Hasbro Inc.s business may be all fun and games, but the second-largest toy maker in the United States doesnt play around when it comes to business process management.
Two years ago, Hasbro decided to replace its manual vendor-inquiry process in an attempt to better identify gaps, bottlenecks and opportunities for improvement in its manufacturing process. After looking at several BPM packages, the Pawtucket, R.I., company deployed TeamWorks business process management software from Lombardi Software Inc., of Austin, Texas.
The decision to automate the way vendor inquiries are handled was easy, according to Hasbro CIO Doug Schwinn. Implementing TeamWorks not only streamlined the inquiry process but also provided greater visibility for the status of toy orders.
The deployment of the TeamWorks software, which took several weeks, was so successful that in its first year of using the BPM product, the company doubled productivity without increasing head count, said Schwinn.
Schwinn said he expects productivity will continue to increase with a stable head count.
Hasbro is deploying its BPM system companywide, while administering the software from its Pawtucket headquarters.
“We are looking for creative ways to operate more efficiently across the entire company,” Schwinn said. “Our ability to deliver the capability to look into our business processes has increased productivity to a rate that is astounding to me.”
An increasing number of enterprises are, like Hasbro, turning to BPM software, which combines planning and data analysis to develop strategic goals and track progress toward meeting those goals using financial and operational metrics. In fact, research company Gartner Inc., in Stamford, Conn., estimates that the worldwide BPM software market grew 15 to 20 percent last year and exceeded $518 million in sales volume. In addition, Gartner predicts the BPM market will see moderate double-digit growth, to $598 million in sales volume, through 2007.
Hasbro, which posted $3.1 billion in sales last year, began outsourcing toy manufacturing to companies in China a few years ago and has sourcing divisions in Shenzhen, China, and in Hong Kong.
Until two years ago, the company used SAP AGs MySAP ERP (Enterprise Resource Planning) system internally but relied on faxes, e-mail and phone calls to communicate with its suppliers and manufacturing vendors.
When a customer inquired about a product, the inquiry was manually entered into Hasbros operations system, printed and faxed to the product vendor with a requested commitment date for the product. The vendor would review the faxed inquiry, make changes, then fax the document back to Hasbro, where an employee would enter the commitment date into the SAP ERP system.
This process resulted in long lead times for delivery from China to the United States or Europe—especially when a fax or phone call was missed. In addition, the manual process provided little transparency into the ordering process, making it hard to track missed orders and other problems.
“We knew we had to really look at ways to improve our process because any errors like missed phone calls or faxes immediately created gaps in our ability to deliver product,” Schwinn said. “We also knew we were going to be driving more and more volume through that sourcing operation and really needed to operate as efficiently as possible.”
Schwinn said he didnt want to open his SAP ERP system to external entities, for security reasons. He looked at a number of options, including SAPs portal technology, but decided it would take too long to deploy and would require outsourcing the development to a third-party services company.
Two years ago, Schwinn decided to deploy Lombardis TeamWorks software to automate the entire invoice process between Hasbro and more than 100 Chinese vendors. The TeamWorks system—which Hasbro customized and calls eConnect —enables the company to extend the enterprise by providing a portal through which it can communicate with vendors.
Low-end suppliers receive an e-mail message with a URL that links them to eConnect via an HTML browser. High-end suppliers have portal sign-ons that enable them to directly log on to eConnect.
“Some of our vendors have technology that exceeds ours; others only have access to e-mail and the Internet,” Schwinn said. “So what we did was build a system that would allow us to communicate with whatever tools they have.”
Today, the TeamWorks process automatically sends all customer inquiries to a Hasbro employee for review. If the inquiry is not reviewed within a specific period of time, as designated by Hasbros business rules, the system automatically sends the inquiry to the product vendor to avoid bottlenecks.
Once the vendor receives the inquiry electronically, the vendor responds via the portal, and that order is automatically updated in Hasbros SAP system.
Playing by the rules
Based on business process rules written by Schwinn and his team, the system constantly seeks inquiries that need follow-up. When an item remains unaddressed beyond the preset window of time, the system requests manual intervention by a Hasbro employee.
“We use an 80-20 rule for the system. Eighty percent of the time, something is within tolerance of rules and doesnt need any manual interaction. This allows us to focus on the 20 percent that actually need an employee to resolve,” Schwinn said.
In addition, Hasbro employees are able to log on to the eConnect system to create an on-screen HTML report or a Microsoft Excel spreadsheet of the outstanding tasks they need to perform, which provides additional visibility into the vendor-inquiry process.
When the company is waiting for a vendor to respond to an inquiry, Hasbro employees also have the option of putting that inquiry on hold before the operations system is updated. Employees are then able to request notification once the vendor has responded.
The implementation was so successful that Hasbro has been able to take days out of the vendor-inquiry process. The company has expanded the use of eConnect to handle purchase orders, capacity analysis, shipping notices and custom interfaces, in addition to quotes for orders.
Hasbro is building on eConnect to roll out a reservations system that will enable freight companies in the United States to pick up products from Hasbro warehouses and docks and deliver them to customers.
In addition, the company has opened up eConnect to its domestic game manufacturers as well as to suppliers of raw material in the United States and in Europe.
“The purpose of a BPM system was to drive good results, and we constantly get comments from our vendors that were far ahead of other companies they deal with,” Schwinn said. “We increase productivity on our end and help lower costs on the vendor end, so its really a win-win for all.” ´
Senior Writer Anne Chen is at [email protected].