There was a time when just spending more money might have been the IT solution to problems that sales growth was creating at Howard Binghams company. But in late 2003, with major changes afoot, that wasnt an option.
At the time, business was good at Sprint North Supply, where Bingham is IT director. SNS is the distribution and logistics division of global telecommunications giant Sprint Corp., of Overland Park, Kan. The economic outlook for the companys customers was improving. The SNS sales force was being very efficient in landing new business. And the company expected substantial order growth in the coming year.
But that good news was coming at a price for Binghams staff. The projected growth was poised to strain SNS vital order-taking systems, potentially endangering the companys ability to serve customers.
That would be very bad news for a company totally dependent on its ability to ship thousands of orders—comprising thousands of products—to thousands of customers with complete precision and on short notice.
“We were seeing a growth curve in demand from our customers, and we had some new customer bookings coming in that we knew would drive our order volume up in late 2003 and early 2004,” said Bingham. “We looked at our systems and said, Everythings working fine today—but weve got to scale our system to accommodate our growth and still accommodate the peaks.”
That meant a choice: Add more hardware capacity or develop a new process that would enable the companys applications suite to process information more quickly. SNS chose the latter, giving customers and internal users the IT performance they required while staving off an expensive hardware upgrade.
SNS delivers more than 78,000 products to operations—some 10,000 companies in businesses across the telecom spectrum—throughout North America. Last year, the company handled more than 1 million orders, averaging approximately 4,000 each weekday (when most of its call volume is received).
The business demands constant attention to customer needs. Contracts with many SNS customers call for near-perfect performance in on-time—and, often, same-day—shipments and accuracy. And since SNS bills on the same day as it ships, late or inaccurate invoices can imperil customer satisfaction and put extra pressure on the companys inventory management system.
But while SNS realized in late 2003 that changes were needed, it wasnt ready to commit to the time and expense required to revamp its entire IT infrastructure.
“What it really boiled down to, from a financial perspective, was that it was really not beneficial for us to go out and get a bunch of new hardware at that point in time,” said Bingham.
Instead, Binghams team would have to squeeze savings where it could. To do so, the staff turned its attention to SNS order-taking systems.
All SNS orders—the majority taken online or by telephone, with some coming via fax—are funneled into a single electronic system that never stops running. Starting at 5 a.m. and running until 7 p.m., all available orders requesting same-day shipment are sent to distribution centers on a scheduled basis. The centers assemble and ship the orders and then report back to headquarters, where bills for that days orders are prepared and sent.
That process requires a tightly integrated suite of applications, performing the following functions:
• PeopleSoft Inc.s Enterprise Supply Chain Management line handles inventory and orders.
• Siebel Systems Inc.s Siebel Call Center manages customer information.
• Genesys Telecommunications Laboratories Inc.s Genesys Real-Time Customer Interaction Management Suite routes customers into the companys call center.
• EXE Warehouse Management (now SSA Global Technologies Inc.s SSA Warehouse Management) handles the workload in the distribution centers.
• Kewill Systems plc.s Kewill Ship is used to handle bill labeling and shipping processes.
• Demand Manager, from i2 Technologies Inc., helps track and analyze customer demand. SNS Web-based customer front end is custom-developed.
• Vitria Technology Inc.s Vitria BusinessWare is the messaging system that ties it all together.
SNS collects copious statistics on all its applications using Mercury Interactive Corp.s Mercury Performance Center, watching for poor performance or troubling trends. After analyzing the data, SNS noticed that transaction growth and rising data volumes were straining its PeopleSoft ERP (enterprise resource planning) application.
“We could see that we would have a bottleneck if we grew as we anticipated,” Bingham said.
Using Mercurys LoadRunner performance-testing product, SNS was able to get a picture of how its software was underperforming. After identifying fixes, it used LoadRunner again to simulate the effects those fixes would have in real-life conditions—in short, whether its planned solutions would float or flounder once they reached users.
“The technology allows you to emulate production usage in a lab environment,” said Rajesh Radhakrishnan, senior director of product marketing at Mercury, in Mountain View, Calif. “You can simulate thousands of users hitting your systems before you go live. The key benefit of that is risk mitigation. When you go live with [a solution], is it going to stay up and running, or is it going to crash?”
Meantime, SNS tracked its changes with Mercurys TestDirector, an application for managing testing by recording what tests were done and by whom, and what the results were. The idea, said Radhakrishnan, is to ensure “quality control” during an organizations tests and changes.
The tests verified SNS planned fixes. Once implemented, the company saw measurable results almost immediately. (The project ran for about six months, ending in May 2004.) SNS was able to get enough additional “juice” to handle another 20 percent increase in sales orders, said Bingham, without overstressing its systems. This bought SNS approximately a year because the company was able to push back the need for $750,000 in upgraded hardware.
Among other benefits SNS has seen since putting its software through the paces are the following:
The capacity to run more fulfillment cycles. Before fine-tuning its applications, SNS was running fulfillment cycles once per hour between 5 a.m. and 7 p.m. Now, Bingham said, it can handle twice as many. This gets more information to the distribution centers more quickly, improving workload management and customer service.
Shorter batch processing times. SNS runs its billing cycles overnight between 7 p.m. and 5 a.m., when new order volume starts to pick up again. SNS has been able to shorten the time required to run its billing cycle by 2 hours, meaning theres less chance that the associated demands on the system will bump up against the demands of the order-taking system when customers start to log on around 5 a.m.
Improved customer call center interactions. SNS tries to keep the customer experience smooth, which requires service representatives to have a responsive system at their disposal. With that in mind, SNS targets a maximum system transaction time of 3 seconds. Application tuning helped here: SNS now has 94 percent of its system transactions fall within that window, and an average of 1.88 seconds—down from 88 percent and 2.36 seconds beforehand.
Having identified and fixed issues dealing with its applications, SNS could turn its attention to networking and other issues, finding even more opportunities to improve performance. All told, SNS was able to reduce downtime substantially—”impacted user hours” fell from 15,000 in 2003 to 5,800 last year—and meet its goal of 99.9 percent system availability.
In the end, SNS was able to generate meaningful results from performance testing while controlling labor costs, leading to better service for both customers and internal users.
David P. Marino-Nachison is a free-lance writer in Washington. He can be reached at [email protected].
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