Kawasaki's supplier portal provides quick ROI
The return on investment was very quick. The portal paid for itself in just a few months.
- Customer Kawasaki Motors Manufacturing Corp, USA Consumer Products (KMM CP).
- Challenge Most suppliers were relying on manual procedures as EDI was too expensive, resulting in laborious procedures for processing shipments and invoices.
- Solution Portal for suppliers to respond to purchase orders and generate the EDI files, PDF box labels and invoices.
- Key Benefits Significant reduction of labor cost, faster processing and savings from payment discounts.
- Products Used Visual LANSA Framework
Some companies choose to implement big ERP packages that require them to change their business procedures to what their ERP vendor has determined best business practice. In these environments it often becomes technically and financially challenging to add or customize business functionality. Kawasaki Motors Manufacturing Corp., USA decided to go along a different path and is reaping the benefits.
Kawasaki's consumer products plant in Lincoln, Nebraska, operates on a 'just-in-time' basis to eliminate expensive warehousing and over-ordering of parts. For this, the company needs to work closely together with its suppliers. Using the skills and knowledge of its in-house IT team, Kawasaki's Lincoln plant developed an online supplier portal that paid for itself in just a few months. The supplier portal, underlying ERP system and the entire process of generating purchase orders, packing slips, box labels, invoices and EDI transactions consists of LANSA-based applications.
Kawasaki Motors Manufacturing Corp, USA (KMM), is part of Kawasaki Heavy Industries, Ltd. In 1974, Kawasaki was the first foreign vehicle manufacturer to open a manufacturing plant in the USA. Today Kawasaki's Consumer Products manufacturing facility in Lincoln, Nebraska, employs over 1,000 people and occupies nearly 1.3 million square feet of manufacturing, office and warehouse space. In 2001 a rail car plant was completed at the Lincoln site, adding 700,000 square feet for light rail car manufacturing. The Maryville plant, opened in 1989, produces general purpose engines and employs 600 people.
Both the Lincoln consumer products plant (KMM CP) and the Maryville engine plant use LANSA-based solutions on IBM i power servers, but independent from each other and tailored to their individual needs. KMM CP has been using LANSA ERP Frameworks since 2002. For its communication with suppliers KMM CP uses LANSA EDI Direct, which is now an integral part of the LANSA Composer product.
For those suppliers that cannot handle EDI, KMM CP previously used a third party web portal. Since there were significant fees involved for the supplier (and for KMM CP), use of the third party portal wasn't widespread. As a result, many suppliers used fax or email, with all the associated inefficiencies.
The third party portal offered some efficiencies, but was still far from perfect. Paul Kramer, based at the Lincoln plant and Assistant Manager Information Systems at KMM explains, "There were too many links in the chain: the supplier, the third party portal, another EDI processor (used by the portal) and us. If there were hiccups in the connections between any of these systems, transaction files would not arrive."
"Errors could go unnoticed until late in the process and, when finally discovered, it would be hard to trace where things went wrong. Some of the shipments that arrived at the receiving dock could not be processed because we had not yet received the ASN (Advance Shipment Notification), even though the supplier was sure they had submitted it."
KMM CP decided that it would be better to have its own supplier portal. "We could simplify the communication process by eliminating third parties and we could save our suppliers money by offering the portal for free. Consequently, the uptake would be bigger and we could even consider enforcing it. Plus, having the portal under our control would allow us to tailor it to our needs and integrate it with our ERP system," says Kramer.
KMM CP's IT team had years of experience using the LANSA tool set for its core ERP solution, but the supplier portal was KMM CP's first big web project. KMM CP decided to capitalize on and upgrade its existing LANSA skill set and deliver the portal using the Visual LANSA tool.
We could simplify the communication process and save our suppliers money.
A project team was put together consisting both of KMM CP's in-house developers and LANSA Professional Services consultants. Using LANSA WAM development technology, in combination with LANSA's prebuilt industry standard web components, the team built a custom supplier portal.
The Material Requirement Module in KMM CP's ERP system recognizes demand and creates purchase orders which are automatically published in the supplier portal. To make sure that the orders aren't overlooked by the supplier, new orders are published in a special web section and stay there until acknowledged by the supplier. Orders that haven't been acknowledged within a certain time frame trigger an alert and send-reminder to the supplier. Once the orders are acknowledged, they become part of the supplier's open orders that can be viewed and filtered by several criteria.
When due dates come around, the supplier goes back to the portal to indicate which orders will be shipped, specify the exact number of items per box, assign box-ids, double check totals and merge boxes if needed. When shipments are confirmed, the portal creates box labels. The labels, PDF documents generated by LANSA Integrator, contain the proper barcodes and all the other information needed to identify a box and its contents. Once the boxes have shipped, the supplier can use the portal to generate an invoice on KMM CP's own system.
"All this is done in the web portal for which the supplier needs nothing else than a browser," explains Kramer. "Also, the supplier doesn't need an expensive barcode printer or complex set of fonts, because the PDF labels already contain the barcode images."
Behind the scenes the portal generates EDI transactions (ASNs, invoices, etc) which then follow the same path as EDI files transmitted directly by non-portal suppliers. "We didn't have to change any of our programs to process the transactions from the portal," explains Kramer.
All this is done in the web portal for which the supplier needs nothing else than a browser.
"It works really well," says Kramer. "Boxes are identified immediately upon arrival when we scan the box labels. Until we rolled out our own supplier portal, the majority of our suppliers did not use any type of EDI. We spent hours on shipments, because it involved manually marking the received items against the packing slips. Now we can receive and process large shipments in a fraction of time. Multiply that by the number of shipments we handle a year and it's clear that the labor savings are enormous."
Today, when boxes arrive and the labels are scanned, the goods are automatically marked as received and go through a computerized 3-way-match, meaning that when the price and quantity of the purchase order, packing slip and invoice match, the invoice is marked as ready for payment. "And obviously, they do match because they are all on our system and created based on the same correct data," explains Kramer.
"There are significant savings in straight dollars as well. Because our procedures are now so quick and efficient, we have the ability to negotiate better payment discounts with our suppliers. Using our electronic payment system we can schedule payments just before the due date, allowing us to maximize interest and still pay the supplier within the agreed terms."
"The portal was easy to roll out and is well accepted by our suppliers. It's far more efficient than the hosted portal we used previously and affects many business areas, from how parts are ordered to how they are received and paid for. When you add up the labor savings and payment discounts, the return on investment was very quick. The portal paid for itself in just a few months."
The return on investment was very quick. The portal paid for itself in just a few months.
The supplier portal is only a small part of KMM CP's overall solution infrastructure. For its core manufacturing , distribution and financial systems, KMM CP uses the LANSA ERP Frameworks. This solution comes with source code, thus eliminating vendor lock-in and ongoing maintenance and upgrade fees. KMM CP uses Visual LANSA to add web and Windows functionality, while the core financial modules have been modernized with RAMP. KMM CP is planning to modernize the ERP modules with aXes.
KMM CP has no problem mixing and matching web, Windows and 5250 development and deployment. "We develop most of the new applications with Visual LANSA Framework," explains Kramer. "Small modifications to 5250 applications we may do in the traditional LANSA tool, but if it’s anything major we prefer a Windows interface and the productivity of the Framework."
Six developers have LANSA skills and also handle the tiny bit of CL and RPG applications that are still left. There is one dedicated .NET developer plus there are some .NET skills in the LANSA team as well. Most .NET development is for websites, but may occasionally include a production application. "We are exploring LANSA's IBM i and .NET integration capabilities and may use LANSA Open for .NET in certain instances," says Kramer.
KMM CP uses LANSA's original EDI Direct tool for exchanging transactions with its suppliers and the newer LANSA Composer product for EDI transacting with Kawasaki's Rail Car Division, which runs SAP. LANSA Integrator is used for PDF generation and also plays a role in KMM CPs electronic banking.
"LANSA's programming language isn't complex at all, so our developers picked it up quickly. We use LANSA's rapid development for web, Windows and green screen applications. So we can get it out there in many different ways using the same tool. We don't have to use different tools for different types of clients, not even if we would deploy to SmartPhones or tablets."
"LANSA provides a very good base system and the flexibility to customize it to our business needs. So often you hear about ERP packages where you have to change your business practices to match the way the package works. That's not the case for us. We can build the applications to suit our processes," concludes Kramer.
We don't have to use different tools for different types of clients, not even if we would deploy to SmartPhones or tablets.
Company and System Information
- Kawasaki Motors Manufacturing Corp., U.S.A. manufactures and distributes small engines, ATVs, personal watercraft, Mule and Teryx utility vehicles and passenger railcars from its manufacturing plants in Maryville, Missouri and Lincoln, Nebraska.
- Kawasaki’s Maryville plant has used LANSA since 1995 and more recently replaced its old ERP system with LANSA’s ERP Frameworks. Kawasaki’s Lincoln plant has been running LANSA's ERP Frameworks since 2002.
- KMM CP's IT department consists of 11 staff, including infrastructure support.
- For more information visit: www.kawasaki.com