In facing up to costly inefficiencies in its supply chain, Avnet, among the larger distributors of electronic components and embedded systems, saw both a challenge and an opportunity.
Advances in b-to-b automation during the past decade, including direct connections between ERP systems, helped streamline interactions between Avnet and its handful of large customers. In those relationships, Avnet has reaped the benefits of operational efficiencies, supply-chain visibility, and automated transactions and business processes. But the distributor’s smaller partners — hamstrung by small IT staffs and limited resources —were not in that automated loop.
Bill Chapman, Avnet’s CTO, realized the company needed to bring its wide pool of smaller supply-chain partners into the 21st century. “We were looking for ways to create supply chain efficiencies down to these small and midsized companies, which normally are just not serviced by the newer innovations in supply chain. It is a much more dramatic problem down there,” Chapman says.
To get there, Chapman and the IT organization at Avnet conceived the B2B Partner Automation solution, a set of business processes and services accessible via Web services protocols. Alterternatively, customers can take advantage of the direct connections Avnet built for several ERP packages popular among SMBs, including those sold by VBS (Virtual Business Suite) Software, Siebel Systems, and SAP.
“In the direct connect, we put a little application logic right in front of the Web service. We are doing their custom code for them,” Chapman says.
Avnet’s investment in resources has been relatively small compared with the payoff. The effort started in November 2003, with nine Avnet IT staff members who worked approximately four weeks to develop the Siebel solution and six weeks to create the VBS connection. The B2B Partner Automation solution debuted in December 2003, and currently has two partner companies working in full production, transacting approximately $50 million per year. Four to six more partners, totaling another $50 million in transactions, are preparing to join.
Reconciling business processes among divergent companies has posed the greatest challenge, Chapman says. Specialized services such as credit holds, credit extensions, authorizations, financing, and contracts must sync up on both sides. When the kinks are ironed out, the benefits include better flexibility, visibility, and responsiveness throughout the supply chain, not to mention much faster transactions.
Without standard Web connections, says Chapman, the automation initiative wouldn’t be possible. “It’s one thing to create interfaces to a few Fortune 500 companies, but it’s another thing to create interfaces down to tens of thousands of companies that have different mapping and transactional protocols. That is what these Web services do,” he says.