At Hasbro Inc., it's all fun and games until somebody loses the toys. A $3 billion maker of some of the most recognized brand name toys, including Playskool, Tonka, Mr. Potato Head, G.I. Joe and Star Wars action figures, Hasbro is serious about ensuring that it will always meet retail requirements based on consumer demand.
Typically, sales are predictable. For instance, the company knows how many Mr. Potato Heads it will sell to Wal-Mart each year, which makes forecasting easy. But there are sales spikes associated with the holiday season, and Hasbro needs to know where its Darth Vader toy is being produced, for example, what the manufacturing capacity is and whether or not the deadline will be met.
Hasbro, like many other U.S.-based companies, outsources its manufacturing. Not surprisingly, the majority of toy production takes place in China. Managing the growing number of vendors, manufacturers and freight carriers that Hasbro uses in the region can be a time-consuming task that is often unstructured. That was the problem facing Hasbro's Hong Kong office -- known as Hasbro Far East (HFE) -- which has responsibility for all the procurement, customer requirements and logistics of getting products to the U.S. and around the world. HFE deals with about 80 vendors in China, and for many years all coordination with business partners in South China -- up to 50,000 contacts annually -- was done via fax and phone.
GROWING EFFICIENCY
"Eighty percent of the time we know when we give the vendors a schedule that they'll [meet] it because we know their capacity," says David Adams, business integration manager at Hasbro's headquarters in Pawtucket, RI. But someone has to look at every fax generated in the chain of communication, which becomes tedious. "We wanted to have collaboration with the vendors and only have to manage by exception," he says.
That's why, in the last few years, the company has invested in a worldwide deployment of SAP AG's ERP, which is working in combination with business process management (BPM) tools from Lombardi Software Inc. (Austin, TX) that help Hasbro track the entire backend of the supply chain -- from the time a customer order is taken to the time the product is shipped.
SAP was deployed in the U.S., Europe and Hong Kong offices in 2001. Quickly, however, Hasbro realized that it needed to automate processes that fell outside of ERP's purview. "SAP was utilized as a transactional engine -- we needed to be able to manage the business process that surrounds the transaction," Adams explains.
CONNECTING WITH CONTRACTORS
So Adams went searching for a way to automate integration, collaboration and content management. Lombardi's software, called TeamWorks (Hasbro has internally dubbed it e-Connect), layers on top of SAP and pushes out documents -- such as requests for quotations or purchase orders -- to Hasbro's contract manufacturers. The tasks generated are based on business rules that Adams applied to the TeamWorks engine. SAP Business Connectors employ remote function calls that push documents from SAP to TeamWorks.
If, for example, a delivery is running late, the system will generate an e-mail alert and send it to the individuals involved. The vendor might come back with an alternative schedule, but all of the information related to who is responsible for what materials is tracked within TeamWorks, giving Hasbro officials the big picture of what's happening behind the scenes.
TeamWorks, built with Java and based on a service-oriented architecture (SOA), is made up of about 10 major modules that allow users to visually model a business process. TeamWorks applies a model-driven approach to process definition and execution. It can simulate load, cost or performance bottlenecks, plus it has the ability to monitor the process and report back in order to fine-tune the model.
"Our customers find they'll iterate a process between four to seven times in order to get it efficient," says Rod Favaron, president and CEO of Lombardi Software. "The key to the technology is the ability of the process to change itself rapidly in order to drive cost out and make it more efficient. It's not unlike a factory floor process [designed] to get rid of scrap, fix yield or reduce latency and delays. It's the same concept applied to a white-collar process."
Aside from streamlining business transactions between Hasbro and its vendors, the system adds a layer of visibility that can pinpoint where the supply chain may be breaking down. At Hasbro Far East, where the majority of vendor communication takes place, there have been over 800 users of the system, processing over 200,000 electronic documents every year, according to Josephine Lau, director of operations and planning in the Hong Kong office.
"In traditional shipping processes ... the trail of paperwork, files and faxes among shippers, suppliers, third-party logistics players and shipping lines would be a nightmare to manage," Lau says. That's because the shipping process includes online bookings, shipping orders and tariffs. Hasbro, however, has it all automated on one platform for all the parties to see. "It improves supplier and logistics performance, and supply chain visibility on track and trace," she says.
While ROI remains difficult to measure, both Adams and Lau say that, even as the volume of its freight business out of Hong Kong has increased, Hasbro hasn't had to increase its staff. "They were able to absorb that at no cost," Adams says.
EASE OF USE IS KEY
The TeamWorks system itself doesn't require anything more from Hasbro partners than an Internet connection. Vendors log on to Hasbro.com and then sign in. The user interface includes a "coach" to walk vendors through processes, so there is no need for training.
Having an organized approach to deployment and integration is an important element in the successful use of the BPM software by external vendors as well as company employees. "The methodology of how you deploy BPM is almost as important as the technology," says Lombardi's Favaron, especially when every process hooks into one major system, such as SAP, but the average process hooks into another two to three enterprise systems either in the back office or front office -- such as CRM. If it's not easy to do, fully automated and completely integrated, it won't get used, he says.
Hasbro, however, has proven TeamWorks is an effective way to manage its vendors, manufacturers and freight carriers. Now, Adams plans to expand the system to include customer-facing applications. "We'd like to have it more integrated so that the sales reps on the road with the laptops have more timely notification, rather than having to wait for reports," he says. That way, if a Hasbro representative is at Wal-Mart pitching the hottest product, they can tell the customer the exact availability and timeframe for delivery, he adds.
That capability will come in handy this holiday season when, Hasbro hopes, Darth Tater, the Mr. Potato Head version of the well-known Star Wars antagonist, may be as big a seller as the Vader action figure. The good news is that, if the company is right, Hasbro now has the tools to get the toys out on time.