Motorola creates integrated supply chain with clear focus, fast results
By William Atkinson -- Purchasing, 6/14/2007 2:00:00 AM
Being big has its advantages. One of these is being able to create significant leverage within the supply chain. Being big can also have its disadvantages. One of these is being so far-flung and separate that you fail to realize these leveraging opportunities exist. Telecom giant Motorola in Schaumburg, Ill. is a rarity of sorts: a large company that very much realizes its supply chain leveraging opportunities, but also moves at lightning speed to capitalize on those opportunities.
When Ed Zander became chairman and CEO in early 2004, he realized that there were more things the company could do to take advantage of "one Motorola."
"[Zander] created a task force to investigate what could be done to become best in class, and one thing the task force found was that best in class companies have an integrated supply chain," says Stu Reed, executive vice president, integrated supply chain at Motorola.
Cathie Kozik, a member of Reed's leadership team and corporate vice president for IT, integrated supply chain, agrees: "Supply chain jumped out very early, and we realized we could leverage supplier relationships across the business as a whole."
Almost immediately, supply chain leaders from the individual businesses came together to think outside of their positions and find ways to work together as a single integrated team. The driving focus was specifically on what would be best for their customers (internal users and external customers).
The leaders created task forces to identify the opportunities that existed, as well as the implications and risks. This process took almost nine months. By the end, the team made a proposal to Zander and the board to create an integrated supply chain. The proposal received strong support and subsequently led to the hiring of Reed in early 2005 from IBM.
Making this major shift was not easy, though. One of the most significant challenges was the major cultural change required to get employees to think and operate as one Motorola. "The biggest initial change was the movement on day one of nearly one-third of Motorola's employees into a new group called 'integrated supply chain,'" explains Reed.
Part and parcel with this challenge was shifting people and functions from vertical approaches to horizontal approaches. "This led to issues related to role clarity such as who would be doing what, how, and with whom," says Kozik.
Fortunately, though, things progressed rather smoothly. "There weren't as many obstacles as might have been expected in a transformation of this size and scope," adds Kozik. There were several reasons for the smoothness and speed of the transition.
The most fundamental and important key to success, according to Kozik, was the right leadership, which included Zander, Reed, and the supply chain leaders from the individual businesses, who were all people who believed in the "art of the possible."
"Another key was taking the time to understand the company's businesses and find out where we could add value, then articulate our vision and strategy and key focus areas," adds Reed.
Kozik agrees. "We created a single clear vision and mission of who the new group was and where we wanted to go," she states. "Then, we narrowed it by identifying the top priorities that we wanted to achieve."
 Reed: “Another key was taking the time to understand the company’s businesses and find out where we could add value.”
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 Kozik: “These are clear demonstrations that we have become much more efficient and effective in what we do.” |
Also, management set very clear expectations for people in the new integrated supply chain group, one of which was to be very up front and candid with concerns or problems; "straight talk" as Reed referred to it.
Another key focus for new members of the integrated supply chain team was to be innovative. "We didn't want them to look a little outside the box," says Kozik. "We wanted them to look way outside the box." Another emphasis was that people generate enthusiasm and passion for what they were doing, with the realization that they could control their own destiny. And tied to that was the expectation that old thinking should never get in the way of reaching goals and taking calculated risks.
Once the new organization was in place, the results began mounting up at an impressive speed and intensity. For example, from 2005 to 2006, the group achieved a 51% increase in revenue per supply chain employee and a 75% increase in units shipped per supply chain employee. It realized a 22% improvement in inventory turns and was able to cut by one-third the time it took to integrate electronically with new suppliers. "We have also seen 30% fewer quality problems reported by our customers, and a 20% reduction in factory defects," states Kozik. "These are clear demonstrations that we have become much more efficient and effective in what we do."
Reed adds another impressive result to demonstrate the newfound agility of the organization. "Our biggest business, Mobile Devices, moves very quickly. The volume required to get to 'mature volume' or a daily going rate increased by 50%. But the speed at which we have been able to deliver that volume to Mobile Devices has improved by 60%, and the quality has improved by 40%," states Reed. "In addition, we anticipate replicating these results across all of our businesses."
In thinking ahead to the future, the integrated supply chain management senior leadership team continues to believe that it has the right goals and priorities in place. "However, we have added some new areas to focus on," explains Kozik. One of these is tighter collaboration with suppliers, such as the sharing and passing of data, as well as the alignment of the suppliers' facilities to Motorola's.
Besides working more closely with suppliers, the group plans to work more closely with the engineering team and the sales team, according to Reed. "We want to create common strategies and processes with them," he states.
With engineering specifically, the group wants to improve the processes by which engineering hands off products from the design phase to suppliers so that the company can ramp up new product introductions more quickly, while at the same time improving quality and reducing cost.
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