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Meet Your New Host

By Meridith Levinson

September 01, 2006 — CIO —

Three years ago, Kawasaki Motors Corp. USA had some unhappy dealers on its hands. The $1.5 billion manufacturer of motorcycles, ATVs and water scooters couldn’t get the products into showrooms when the dealers wanted them—for example, water scooter deliveries promised in early spring arrived too early, when the snow was still falling. As a result, Kawasaki had to offer discounts and rebates to drive sales in the off-season, which ate into the company’s margins, according to Roger Peterson, Kawasaki’s vice president of information systems.

The reason Kawasaki couldn’t get the right products to its dealers at the right time was because, like many small and midsize companies, it lacked the technology for precise collaboration and exchange of demand forecasts with its parent company, Kawasaki Heavy Industries, which manufactures the products that Kawasaki distributes to its dealers. The cost of developing and maintaining traditional supply chain applications is too high for Kawasaki, which spends just over $10 million a year on business applications and IT infrastructure. Peterson estimates that deploying similar software in-house would have cost several million dollars and several years of effort. So in early 2004, Peterson began looking at hosted supply chain collaboration applications that ran on the vendor’s computers and that his company could access over the Internet, through a Web browser.

Early Risk

While so-called hosted or on-demand software was making waves in the CRM space at the time, it was nearly unheard of in supply chain offerings. Beth Enslow, Aberdeen Group’s senior vice president of enterprise research who authored a study this spring on hosted supply chain applications, says concerns about data getting lost or stolen and system reliability prevented companies from entrusting their mission-critical supply chain activities to third parties.

Peterson of course considered the issue of security and reliability of the hosted systems he was evaluating. "I had to wrestle with the concern about putting our supply chain application out with a third party over the Internet. That’s our family jewels," he says.

But Peterson had another, larger concern: Kawasaki’s three main competitors—Honda, Harley-Davidson and Yamaha—which are respectively two and a half (Honda and Harley) and one and a half times larger than Kawasaki—all have much more sophisticated supply chain software infrastructures. "We’re not one of the big dogs. We’re one of the smaller players. We’re competing with people who have more resources, more people, more dollars than we do, yet we have all the same problems," he says. So Peterson decided to take a gamble on a hosted collaborative supply chain planning application from Mitrix, which his company deployed in June.

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