Simultaneous Software

As director of technical standards and systems for Procter & Gamble,
Michael Walsh oversees a web of technology that spans the globe. P&G’s
computer network links 900 factories and 17 product development centers in 73
countries. The global network enables the $39 billion consumer-products colossus
to produce and market 300 of the world’s best-known brands, including Tide,
Folgers, and Crest. It has become increasingly difficult to make such a wide
swath of products with speed, efficiency, and quality.

To help solve the problem, Walsh tapped software from MatrixOne to automate
P&G’s product development process. Dubbed the Corporate Standards System,
the software lets researchers comb a database of 200,000 product designs to see
if they already exist in another part of the company, eliminating redundant
efforts. CSS also has trimmed product design times in half, because it lets
far-flung developers cook up formulas together on the Web and enables managers
to measure their progress against timetables. When things fall behind schedule,
the software automatically sends an e-mail reminder to a worker when they need
to, say, approve the packaging of a detergent. "New collaborative tools
like CSS make global science easier to do," says Walsh.

Potential savings

P&G is in the forefront of perhaps the most important trend in business
e-commerce: collaboration technology. It has been five years since companies
started using the Web to share information and streamline purchasing. Now,
despite the slowdown, the corporate US has begun using new Web software tools to
help employees and business partners work together to make products faster and
more cheaply. A July study of more than 350 executives by Deloitte Consulting
found that 57% believe collaborative e-commerce is critical to their business
over the next year. That’s driving companies to spend $10.6 billion on
collaborative software this year, growing to $33.2 billion by 2004, according to
the Aberdeen Group and AMR Research.

The latest tools are coming from a new generation of
companies. Collaboration functions also are being added to older supply-chain
programs. In contrast to early collaborative software such as Lotus Notes, the
new tools are easier to use and to customize.

The recent ascent of collaboration stems from a
dissatisfaction with the limitations of electronic marketplaces. Many public
e-marketplaces are essentially auction houses: They don’t offer the means to
form deep business relationships online. Through online collaboration, a
manufacturer can, say, share its sales forecasts with suppliers so they can
fine-tune inventories–resulting in potentially enormous savings. Yankee Group
Research estimates that over the next five years, collaborative commerce can
save companies $223 billion by cutting inventories and slicing production costs.
"Collaborative commerce will substantially enhance the profitability of
firms," says a professor at the University of Pennsylvania’s Wharton
School of Business.

It’s still early, but some companies are seeing gains.
Limited Logistics Services, the shipping arm of clothes retailer The Limited,
used to float bids to 35 trucking companies via phone or fax, and the truckers
would send back offers. Efficient it was not. Sometimes, LLS had to air-freight
shipments because it couldn’t find any trucks. Now, LLS uses a Web service,
Logistics.com, that invites shippers to bid on jobs and develops an optimal
delivery plan by weighing factors such as traffic congestion and truck
availability. Instead of LLS paying for pricey one-way trips, Logistics.com
finds shipments from other LLS warehouses to fill trucks on return trips. The
service also enables truckers to learn enough about a shipment to offer the best
price. Thanks to the service, LLS has sped up its average delivery time by a
week, increased the reliability of its shipping rates by more than 10%, and cut
its delivery costs by $1.2 million, or 3%, this year.

Manufacturers, too, stand to gain from this. In March, SCI
Systems, a $9 billion contract manufacturer, rolled out Agile’s software to
four of its factories to coordinate production plans with customers and
suppliers. SCI builds tech gear for companies such as Nortel Networks. In the
past, SCI engineers and manufacturing customers would phone, e-mail, or fax
product specifications to one another. This process created errors and
bottlenecks when product-design changes would get stuck on an engineer’s
desktop. Now, SCI workers update and view the changing product specifications in
real time. Vincent Melvin, SCI’s chief information officer, says the system
has increased quality and cut production setup times by 20%. "Everyone can
find the right information at the time they need it," says Melvin, who
plans to roll out the software to all 50 plants this year.

Keeping secrets

What’s the future of collaboration? The biggest factor
slowing adoption is that employees and departments tend to hoard data. For
inter-company collaboration to work, businesses must build trust.

Collaboration aficionados are forging ahead. They expect that
the expansion of broadband technology will trigger yet another wave of
collaborative applications. But even without an Internet upgrade, collaborative
commerce technologies are already paying off for P&G and other companies. If
these pioneers keep logging productivity gains, they’ll soon have a lot of
company in the collaboration fan club.

By Spencer Ante in BusinessWeek. Copyright 2001 by The McGraw-Hill Companies, Inc