Page 655 - Introduction to Business

CHAPTER 18 The Digital Enterprise 629

Case in Point

Supply Chain Management at DaimlerChrysler

Some companies, either emboldened known collectively as SeeChain extracts parts supply
by a higher strategic vision or forced by information from Mopar’s ERP system, organizes the
necessity, have invested in real-time information, and generates reports and notices. Users
information systems to streamline manufacturing and can also search information at will.
distribution. For example, the Mopar Parts group at Armed with more timely information and better
DaimlerChrysler Corporation distributes spare parts to analytical tools, planners can anticipate parts
Chrysler, Dodge, and Jeep dealers in the United requirements and spot shortages before they
States. The group handles some 280,000 different happen, so needed parts are more likely to be
parts procured from 3000 suppliers and processes available at the regional warehouses when they are
more than 220,000 dealer orders per day. The needed. At the same time, orders move through
distribution chain includes four national distribution the system faster; if an order cannot be filled at the
centers and 15 regional warehouses. regional warehouse, inventory managers can use
Traditionally, Mopar’s order processing system the system to locate the parts more quickly. The
would first try to fill orders from the dealer’s nearest result is that 98.5 percent of orders are now filled in
regional warehouse; that resulted in an 89.5 percent three to five days. It is only a small percentage
fill rate the first day. Orders that could not be filled improvement, but one that translates into big bottom-
regionally were bumped up to the central line results. Mopar estimates it saves $10 million
warehouses, which would try to fill the remaining annually in transportation costs alone because it
orders. By the end of the second day, 92 percent of makes fewer rush shipments to fill dealer requests,
orders were filled. and millions more in reduced inventory levels.
Next, the system would try to fill orders from
Source: “Does Everyone Have the Same View in Your Supply Chain?
other regional warehouses; then inventory planners Not Sharing Real-Time Data Can Wreak Havoc Unless Software Ties
would check for parts in transit or would special-order It Together,” Larry Tuck, Frontline Solutions, July 2002. Reprinted
with permission of the author.
them from suppliers and express-ship them to
dealers. Still, after five working days, 2.5 percent of
Questions
orders remained unfilled—a small percentage, but
given the huge number of orders, an expensive gap 1. Describe how DaimlerChrysler is managing its
for Mopar and an inconvenience for too many supply chain to improve business operations.
customers. 2. Explain the role that enterprise resource planning
To improve the situation, Mopar implemented a is playing in DaimlerChrysler’s supply chain
supply chain system from SeeCommerce of Palo Alto, management efforts.
California, two years ago. A group of applications

among the firms that are members of a supply chain, e-business provides the links
between the end users and the supply chain and between a firm and the firms and
other entities with which it does business. DaimlerChrysler uses an ERP system to
integrate its business processes. It uses supply chain management, where its ERP
system is the backbone, to minimize the total costs of the chain and to maximize
the value to the end user. It uses e-business to buy goods and services electronically
from its many vendors, some of which are members of the supply chain and some
of which, like insurance organizations and health care providers for its employees,
are not. And it uses e-business to sell electronically its automobiles to Daimler-
Chrysler dealers and customers. If one adds the efforts of DaimlerChrysler to digi-
tally enable its relationships with its shareholders, then obviously this company is
being driven in the digital-enterprise direction.
One way in which e-business transactions can be classified is by the nature of business-to-consumer (B2C) e-business
The e-business that involves selling
the participants in the electronic transaction. Business-to-consumer (B2C)
goods and services to individual
e-business involves selling goods and services to individual consumers. consumers

Copyright 2010 Cengage Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.