GLOBAL SUPPLY CHAIN MANAGEMENT

CASE: GS-25
SGSCMF: 001-2001
DATE: 07/17/01 (REVISED 03/23/05)

SEECOMMERCE:
ENHANCING SUPPLY CHAIN VELOCITY AT
DAIMLERCHRYSLER

SEECOMMERCE ENCOUNTER: MARCH 2000

Jerry Quell was in a quandary. His company had begun to take a strategic look at its supply
chain two years before and had reinvented most of its major supply chain systems⎯demand
collection and forecasting, order processing, inventory control, and warehouse
management⎯over the previous five years. Because the company’s supply chain was mature
and had been the focus of numerous improvement initiatives, Quell was in a dilemma as to how
he might further improve demand forecasting and minimize inventory for the service parts group
while ensuring that customers were not left waiting for replacement parts at a dealer.

Quell was the senior manager of Materials Operations Planning for the Mopar Parts group at
DaimlerChrysler. He had been with the company for over 15 years, and was involved in most of
the supply chain initiatives previously undertaken by the division. Recently, in 2000, Quell
became aware that one of DaimlerChrysler’s weak areas was supply chain collaboration, and that
there was a pressing need for better visibility in order to shrink Mopar’s decision-cycle times and
react to unplanned changes promptly. As he was exploring alternatives for addressing this
challenge, he came across a company called SeeCommerce, which had recently received
recognition from AMR Research. SeeCommerce provided performance management solutions,
a topic in which Quell was interested. Accordingly, out of curiosity, he picked up the phone to
learn more about SeeCommerce’s offering.

SEECOMMERCE: HISTORY

Founded in 1996, SeeCommerce was a Palo Alto-based company with over 120 employees.
Since its inception, SeeCommerce had received infusions of over $66 million in venture capital
from A-list investors such as Amerindo Investment Advisors, Integral Capital Partners, Insight
This case was prepared by Paresh Rajwat under the supervision of Professor Hau Lee at Stanford University. The case was
prepared as a basis for class discussion and not to illustrate either effective or ineffective management practices.

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provided easy access to all data in the supply chain and offered a what-is capability to business users. COMPLETING THE SUPPLY CHAIN MANAGEMENT CYCLE Quell was interesting in understanding what had made SeeCommerce so successful. SeeCommerce was intended to be an improvement on a basic business process that was commonly used to operate a supply chain: the “Plan–Execute–Plan Cycle” (Exhibit 1). SAP. and others. etc. SeeCommerce's products had been adopted in a wide variety of industries. and SCI. they did not have the visibility of other channel partners. Because of this independence. Adexa. Qwest. However. Siebel Systems. Sierra Ventures. it was difficult to act fast and address problems before they occurred. Ariba. Philips. Manugistics. including Nestlé Germany. warehousing. the entire supply chain would slow to a crawl. automotive and packaged-goods manufacturing. As a result. Most managers still relied on manual reports for performance data on each connection (manufacturing. DaimlerChrysler. transportation. and others gave what-if capabilities to their users to help to improve a company’s performance. SeeCommerce had referenced more than 30 customers across the United States and Europe. In addition. PNC. retail and financial services. If managers could not look across the enterprise at the various links to access information and tune performance. as a result. industry-leading companies such as Ariba. etc. to provide a complete solution. and why it outstripped its competitors in so many performance areas. it was clear that SeeCommerce was the leading provider of supply chain performance management and improvement applications. order processing and management solutions provided by Oracle. and sales. Pfizer. including high-tech. Upside Hot 100 and the Enterprise Outlook Investors Choice Top 10. Arthur Andersen Best Practices Award. AMR Research’s “12 Hot New Applications Market Leader. SeeCommerce envisioned the post-2000 supply chain with suppliers and . without a transparent and real-time view of the supply chain. and their competitors enabled the execution of transactions. managers’ confidence could ebb and.<Case Title> <Case Number> p. thus completing the management cycle to “Plan–Execute–Measure–Plan. 2 Capital Partners. designed to enable business managers and trading partners to continuously manage and improve business performance across complex supply chains.” Red Herring 100. Furthermore. The company had also been awarded the APICS Certificate of Excellence in Innovation. and collaboration among them was infrequent. (Exhibit 2). Similarly. transportation. Deloitte Consulting. KPMG. Each channel master acted independently. Voyager Capital. visibility and business processes) of supply chain performance management and improvement. planning.) of the supply chain. To learn more. supply chains consisting of suppliers and customers were usually connected through various channel masters that provided the service of purchasing.” This new dimension enabled better performance management. Planning solutions provided by i2. Increasing Visibility through SeeCommerce Prior to 2000. Applied Materials. FIAT. By adding this crucial step. SeeCommerce provided the required transparency by adding a “Measure” dimension to the traditional supply chain cycle. SeeCommerce had integrated all the components (event management. and IBM Global Services had endorsed SeeCommerce's products through strategic partnerships. Commerce One. Charles Schwab. Polaroid. he began to investigate the product.

It supplied product performance snapshots and helped managers identify the turning points when the contribution of the product began to diminish. material. Managing successful product rollover requires close tracking of operational data and demand trends of a product. at various stages and collaborate on their performance over the Web. production. reduce operational costs by automating information distribution. If production plans were to be changed. and shared. enabling a quick product transition and avoiding costly product . This dramatically reduced the time it took to make decisions and adapt to market trends. or systems that did not exist.) The solutions increased supply chain velocity by replacing manual performance systems. customer service fulfillment etc. raw material availability. SeeCommerce provided this tracking and performance measurement functionality. Companies need to manage the time to new product introductions. the contribution of the new product to a company increases with time. continuous innovation and new product development is a key to success. (Exhibit 4 depicts the measured impacts through SeeChainTM on decision-cycle time and other performance parameters. the product is replaced by another new product. inventory. finished goods availability. aggregated. and alert suppliers about product changes during and between product life cycles. compared. The solution also helped business users benchmark company performance against industry standards. generate fewer printed reports by making information available anytime. using a Web browser. In the front part of the product life cycle (Exhibit 6). making collaboration the big differentiator. executives did not need to be at their desks at all times but could receive e-mail alerts and simply log onto the network and access the required information. The key to the post-2000 model was transparency. with automated measurements and alert systems. the product can be transitioned smoothly from one generation to the next. while in the back part of the life cycle. the contribution decreases with the passage of time. The suite of SeeChainTM applications (Exhibit 3) provided by SeeCommerce allowed companies to measure the accuracy of forecasted demand. from anywhere. to take corrective actions and gain measurable supply chain improvements.) Impact of Timely Performance Measurements Through SeeChainTM In an age of hyper-competition. and their entire organization—from a single screen view and could have all of the relevant information at their fingertips. They could immediately see performance measurements from demand to supply—across product lines.<Case Title> <Case Number> p. SeeCommerce empowered business managers to see problems and effects over time. distribution centers. Ultimately. with explanations for changes in performance. (Exhibit 5 gives a sample of potential competitors of SeeCommerce. Improved product demand visibility helped companies to better plan the timing of the ramp-up phase of the new product cycle relative to the previous product. demand. Data in different information systems at different locations could be assessed. As a result. This way. suppliers could be immediately notified. and fulfillment) to share a common data pool (Exhibit 2). production performance against plan. and also provide Web-based access to critical information across the total supply chain. 3 customers connected through a common business-to-business (B-to-B) home page and a single channel master center which would enable all supply chain processes (such as supply.

Distribution and fulfillment of dealer orders were achieved through the use of dedicated delivery service (DSS). Traditionally. Freightliner. Referral dealer orders were handled by the UPS Logistics Group. TEMIC. smart. Mopar had maintained a five-year demand history for every dealer. these parts arrived at the dealers (if the central warehouses had the stock on hand). Chrysler. The unfilled orders were routed to the central warehouses and. Western Star.000 dealer order lines per day. and forecasted demand for about 1. THE MOPAR PARTS GROUP OF DAIMLERCHRYSLER At the beginning of the twenty-first century. backlog accumulation.2 million passenger cars in more than 200 countries. 4 rollovers. The company had 400. and other supply chain operational problems). delinquent deliveries. collaborate and take corrective action. Thomas Built Buses. manage parts inventory and fill customer orders. Jeep®. Mopar’s distribution supply chain consisted of four national distribution centers or central warehouses (CW) and 15 domestic field parts distribution centers or regional warehouses (RW). With global alliances with Mitsubishi Motors Corporation and Hyundai Motor Corporation. Dodge and Jeep dealerships in the United States. and processed over 220. SeeChainTM applications could quickly diagnose other problems (such as supply shortfalls. The Mopar group was the spare parts division for the Chrysler Group of DaimlerChrysler and a primary distributor of parts and accessories for all Chrysler. The UPS Logistics Group provided DaimlerChrysler with a multimodal transportation system into and out of those centers. MTU. and finished goods carrying costs (as shown in Exhibit 6). Mopar had been able to achieve a fill rate of 89. More critical orders were consolidated and shipped via UPS. Orion. Dodge. The average . Reduction in the decision-cycle time could result in huge savings in inventories. American LaFrance. Before SeeCommerce became involved. and others.8 million different SKUs (stock keeping units) at the RW level on a daily/weekly/monthly basis. and a Distribution Requirement Planning (DRP) system was used to determine the required stocking level and the associated material acquisition with suppliers. Mopar released about 65. Mopar’s automotive parts and distribution business relied on how effectively the company could forecast demand. These were then rolled up to part level. and revenue of over $144 billion in 2000.5 percent from the stock at the regional warehouses. When performance went outside acceptable levels.000 employees and manufacturing sites in 37 countries. Similarly. as well as pinpoint opportunities across the global supply chain. the global order processing system would try to fill part orders from dealers using inventory at the respective regional warehouse.000 orders every week to its suppliers. SeeChainTM automatically alerted business managers so that they could quickly investigate.<Case Title> <Case Number> p. the company recorded automotive sales of 4.000 original equipment parts procured from about 3. Sterling. The group managed more than 280. by the end of the second day. all via the Internet. It operated two Order Consolidation Centers. using one-day ground or air delivery service. Setra. DaimlerChrysler was the world's leading manufacturer of commercial vehicles with brands like Mercedes-Benz.000 different suppliers. a daily cycle of order fulfillment at Mopar worked as follows (Exhibit 7): During the day.

The data was then organized and presented using SeeCommerce’s patented technology.000 dealer order lines per day from over 4. the Mopar Parts Group conducted an internal benchmarking study to evaluate what it would take to develop a similar solution in-house. In 1998. a prototype system was created. Mopar could usually achieve a fill rate of 95. 5 fill rate at the end of the second day was usually 92 percent. and since the previous internally developed system was going nowhere. The key was to enhance supply chain visibility and shorten the reaction times to problems. In fact. from which . The SeeCommerce project at Mopar started in April 2000. as senior manager of materials planning at Mopar. The solution proposed by SeeCommerce showed a lot of promise. The complexity of the system was such that it was difficult to monitor performance on a weekly basis. the solution would not have utilized the latest peer-to-peer technology on which SeeCommerce was based. the SeeCommerce team took a strategic look into the Mopar Parts Group’s supply chain. this technology could promote greater efficiency. which was based on IMS and DB2 on an IBM Mainframe.5 percent as a result of such inventory pooling. If the central warehouses did not have stock on hand. the average fill rate at the end of five days was 97. Finally. Quell decided to give it a try. By enabling peers to find and collaborate with each other at will. Mopar initiated a project to create tools that would allow the company to measure customer service levels. had been looking for ways to improve customer service levels and reduce the expenses associated with frequent expedited shipments. Teaching all users proficiency with the new system was quite a challenge. They realized that their IT (Information Technology) group would require 9 to18 months to develop an internal solution. without removing control from the peers on the network. Also. a resourceful inventory planner might start looking for parts that were in transit or available at suppliers. SEECOMMERCE AT DAIMLERCHRYSLER: APRIL 2000 At Quell’s request.000 dealers.5 percent of unfilled orders were backordered and released when material was received anywhere in the distribution system. It could even enable a global virtual marketplace where anyone was literally enabled to conduct business with anyone else. The SeeChainTM applications extracted transactions and planning data from a multitude of data systems. the orders were referred to other regional warehouses based on stock position. In the next two days. The associated data files were also enormous. systems and services. since most of Mopar’s IT systems were mainframe based. The project therefore required the development of a system of tools for the extraction of data from operational databases into datamarts using OLAP (online analytical processing) tools. the remaining 2. openness.<Case Title> <Case Number> p.5 percent. Data was retrieved from Mopar’s homegrown legacy ERP (Enterprise Resource Planning) system. There were 220. He recognized that the key was to have a continuous and tight process of performance measurements that would identify problem areas and opportunities in the service parts supply chain on a timely basis. Although expeditions could be very costly to Mopar. Peer-to-peer technology could provide the ability to dynamically unify diverse and widely distributed elements of contents. By the third day. Forecast Planning and Inventory Planning System. and use expedited shipments to get the parts to the dealers. and choices for information systems. Quell. After 18 months. as it was not user- friendly. To monitor order shipment versus allocation was the goal. It revealed tremendous opportunity of cost savings by improving performance in terms of lower inventory costs and better order flow.

<Case Title> <Case Number> p. which affects the level of aggregation in the reports). . at the field parts distribution center (PDC) level. SeeChainTM had a simple tree structure for navigation. Using personalized MyCommerce home pages. but SeeCommerce offered the payback within 12 weeks after implementation. Quell was expecting a payback by the end of year 2000. SeeChainTM Demand. As a result. and helped planning and forecast managers see how they were doing daily. 6 metrics and key performance indicators (KPI) were calculated and reports generated. SeeChainTM Inventory.000 total line orders daily. Finally.5 million in avoidable on-order inventory within a week after implementation. By improving the customer service level. By reducing the decision cycle time we are now able to do many things. users could have the screen layout designed according to taste. We have 12 forecast demand measurements.200 line orders out of 220. based on business rules and control hierarchies (i. The use of SeeChainTM Supplier also improved supplier performance substantially. After three months of using the SeeChainTM application. and promptly respond to unplanned changes. The Mopar group expected to reduce backorder of about 2. the span of control for the respective KPIs. We believe. managers could quickly pinpoint problems. increased flexibility allowed planners to address remaining inefficiencies in inventory management. The applications improved business velocity by shrinking decision cycle times. we can further reduce safety stock by $20 million in year 2001. reports and annotation notifications. with their help. we have reduced safety stock by $7. Based on the respective information. e- mails. 17 inventory measurements and 30 supplier performance measurements that allow us to keep a close watch over the key operating parameters. The Mopar Parts Group discovered $4. and at different aggregation levels (see Exhibit 8). For instance. in terms of forecasted demand versus actual shipments to dealers and stocking levels. This way. Prompt creation of exception reports enabled early warning of potential problems and immediate reaction by inventory planners.). a cumulative fill rate of about 98. take proactive actions. and improved visibility into supplier delivery quantity. Quell was pleased with the success of the SeeCommerce implementation: SeeCommerce gave us information at our fingertips. etc. This improved fill rate represented an equivalent of $10 million savings annually in transportation costs by eliminating referral orders while increasing market share. we expect to save about $10 million of excess transportation charges. and SeeChainTM Supplier offered the Mopar Parts Group real-time supply chain performance visibility.5 percent could be achieved (Exhibit 9) within the first three to five days. and expected to save tens of millions per year from reduced safety-stock inventory and dealer order-line improvement.e. Initially. by reducing the forecasting error. timelines and quality enabled the immediate fill rates to improve by 1 percent. users could launch the appropriate application directly.5 million within the first six months. Advanced alerts of inventory and supply conditions at the regional warehouses. which allowed users to easily probe and find performance indicators for different products/locations. and set up different forms of information retrieval (performance alerts. users could get all required information in one place for fast decision-making.

he had to figure out how he could further improve the service supply chain in this environment. he wondered which performance measures would be most critical for the Mopar Parts Group to monitor in this new era. . Quell was now faced with another major challenge. However. 7 The SeeCommerce implementation was undoubtedly a great success.<Case Title> <Case Number> p. Since the economy had slowed down. As he entered into the conference room for his meeting with top executives.

<Case Title> <Case Number> p. 8 Exhibit 1 Supply Chain Management Cycle Source: Created by the authors from publicly available information. .

Fig.<Case Title> <Case Number> p. 2 Fig.23 Source: Information provided by SeeCommerce. 9 Exhibit 2 Pre and Post-2000 Supply Chain Environments Post -2000 Pre -2000 B2B Portal Channel Master Supplier Customer Supplier Customer Purchase Channel Master Channel Center Master Supplier Supplier Customer Supplier Customer Demand Transp Material Production Channel Supplier Inventory Customer Supplier Master Fulfillment Customer Planning Supplier Customer Channel Master Supplier Customer Common Data Sales Shared Processes Fig. .

significantly improves ROI and expands market share by optimizing supply chain performance and creating effective supplier relationships. SeeCommerce. relational databases and standard Web browsers.<Case Title> <Case Number> p. improves forecasting accuracy of items not meeting acceptable levels and thus enables better management of raw materials inventory. production planning and FGI to ensure that supply meets targeted service levels. SeeCommerce improves a company’s ability to compete in the global marketplace. The application also helps in collaboration of supplier-related information to correct problems and improve performance. The SeeCommerce suite of SeeChainTM applications drive performance management. the SeeCommerce logo. SeeChain. data warehousing. The products are based on industry standards such as JavaTM. identifies top performers. Dynamic Commerce Server. XML. Internet technologies and supply chain management. measures sales accuracy by comparing forecasted sales to actual sales. . SeeChainTM Materials SeeChainTM Materials measures and optimizes raw materials availability by measuring inventory levels of raw materials and semi-finished goods.seecommerce. SeeChainTM Demand SeeChainTM Demand application measures and improves demand forecasting performance. 10 Exhibit 3 SeeCommerce Suite of Products1 SeeCommerce enables business managers and trading partners to continuously manage and improve business performance across complex supply chains. The SeeChainTM family includes the following seven applications: SeeChainTM Supplier SeeChainTM Supplier measures and improves supplier performance. and the SeeChain logo are trademarks of SeeCommerce in the USA and other countries. knowledge management. organizational synchronization and workflow coordination throughout the entire supply network. The application also helps in identifying potential inventory shortages and sees value of excess inventory in warehouses or distribution centers. SeeCommerce’s applications leverage domain expertise in online analytical processing (OLAP). All other products and company names may be trademarks of their respective owners. tracks performance over time and negotiates performance-based agreements.com/products/. SeeChainTM Production SeeChainTM Production measures and improves production performance by measuring the accuracy of the production plan for a time frame. It identifies which products may affect customer service levels and notifies sales representatives to manage corresponding customer 1 For detailed product descriptions and information refer to www.

in the right quantity. reliability of process accuracy and asset utilization for the logistics network. ensuring customer retention and market share growth. generate and share the information in context in an easy-to-use single screen view. thus signaling to improve future deliveries. measures on-time shipping performance and improves customer satisfaction levels by identifying shortages that impact customers. SeeChainTM Inventory SeeChainTM Inventory measures and optimizes FGI levels by measuring inventory levels and identifying potential shortages of finished goods. They can dynamically navigate. . The application also helps in managing impacted customers. The application also helps in managing finished goods levels to avoid obsolescence and take into account the product life cycles. The application also helps in determining if manufacturing capacity is able to support the planned production. It provides companies with visibility into supply chain velocity. collaborate. customers and suppliers⎯to share and collaborate on a wide range of corporate information within a secure environment. Through their existing browsers. publish. Dynamic Commerce Server is a Web-centric enterprise information portal that allows all levels of users . Source: Information provided by SeeCommerce. to the right location at the right cost. users can access all information to which they have security privileges. SeeChainTM Fulfillment SeeChainTM Fulfillment measures and improves order fulfillment performance. 11 relationships.<Case Title> <Case Number> p. subscribe.management. design. employees. SeeChainTM Logistics SeeChainTM Logistics enables the timely delivery of the right product.

12 Exhibit 4 Measured Impact on Decision Cycle Time and Other Parameters 0% 20 40 60 80 100% Decision Cycle Time DCT Reduction Impacts Revenues = Average Improvement Inventories Operational Productivity Administrative Productivity Depreciation Scrap Delivery Lead Times Time-to-Market Return on Assets Source: Information provided by SeeCommerce. .<Case Title> <Case Number> p.

InfoRay (visibility) InfoRay provided personalized business monitors and infostructure for performance measurement in high-speed businesses. Inforay aimed at providing visibility. and automated the performance of specific business data processing functions for financial management.<Case Title> <Case Number> p. provided a supply chain monitoring/event management system that enabled people to create personal 1:1 agents that detected any desired event. . Oracle integrated and streamlined both internal and external processes for any business. Vigilance and Oracle. Founded in the Netherlands. As an e-business solutions provider. in 1999 and had offices in the U. there were companies supplying tools that addressed specific features and functions. InfoRay moved its headquarters to Cambridge. project management. so competition was moderate. Oracle (streamlining business processes) Oracle Corporation’s software products could be categorized into two broad areas: systems software and Internet business applications software. human resources management. Instead. Vigilance (event management) Vigilance. InfoRay’s patented solutions allowed users to track key business indicators to impact a company’s performance at any level. allowed users to access information. these companies fell into three categories: visibility. most of the companies in this market provided a portion of the complete performance measurement and improvement solution. ubiquitously notified the appropriate community.S. Inc. procurement. Supply chain performance management was a comparatively new market. 13 Exhibit 5 A Note on Potential Competitors At the time the case was written. These tool vendors could provide a basis for others to develop packaged applications. Source: Compiled by the authors from publicly available information. Typically. and customer relationship management. and Europe. Massachusetts. and business process management. SeeCommerce did not have any direct competitor providing applications like SeeCommerce’s SeeChainTM solutions. Some of the companies in this broad arena were InfoRay. supply chain management. Unlike SeeCommerce. and collaboratively resolved an event through workflow. Vigilance focused on event management while Oracle strove to address the business process aspect. exception/event management.

the trend would not be identified until time period 6. . Source: Information provided by SeeCommerce. Traditionally. 5 Note: The top line represents the old way of doing business. SeeChainTM enables the trend to be identified in period 2. the bottom line represents the new way. 14 Exhibit 6 Potential Improvements Realized through SeeChainTM Trend Identified / Demand Drop Without SeeChain Old Product FGI $$$ Completely Level Replaced Using SeeChain Reduced Carrying Cost Time Fig.<Case Title> <Case Number> p.

unfulfilled orders drop- shipped from supplier „ Remaining orders backordered 96.0% „ Unfulfilled orders sourced via cross-ship from RW Day 3 94. orders created 89. 15 Exhibit 7 Daily Order Fulfillment Performance Prior to SeeCommerce Weekly Plan Cumulative Fill Rate „ RW fulfills dealer orders Day 1 „ Unfilled orders immediately referred. .<Case Title> <Case Number> p.5% Source: Information provided by SeeCommerce.5% „ Unfulfilled orders shipped from CW Day 2 „ Unfulfilled orders referred immediately 92.5% „ Unfulfilled orders sourced from in- transits headed for alternate RW Days 4&5 „ Other.

16 Exhibit 8 The Tree Navigation Structure of SeeChainTM Source: Information provided by SeeCommerce. .<Case Title> <Case Number> p.

5% 3-5 in inventory management 98.5% --> Days to address remaining inefficiencies 98.<Case Title> <Case Number> p.5% --> decreases the amount of cross 97.5% shipment and drop ship and lowers Day 2 expediting costs. timelines and quality enables improved fill rates „ Unfilled orders referred immediately „ Increase level of service from RW 96.5% --> Day 1 visibility into supplier delivery 92. 17 Exhibit 9 Daily Order Fulfillment Performance with SeeCommerce Weekly Plan Cumulative Fill Rate „ Advanced alerts and improved 91. . „ Exception report of unfulfilled orders created „ Increased flexibility allows planners 97.5% quantities.5% Source: Information provided by SeeCommerce.