Triumphs & Trip-Ups In 2004By Baselinemag Print
Here's a look at the winning and losing technology projects of 2004. Toyota, Ameritrade and Wal-Mart are among the winners. Losers: Wal-Mart suppliers, Wells Fargo and Ford.
The most intriguing-and discouraging- projects and returns on investment in 2004 were separated by the simple motivation of self-interest. It's in Ameritrade's self-interest to automate and innovate in the way it serves its customers online. It's in Toyota's self-interest to get cars to customers faster.
Of course, self-interest can go too far if it doesn't serve constituents. Wal-Mart's sheer girth makes whatever it deems to be its self-interest everyone else's. Hence, the race to meet its radio-tagging mandate. But even that could change if its suppliers find, over time, that they don't get a return on the effort.
Ask Ford. The company couldn't get suppliers to buy into an e-procurement system and had to pull the plug after a $220 million investment.
"In the auto industry, it's historically club versus carrot," says AMR Research analyst Kevin Mixer. "Without the carrot, suppliers walk away."
Here's a look, in numbers, at the year.
Days Toyota saved on vehicle in-transit time by using data warehousing to plan more efficient routes.
Toyota Motor Corp. overtook Ford Motor Co. as the world's second largest automaker by sales volume in 2004. One reason was popular cars such as the Prius gas-electric hybrid sedan. Another reason: the information systems at its North America unit.
Over the past seven years, Toyota has led the industry in how it captures and mines data from every corner of its manufacturing, logistics and sales operations to gain business intelligence.
Using applications from IBM's Red Brick unit, Oracle and Hyperion Solutions Corp., Toyota re-engineered its data warehouse and saved $30 million a year in North America. With data mining, Toyota determined more efficient transportation routes and reduced the time it takes to get its vehicles to customers from 37 days to 18. Dealers also get immediate information on vehicles they've ordered. Toyota identifies sales trends faster, and can determine the best locations for new dealerships. Research firm IDC calculated the overall project's return on investment at 506 percent.
Toyota's sales in North America increased by 60 percent between 1997 and 2003, from 1.3 million units a year to 2.1 million, yet it has managed to keep head-count growth to 20percent, or 36,300 employees. Much of this growth occurred in production, where Toyota has increased units produced in North America from 838,069 in 1997 to 1.28 million in 2003. Among other improvements: Toyota's North America logistics department is handling a 37 percent increase in shipment volumes with a 3percent increase in staff.
With twice-daily feeds from dealerships, project lead Karen Bolger says Toyota can "decide quickly if a dealer's doing well or not, and take immediate action."
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