Motion Industries is taking a new approach to continuous improvement that promises lasting benefits for its supply chain.

Motion embarked on an Operational Excellence program to improve its internal operation for the benefit of customers and suppliers in June 2003. Under the leadership of Ellen Holladay, senior vice president of information technology and director of operational excellence, the program is part of the company's overall strategic planning process.

Based in Birmingham, Ala., Motion Industries is North America's largest distributor of bearings, mechanical power transmission, electrical power transmission, fluid power transmission replacement parts and hose products.

Approached by Motion President and CEO Bill Stevens to spearhead the new program, Holladay spent three months gathering information from every area within the company before developing a methodology for executing the program. Holladay is involved because of her role as leader of the company's IT operation; many of the program's initiatives call for automating processes that were previously performed manually. Every employee in the company potentially has a role in the program.

"Our mission is to challenge current processes, service customers better, reduce costs and improve our ability to differentiate ourselves in the marketplace by having the most efficient business model in the industry, and to continue to do that," says Holladay. "We are committed to delivering that difference."

The methodology, based on classic operational improvement methodology, is used to evaluate the company's business processes and their impact on customers and suppliers on an ongoing basis. "The focus is on eliminating unnecessary, inefficient and non-value-added activities and streamlining and improving value-added processes," she says. "Our methodology is geared toward not only our internal processes, but also our operational relationships with customers and suppliers. By focusing on initiatives that benefit all three parties, we can gain some real efficiency across the supply chain."

The methodology consists of four phases: planning, opportunity assessment, implementation and refinement.

In the planning phase—which is ongoing—Holladay and her team gather suggestions from company employees on ways to improve business processes. They select and prioritize these ideas for the next phase.

At the opportunity phase—which is the foundation of the program—a cross-functional team of 10-12 company employees examines the current business model and identifies opportunities for improvement. It then creates a desired business model and selects projects to take the process from its current state to the desired state by devising new systems, introducing new policies and procedures, adding training programs, etc. After the new business model is implemented, the team evaluates its effectiveness on an ongoing basis for further refinement.

"We are not approaching an activity and simply trying to make it better and better," says Holladay. "We question whether there's a way to leverage our current resources in a more efficient manner. For instance, if we look at branch operations, whose sole mission is to service the customer and find that they are spending too much time on administrative tasks, we would remove these activities and consolidate or centralize them."

To date, Motion has conducted opportunity assessments of these processes: billing and collections, procurement to payment, internal audit and electronic communications. Each is now in the implementation phase.

Measurement is key to the program's success. "When we move to implementation from opportunity assessment, the first thing we do is define those things we want to improve," says Holladay. For each initiative, the group determines specific metrics, such as error reduction, cycle time reduction or transactions handled per person.

Already, automating communication between Motion and its manufacturer suppliers has yielded benefits for both parties, and is expected to continue to do so. For example, through customized Web sites, suppliers now have ready access to point of sale and inventory information. This improvement has helped the distributor and its suppliers to save both time and money.

"In the past year, we've taken a good, hard look at ourselves and how we contribute to the supply chain," says Holladay. "Now, we are beginning initiatives with customers and suppliers to establish Operational Excellence partnerships to increase supply chain efficiency." She plans to introduce Operational Excellence to suppliers beginning later this month, and involve Motion customers in the program by the end of the year.