, January 22, Perspectives on Supply Chain Management, McKinsey & Company, July 18, 2002 Microsoft Business Solutions >> The Mainstreaming of Supply Chain Management 13

16 WINNING STRATEGIES FOR THE DISTRIBUTION AND MANUFACTURING INDUSTRIES Microsoft Business Solutions One Lone Tree Road Fargo, ND Phone: (888) Fax: (701) Microsoft Corporation. All rights reserved. Microsoft and Microsoft Business Solutions are either registered trademarks or trademarks of Microsoft Corporation or Microsoft Business Solutions ApS or their affiliates in the United States and/or other countries. L0WP-DIS0-MS00000 (5/03)