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

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

The group managed more than 280. collaborate and take corrective action.000 orders every week to its suppliers. 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). Thomas Built Buses. MTU. Reduction in the decision-cycle time could result in huge savings in inventories. The average . Mopar’s automotive parts and distribution business relied on how effectively the company could forecast demand. and others. The UPS Logistics Group provided DaimlerChrysler with a multimodal transportation system into and out of those centers. Western Star. When performance went outside acceptable levels. DaimlerChrysler was the world's leading manufacturer of commercial vehicles with brands like Mercedes-Benz. More critical orders were consolidated and shipped via UPS. It operated two Order Consolidation Centers. using one-day ground or air delivery service. and a Distribution Requirement Planning (DRP) system was used to determine the required stocking level and the associated material acquisition with suppliers. The unfilled orders were routed to the central warehouses and. Traditionally. backlog accumulation. Chrysler. SeeChainTM applications could quickly diagnose other problems (such as supply shortfalls. and forecasted demand for about 1. Setra. These were then rolled up to part level. a daily cycle of order fulfillment at Mopar worked as follows (Exhibit 7): During the day. 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. Distribution and fulfillment of dealer orders were achieved through the use of dedicated delivery service (DSS). Mopar had maintained a five-year demand history for every dealer. With global alliances with Mitsubishi Motors Corporation and Hyundai Motor Corporation.8 million different SKUs (stock keeping units) at the RW level on a daily/weekly/monthly basis. Orion. Mopar released about 65. Before SeeCommerce became involved.<Case Title> <Case Number> p. TEMIC. American LaFrance. and revenue of over $144 billion in 2000.000 dealer order lines per day. Similarly. Sterling. Freightliner.000 employees and manufacturing sites in 37 countries. The company had 400. SeeChainTM automatically alerted business managers so that they could quickly investigate. smart. delinquent deliveries. the global order processing system would try to fill part orders from dealers using inventory at the respective regional warehouse. Dodge and Jeep dealerships in the United States.000 different suppliers. these parts arrived at the dealers (if the central warehouses had the stock on hand).000 original equipment parts procured from about 3. Referral dealer orders were handled by the UPS Logistics Group. and finished goods carrying costs (as shown in Exhibit 6). manage parts inventory and fill customer orders. and other supply chain operational problems). THE MOPAR PARTS GROUP OF DAIMLERCHRYSLER At the beginning of the twenty-first century. the company recorded automotive sales of 4. Jeep®. as well as pinpoint opportunities across the global supply chain. by the end of the second day. Dodge.2 million passenger cars in more than 200 countries. 4 rollovers. and processed over 220.5 percent from the stock at the regional warehouses. all via the Internet. Mopar had been able to achieve a fill rate of 89.

5 percent of unfilled orders were backordered and released when material was received anywhere in the distribution system. If the central warehouses did not have stock on hand. There were 220. and choices for information systems. the Mopar Parts Group conducted an internal benchmarking study to evaluate what it would take to develop a similar solution in-house. a prototype system was created. Forecast Planning and Inventory Planning System. Teaching all users proficiency with the new system was quite a challenge. 5 fill rate at the end of the second day was usually 92 percent. They realized that their IT (Information Technology) group would require 9 to18 months to develop an internal solution. this technology could promote greater efficiency. To monitor order shipment versus allocation was the goal. In fact. The solution proposed by SeeCommerce showed a lot of promise. 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. Quell. By the third day.5 percent as a result of such inventory pooling. and since the previous internally developed system was going nowhere. the average fill rate at the end of five days was 97.5 percent. had been looking for ways to improve customer service levels and reduce the expenses associated with frequent expedited shipments. SEECOMMERCE AT DAIMLERCHRYSLER: APRIL 2000 At Quell’s request. Data was retrieved from Mopar’s homegrown legacy ERP (Enterprise Resource Planning) system. without removing control from the peers on the network. By enabling peers to find and collaborate with each other at will. The associated data files were also enormous. the solution would not have utilized the latest peer-to-peer technology on which SeeCommerce was based. The complexity of the system was such that it was difficult to monitor performance on a weekly basis. and use expedited shipments to get the parts to the dealers. After 18 months. from which . It could even enable a global virtual marketplace where anyone was literally enabled to conduct business with anyone else. In 1998. openness. a resourceful inventory planner might start looking for parts that were in transit or available at suppliers. In the next two days. the orders were referred to other regional warehouses based on stock position. The SeeCommerce project at Mopar started in April 2000. Also. 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 data was then organized and presented using SeeCommerce’s patented technology. The SeeChainTM applications extracted transactions and planning data from a multitude of data systems. systems and services. as senior manager of materials planning at Mopar. which was based on IMS and DB2 on an IBM Mainframe.000 dealers. Peer-to-peer technology could provide the ability to dynamically unify diverse and widely distributed elements of contents.000 dealer order lines per day from over 4. Although expeditions could be very costly to Mopar. the remaining 2. since most of Mopar’s IT systems were mainframe based. Mopar initiated a project to create tools that would allow the company to measure customer service levels. Mopar could usually achieve a fill rate of 95. The key was to enhance supply chain visibility and shorten the reaction times to problems. It revealed tremendous opportunity of cost savings by improving performance in terms of lower inventory costs and better order flow. Finally. as it was not user- friendly.<Case Title> <Case Number> p. Quell decided to give it a try. the SeeCommerce team took a strategic look into the Mopar Parts Group’s supply chain.

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

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

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

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.<Case Title> <Case Number> p. 2 Fig. Fig.

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

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

<Case Title> <Case Number> p. 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. .

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

the bottom line represents the new way. Source: Information provided by SeeCommerce. .<Case Title> <Case Number> p. 5 Note: The top line represents the old way of doing business. the trend would not be identified until time period 6. SeeChainTM enables the trend to be identified in period 2. Traditionally. 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. 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.5% „ Unfulfilled orders sourced from in- transits headed for alternate RW Days 4&5 „ Other.0% „ Unfulfilled orders sourced via cross-ship from RW Day 3 94. orders created 89. .5% „ Unfulfilled orders shipped from CW Day 2 „ Unfulfilled orders referred immediately 92.5% Source: Information provided by SeeCommerce. unfulfilled orders drop- shipped from supplier „ Remaining orders backordered 96.

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

5% --> Days to address remaining inefficiencies 98. timelines and quality enables improved fill rates „ Unfilled orders referred immediately „ Increase level of service from RW 96.5% Source: Information provided by SeeCommerce. .5% --> decreases the amount of cross 97.5% quantities.<Case Title> <Case Number> p.5% shipment and drop ship and lowers Day 2 expediting costs. „ Exception report of unfulfilled orders created „ Increased flexibility allows planners 97.5% --> Day 1 visibility into supplier delivery 92.5% 3-5 in inventory management 98. 17 Exhibit 9 Daily Order Fulfillment Performance with SeeCommerce Weekly Plan Cumulative Fill Rate „ Advanced alerts and improved 91.