BUSINESSWEEK ONLINE:   Business Week ebiz
Q&A with Les Shroyer March 17, 1999 Motorola's Extranet Edge The company's CIO talks about how linking business partners into its operations enhances performance Motorola Inc. (MOT) understands the power of the Internet. During the past 10 years, the Schaumburg (Ill.) wireless communications and semiconductor company has been improving an electronic system that makes doing business with customers more efficient. It has to. With operations in countries around the world and hundreds of vendors, every minute is crucial. Motorola's extranet -- which uses technology from companies like Chicago-based Click Interactive Inc. -- connects vendors and distributors via the Web. The system lets customers speedily check product availability and place orders. Processing an order for a two-way radio, for example, once took days. Now it takes eight minutes. Motorola Chief Information Officer Les Shroyer spoke to Business Week correspondent Roger O. Crockett about the extranet edge. Here are excerpts of their conversation: Q: How are you using the Web to conduct business? A: We think of E-commerce in two areas: Business-to-business between us and our trading partners, and business-to-consumer. We do some of the business-to-consumer, but the bulk of our products move through indirect channels to other manufacturers. We have literally dozens of sites up now, and we will have hundreds as we further penetrate the usage of Web-based commerce. Q: What advantages does Web-based interaction with customers give you? A: The thing we are seeking is cycle-time reduction. It makes us more responsive to our customers. If we eliminate the dead time involved between receiving and responding to orders, it drives the cost down for both us and the trading partner. We can serve customers around the clock. That's important in a global business world where sun never sets. Q: So what are the cost savings? A: For a purchase order that costs $50 to process, we can literally get that down to pennies. These days we're so customer-focused we appreciate cost savings. And the payback [on the investment to build the Web system] can be short -- well under a year. Q: Where does all that savings come from? A: When we receive an order for a two-way radio it can take two to three days to get [the parts identified and collected] and onto the manufacturing floor. Then it takes several more days to build it. With the Web system of ordering parts, that time is cut from about seven days to a little more than three. So it cuts the time in half. Q: What other factors beyond costs have driven you to build the extranet to partners and suppliers? A: Well, anyone who is just focused on costs doesn't get the point. Improving the service level to the customer -- getting the right information at the right time and place is important. It builds a more intimate relationship with the customer, which breeds loyalty and credibility with customers. If I can serve my customer better than the competition by executing transactions more quickly I become a preferred supplier. Q: How important is it that customers have direct access to Motorola inventory? A: Customers can simply hit the Web site and find out if a product has shipped. It's low-hassle. They don't have to call someone, get their voice mail, and wait to get a call back. I don't want to take out the importance of the human element, but most of us have institutionalized the Web experience into our personal lives. We don't want to leave the Web at home. It's not only a company-to-company expectation, it's a colleague-to-colleague expectation. Q: Many companies still don't think doing business over the Web is viable. Are they making a strategic mistake? A: It's something you have to have to survive. If we're capable of sustaining higher adoption rates than the competition, it puts distance between us and them. It's what you better be doing if you're professionally running a business. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					PREVIOUS Q&As Author Clayton Christensen Venture capitalist John Doerr Amazon.com's Jeff Bezos