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

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

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.<Case Title> <Case Number> p. The UPS Logistics Group provided DaimlerChrysler with a multimodal transportation system into and out of those centers. collaborate and take corrective action. 4 rollovers. Chrysler. Jeep®. TEMIC. and revenue of over $144 billion in 2000. Mopar had been able to achieve a fill rate of 89. the global order processing system would try to fill part orders from dealers using inventory at the respective regional warehouse. these parts arrived at the dealers (if the central warehouses had the stock on hand).000 dealer order lines per day. Reduction in the decision-cycle time could result in huge savings in inventories. The average . The company had 400. a daily cycle of order fulfillment at Mopar worked as follows (Exhibit 7): During the day. Sterling. DaimlerChrysler was the world's leading manufacturer of commercial vehicles with brands like Mercedes-Benz. Thomas Built Buses. Referral dealer orders were handled by the UPS Logistics Group. More critical orders were consolidated and shipped via UPS. backlog accumulation. It operated two Order Consolidation Centers. Western Star. and processed over 220. Freightliner.000 different suppliers. MTU. by the end of the second day. When performance went outside acceptable levels. Distribution and fulfillment of dealer orders were achieved through the use of dedicated delivery service (DSS). 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). The group managed more than 280.000 employees and manufacturing sites in 37 countries. smart.5 percent from the stock at the regional warehouses. using one-day ground or air delivery service. and other supply chain operational problems). the company recorded automotive sales of 4.000 orders every week to its suppliers. The unfilled orders were routed to the central warehouses and. American LaFrance.000 original equipment parts procured from about 3. Orion. Mopar released about 65. Traditionally. Setra. and a Distribution Requirement Planning (DRP) system was used to determine the required stocking level and the associated material acquisition with suppliers. Similarly. SeeChainTM automatically alerted business managers so that they could quickly investigate.2 million passenger cars in more than 200 countries. SeeChainTM applications could quickly diagnose other problems (such as supply shortfalls. Dodge and Jeep dealerships in the United States. as well as pinpoint opportunities across the global supply chain. Mopar’s automotive parts and distribution business relied on how effectively the company could forecast demand. manage parts inventory and fill customer orders. and forecasted demand for about 1. and others. THE MOPAR PARTS GROUP OF DAIMLERCHRYSLER At the beginning of the twenty-first century. These were then rolled up to part level. Dodge. all via the Internet. Mopar had maintained a five-year demand history for every dealer. delinquent deliveries.8 million different SKUs (stock keeping units) at the RW level on a daily/weekly/monthly basis. Before SeeCommerce became involved. With global alliances with Mitsubishi Motors Corporation and Hyundai Motor Corporation. and finished goods carrying costs (as shown in Exhibit 6).

a prototype system was created. Also. It revealed tremendous opportunity of cost savings by improving performance in terms of lower inventory costs and better order flow. Although expeditions could be very costly to Mopar. The solution proposed by SeeCommerce showed a lot of promise. They realized that their IT (Information Technology) group would require 9 to18 months to develop an internal solution. After 18 months. Peer-to-peer technology could provide the ability to dynamically unify diverse and widely distributed elements of contents. the orders were referred to other regional warehouses based on stock position. as senior manager of materials planning at Mopar. a resourceful inventory planner might start looking for parts that were in transit or available at suppliers. and choices for information systems. It could even enable a global virtual marketplace where anyone was literally enabled to conduct business with anyone else. Quell decided to give it a try. Forecast Planning and Inventory Planning System. 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. from which . The key was to enhance supply chain visibility and shorten the reaction times to problems. and since the previous internally developed system was going nowhere. the average fill rate at the end of five days was 97. In the next two days. as it was not user- friendly. the remaining 2. without removing control from the peers on the network. Quell. The associated data files were also enormous. To monitor order shipment versus allocation was the goal.5 percent as a result of such inventory pooling. openness. In 1998. Data was retrieved from Mopar’s homegrown legacy ERP (Enterprise Resource Planning) system. Mopar could usually achieve a fill rate of 95.000 dealers. By the third day. Finally. this technology could promote greater efficiency. had been looking for ways to improve customer service levels and reduce the expenses associated with frequent expedited shipments.000 dealer order lines per day from over 4. 5 fill rate at the end of the second day was usually 92 percent. Teaching all users proficiency with the new system was quite a challenge. the solution would not have utilized the latest peer-to-peer technology on which SeeCommerce was 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.<Case Title> <Case Number> p. If the central warehouses did not have stock on hand. systems and services. the SeeCommerce team took a strategic look into the Mopar Parts Group’s supply chain. There were 220. SEECOMMERCE AT DAIMLERCHRYSLER: APRIL 2000 At Quell’s request.5 percent. The SeeCommerce project at Mopar started in April 2000. The SeeChainTM applications extracted transactions and planning data from a multitude of data systems. In fact. Mopar initiated a project to create tools that would allow the company to measure customer service levels. 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.5 percent of unfilled orders were backordered and released when material was received anywhere in the distribution system. By enabling peers to find and collaborate with each other at will. the Mopar Parts Group conducted an internal benchmarking study to evaluate what it would take to develop a similar solution in-house. which was based on IMS and DB2 on an IBM Mainframe. The data was then organized and presented using SeeCommerce’s patented technology. since most of Mopar’s IT systems were mainframe based.

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

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

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

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. Fig. .23 Source: Information provided by SeeCommerce. 2 Fig.<Case Title> <Case Number> p.

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

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

<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. .

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

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. . SeeChainTM enables the trend to be identified in period 2. 5 Note: The top line represents the old way of doing business. Traditionally. the trend would not be identified until time period 6. Source: Information provided by SeeCommerce. the bottom line represents the new way.

<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. unfulfilled orders drop- shipped from supplier „ Remaining orders backordered 96.0% „ Unfulfilled orders sourced via cross-ship from RW Day 3 94.5% Source: Information provided by SeeCommerce. .5% „ Unfulfilled orders shipped from CW Day 2 „ Unfulfilled orders referred immediately 92. orders created 89.5% „ 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% --> decreases the amount of cross 97.5% quantities. .<Case Title> <Case Number> p.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% 3-5 in inventory management 98.5% Source: Information provided by SeeCommerce. 17 Exhibit 9 Daily Order Fulfillment Performance with SeeCommerce Weekly Plan Cumulative Fill Rate „ Advanced alerts and improved 91.5% --> Day 1 visibility into supplier delivery 92. „ Exception report of unfulfilled orders created „ Increased flexibility allows planners 97.5% --> Days to address remaining inefficiencies 98.