Benefits

OVERVIEW

e-business Case Study: Goodyear North American Tire

Based in Akron, Ohio, Goodyear North American Tire develops, manufactures, and markets tires through its network of independent dealers and retailers. Accounting for nearly half of Goodyear's worldwide total tire sales, Goodyear North American Tire operates 19 manufacturing facilities in the U.S. and Canada and has a network of 5,000 dealers.

This case study examines Goodyear's use of IBM Net.Commerce and Lotus Domino to create a state-of-the-art order management platform to serve its dealer network. Goodyear's e-business solution has empowered dealers with more robust and flexible inventory management capabilities while reducing its own costs. The result has been process improvements across its entire supply chain.

e-business SOLUTION PROFILE

Goodyear's e-business solution, dubbed XPLOR, is an extranet designed to provide dealers with both information and ordering capability. The solution, running on two IBM RS/6000 servers at IBM's hosting facility in Schaumburg, Illinois, is divided into two separate segments, running different applications and performing different functions. The order management portion of XPLOR, built on IBM Net.Commerce, provides a range of ordering and order management functions, such as the ability to check price, inventory levels and the status of orders. Within the Net.Commerce segment of the solution, product codes and other data are stored in IBM DB2 databases.

XPLOR's second component, information delivery, runs on Lotus Domino, with information such as product information, marketing information directed to dealers and product service bulletins stored in Domino databases. Each component of the XPLOR system runs on a separate RS/6000 server and delivers information to dealers in real-time.

While IBM's Schaumburg hosting facility provides traditional firewall-based security, application-level security is provided through Lotus Domino. Noteworthy is the fact Domino provides two levels of security for the XPLOR platform. The first level is seen in XPLOR's ability to provide dealers with secure, password-based access to pricing, product and other information specific to that dealer. This guarantees that each dealer's data will remain secure from other dealers. The second level - attesting to the granularity of Domino's security features - allows each dealer site to further specify which users at that site should have access to various information. Thus, pricing information can be limited to a few select dealer employees, while service bulletin information can be accessed by all employees.

The front end of the XPLOR platform is also linked to Goodyear's back-end order entry systems, which consist mainly of SAP R/2 running on an IBM S/390. This integration was performed by a team of IBM and Goodyear personnel. A good example of this linkage at work is seen in inventory availability checking, a key element of XPLOR's order management capabilities. To check the availability on a tire, users retrieve the product code for a given tire from a DB2-resident electronic catalog, and input it into the system. At that point, the query is treated as an R/2 transaction and passed to the S/390 order entry system. Additionally, IBM MQSeries is used to facilitate the flow of information between a S/390 IMS pricing system and the XPLOR front end.

Dealers using the XPLOR platform can choose from a number of ways of building orders within its shopping cart, including ordering from the product catalog or doing a parametric search (by tire size, etc.). XPLOR's shopping cart capability is also flexible in its ability to build an order over a period of time, as well as its ability to execute price and inventory availability checks in the course of building an order. For any items in the XPLOR shopping cart, dealers can check the price and availability at a selection of Goodyear warehouses within a given region (Goodyear operates 12 regions in North America). The XPLOR system tells them how many tires are located at a given warehouse, how many are in transit, and how many are on back-order.

PLANNING AND DECISION ENVIRONMENT

Goodyear's XPLOR initiative began as a series of discussions between its Electronic Commerce group (within its IT organization) and its Call Center Management group (within its Sales and Marketing organization) in May 1996, says Gary Hargreaves, head of Goodyear's Electronic Commerce group. "XPLOR's planning represented a partnership between sales and marketing and IT," says Hargreaves, "with the goal of using the Internet to create a self-serve environment for dealers."

One of Goodyear's first actions was to commission IBM to develop a prototype system that would provide a framework for understanding the kinds of functions that could be addressed by a Web-based solution. According to Hargreaves, IBM's appointment at this early stage was an outgrowth of its long-standing relationship with Goodyear. In fact, IBM had developed and implemented Goodyear's call center, which in some ways provided a conceptual foundation for the XPLOR platform. In addition to developing a prototype for Goodyear, IBM also assisted in focus groups with Goodyear, targeting business processes. "The IBM prototype was important because it allowed us to show that conceptually the platform made sense," notes Hargreaves. "It also allowed us to demo our ideas to upper management in order to gain both support and the budget approval needed to move ahead."

In addition to IBM, Goodyear also considered GEIS, AT&T and Microsoft. While Hargreaves notes that IBM's focus group involvement and previous call center role had been a plus, the real reason for its selection was its broad strengths as an Internet commerce solutions provider. "The key reason for selecting IBM as our Internet solutions provider was that it was the only company that we felt could provide a complete solution, ranging from architecture/development to content hosting services," says Hargreaves. "What we didn't want to have was multiple vendors pointing fingers at each other. We just felt that IBM understood a little bit better." IBM was selected as Goodyear's Internet solutions provider in early 1997.

According to Hargreaves, going with Domino on the information publishing side also made sense in light of Goodyear's status as a major Lotus Notes user, as well as the distributed nature of its infrastructure. "It was just a great fit. We've always got great content for publication distributed throughout our business. It was just a natural fit to use Notes to generate content and then publish it in Domino. It's worked out great, and we're happy about that."

GOALS AND BUSINESS DRIVERS

Numerous factors influenced Goodyear's e-business strategy formulation, ranging from trends prevalent across the industry, to the need to update its own internal processes. At the outset, Goodyear defined its most fundamental goal as the reduction in costs associated with the administration of - and communications with - its dealer network. In the area of outbound communications with dealers, opportunities for cost savings were significant, notes Hargreaves. "Each week we physically mail three packages of documents to dealers at over 5,000 locations. It's very expensive for us and inefficient for the dealers."

Goodyear envisioned similar cost savings opportunities on the inbound side, reasoning that since many of the 2,500 calls per day received at its call center are very routine (i.e., checking price, product availability, etc.), they could easily be addressed through a lower-cost Web-based interface. "The people in the call center are highly trained, not just order-taker kind of people," says Hargreaves. "So we want to off-load as many of these routine calls as we could. Using the XPLOR platform as an extension of our call center was a key component of our plan."

The third driving factor related to Goodyear's operations was the desire to defray the costs associated with running DealerLink, its aging EDI network connecting Goodyear to 1,900 dealer locations. While workable, the DealerLink system was - relative to Internet-based alternatives - both functionally obsolete and more expensive due to its large EDI transaction and transmission costs.

Industry-wide trends also exerted a considerable influence on Goodyear's e-business planning. According to Rick Godic, Manager of Extranet Systems at Goodyear, the imperative of competition represented perhaps the most significant driving force. "Goodyear has always been perceived as the leader in providing systems for our dealers. In order to maintain our leadership, we needed to evolve into an Internet-based platform, to make it as easy and cost-effective as possible for the customer."

He further notes that while such major competitors as Michelin and Bridgestone/Firestone have Web-based business-to-business systems, Goodyear has staked out the high ground in terms of functionality. "Where we do have an advantage is that we have taken a very aggressive approach to adding functionality to the system, and we are sharing a wider range of information. In this respect, we are out in front." Godic believes that the positive feedback received from dealers, who praise its simplicity and robustness, attests to the success of its "not first, but the best" approach. Godic further points out that the best way to satisfy its dealer network is to deliver indisputable value, and XPLOR goes a long way toward that end. "It's important for us to be good because the dealer can buy where the value is best. We need to do our part and make sure that we are the easiest to do business with electronically."

If competition is the general catalyst towards e-business in the tire business, then the increasing complexity of inventory management is the galvanizing business issue. One of the key reasons, according to Godic, is the proliferation of tire sizes, which has been driven by original equipment manufacturers over the past few years. As a result of this trend, dealers are now required to have access to a wider breath of product line. "As a result of this trend, there's an inherent problem with inventory growing rather than getting smaller. It's creating a lot of difficulties for distributors."

To address this issue, Goodyear has aimed to provide dealers with broader visibility into what they have in their warehouse. "If the dealer knows exactly what we have and where we have it, it's easier for them to use our warehouses as an extension of their suppliers, and it helps them to better manage the inventory situation," says Godic. An additional benefit of more inventory visibility is an increase in fulfillment, the rate at which dealers receive the products that they ordered from a warehouse. Godic notes that traditionally, dealers would fax an order to Goodyear's customer service center, but were blind to the availability. The higher visibility enabled by XPLOR, coupled with the ability to order through multiple warehouses in a region, is expected to have a major impact on fulfillment rates, thereby making life much easier for dealers.

IMPLEMENTATION TIMETABLE AND STRATEGY

After launching initial discussions on the XPLOR project in May 1996, Goodyear demonstrated the IBM-designed prototype in late 1996 and ultimately received budget approval in February 1997. After spending approximately four months in the vendor selection process, actual design and development work on the XPLOR platform began in July 1997. After working in tandem with Goodyear on architectural design, IBM Global Services (IGS) Integration Services then began to develop code for XPLOR's order management component, which was viewed as the most complex aspect of the implementation.

By late 1997, IGS had begun to build the DB2 databases that would underlie XPLOR's order management functions. To achieve this, data was loaded from product and customer master files that were stored in R/2 databases to Goodyear's development environment. In December, the IBM/Goodyear team conducted a pilot with a number of dealers using a limited-functionality version of XPLOR running in Goodyear's development environment in Akron, Ohio.

After the successful conclusion of the first pilot, the implementation team then began setting up the site at IBM's hosting facility in Schaumburg. The RS/6000 servers running the XPLOR platform were installed in February 1998, soon after which both the application code and data was migrated to the new platform. In the middle of April 1998, Goodyear launched its second pilot, this time running over the Internet using the Schaumburg site. The site was rolled out to Goodyear's dealers in May 1998. Overall, the complex implementation required approximately 10 months to complete.

IBM played the central role in XPLOR's design and implementation, leveraging its intimate knowledge of Goodyear's call center, in whose construction IBM also played a major role. According to Goodyear's Hargreaves, the ability to leverage this overlap had a strong appeal to Goodyear. "Much of the business processes are the same for XPLOR and the call center, and there are some very strong parallels between the information that IBM knew from the call center implementation and the Web solution targeted to our dealers." One key parallel is that, like the call center, XPLOR is linked to Goodyear's R/2 legacy data on the back end. Likewise, on the front end, IBM was able to replicate the user-friendly call center interface - which also accesses R/2 and other legacy systems - on the XPLOR platform. "The interesting thing here is that the interfaces for the call center that link back to R/2 are the same ones that they use for XPLOR. This was very important to us because we didn't have to redo it," says Hargreaves.

By its own accounting, Goodyear is still in the early stages of the implementation, having signed up approximately 700 of its 2,500 independent dealers. According to Extranet Systems Manager Godic, the ultimate goal is to roll out XPLOR to all 2,500 dealers at their 5,200 locations. And on this point he is optimistic. "We add dealers every day. They talk to each other and they also talk to their regional sales managers, who tell them that they really ought to use the system," he says. One major driver that he cites is the ability to more easily participate in Goodyear's quarterly incentive program. "Before, dealers never had an idea of where they stood in terms of sales as it related to the incentive program. Now they can go online and find out in real-time where their business stands on a variety of programs."

BUSINESS PROCESS CHANGES

The most significant business process changes that are occurring as a result of the broadening adoption of the XPLOR platform relate to dealer communications and the more efficient processing of dealer transactions. Dealer communications have seen the most important process improvements in areas where the physical mailing of printed documents is being replaced with Web-based publishing. A good example is the monthly mailing to dealers notifying them of special pricing deals. Previously, Goodyear would e-mail these promotions to its regional offices, which would then print and mail them to over 5,000 dealer locations. Not only did this consume time and money, but the inherent lag of physical mail also delayed each dealer's ability to act on the monthly specials until more than a week into each month.

Telephone communications are also being streamlined significantly, as dealers increasingly capitalize on the self-service enabled by XPLOR. In fact, online inventory management presently represents the largest share of Internet usage for Goodyear's dealers. "Right now, for every order we're getting, we're getting 10 to 15 order management inquiries over XPLOR," says Godic. "These are people who are checking order availability, order status, delivery status, who the carrier is and other critical information."

Process changes are even more manifold on the transactional side. The most fundamental shift in transaction process relates to the timing and frequency of dealer transactions. "Dealers can order when they want to order - before the call center opens or after the center closes. They can now access the price and availability online, which they don't get when they fax the order in. It's putting them in a better position of control," notes Godic.

RETURN ON INVESTMENT

Goodyear's pay-back from the XPLOR solution has the earmarks of an ideal supply chain solution: a strong benefit stream accruing to members all along the value chain. These include improved information quality and faster delivery of information to dealers. This, in turn, translates into a higher-volume of pull-through business. Dealers, on the other hand, have gained more control and flexibility in their inventory and order management processes.

Goodyear expects its most significant source of savings to be a reduction in printing, mailing and administrative labor costs, as dealers receive more information online and assume more control over their order management processes. Examples of sources of cost savings include lower in-bound call center volume, as well as significant reductions in the mailings to dealers. Moreover, as transaction processing moves from Goodyear's EDI system to XPLOR, transaction and dial-up costs are also expected to fall significantly. According to Goodyear's Godic, the real savings will be realized as the XPLOR platform is embraced by a broader cross section of dealers than the 30% that have already adopted. "The early results indicate that things are on track and are looking positive," says Godic, who notes that while Goodyear expects a strong ROI for XPLOR, this was not a condition for moving ahead with the project. "It's really a customer service issue and a competitive requirement, and it's increasingly becoming a customer expectation."

XPLOR's benefit to dealers has also been significant, especially in the area of order management. One concrete benefit has been an increase in dealers' "fill rates," the incidence of dealers being able to receive the products they order from a warehouse and an important measure of a suppliers' effectiveness. In the past, Goodyear's dealers would traditionally fax an order to the customer service center, but were blind to the availability of the products they were ordering. Under this scenario, fulfillment rates were largely a function of inventory stocks at the nearest warehouse. Now, prior to ordering, dealers can see exactly what products are in stock and in what quantities. This, says Godic, has led to much higher fill rates. "Dealers can now ensure that they receive all the critical tire sizes that they need, enabling them to better manage their own inventory."

Godic also points out that for dealers, inventory management means more than just having the right quantity of products: it also means paying the "right" price. "XPLOR provides dealers with an improved ability to leverage any special pricing programs. As dealers build an order, two pieces - price and inventory - now tie together through XPLOR, because dealers now have better visibility to those pricing programs and have an improved ability to leverage them. It helps the dealers in their decision process as they build the order."

XPLOR has also exerted a major impact on all aspects of product ordering cycle time. For example, under the traditional, fax-based ordering scheme, orders sent in to the customer service center may not be entered into the Goodyear system until late in the day, delaying their processing. Similarly, orders submitted through the DealerLink EDI system require a 24-hour turnaround time due to the batch processing nature of EDI. "So, by moving from old methods to XPLOR," says Godic, "we've gone from overnight to real-time order processing." XPLOR's inventory checking capability has also the reduced the overall ordering time cycle by reducing the amount of time it takes for dealers to get the products they need. For example, if a product is not available at the warehouse closest to them, they can also check at a number of other Goodyear warehouses across a wide region. By providing dealers with real-time access to information about inventory stocks in warehouses, Goodyear has contributed to a significant reduction in order-cycle time, which has decreased costs and increased customer satisfaction.

XPLOR has also proven to be a boon for Goodyear's marketing programs, increasing their effectiveness in stimulating the flow of new business. Take the case of Goodyear's monthly pricing specials, which are announced on the last day of the prior month and become effective on the first day of the month. Under the old system, dealers were notified of the specials through physical mail, a process which all told required up to several days. Dealers that use XPLOR now find out about specials as soon as they become effective. "Before, a monthly special may have had only 22 days of effective selling time on it," says Godic. "Now it has 30 full days of selling time." What's more, Goodyear highlights these specials on its site by alerting users immediately upon logging in, further increasing the effectiveness of XPLOR on its special pricing programs.

IMPLEMENTATION ISSUES/LESSONS LEARNED

As Goodyear planned and implemented its XPLOR e-business solution with IBM, it became increasingly apparent that a free flow of information with key stakeholders would be necessary to ensure that the best possible solution would emerge. According to Hargreaves, Goodyear's dealers were perhaps the most important constituency. "We involved 70 dealers in the prototyping and development process for XPLOR, by having them sit down in front of screens to help us develop the interfaces. Dealer feedback was invaluable to us because we were able to develop XPLOR from a dealer point of view. The moral is 'listen to your customers and involve them in the development process.'"

Hargreaves also points out the importance of keeping various internal stakeholders - such as the Sales and Marketing and IT organizations, respectively, apprised of developments. "It was very important to keep them involved early and often throughout the process, so that they knew where we stood in development, and where we stood in the roll-out. This was important because each played a key role at different points throughout the project."

While technology issues such as security and scalability have not been a problem, they nonetheless represent a hot button for Goodyear as it ramps up utilization of the XPLOR platform. Hargreaves is entirely satisfied with XPLOR's SSL-based security, as well as what he calls the "very granular level of security within Domino." Likewise, he sees Goodyear's choice of an RS/6000 platform running AIX as a virtual guarantee of adequate performance, even under the aggressive growth scenarios he projects - a near-tripling of users to 10,000 within 2 to 3 years, driven by the penetration of new customer groups, such as original equipment customers, aviation, national account customers, government sales customers, and mass merchandisers. "So what we had to look at was something that was scalable from a couple of thousand users to 10,000 plus," says Hargreaves. "As far as we are concerned, AIX is the only platform that is that scalable."

FUTURE PLANS

Goodyear plans significant enhancements to the XPLOR platform through the end of the year, as it further positions XPLOR as Goodyear's e-business solution of choice. The most immediate development for XPLOR will be its official displacement of the DealerLink system for all national account and government sales processing. Another major change for Goodyear will be the completion of its ongoing conversion from SAP R/2 to R/3.

As part of this conversion, Goodyear will be creating new linkages between XPLOR and R/3, similar to its initial integration work with R/2. In addition to MQSeries, Goodyear plans to use Commerce Integrator, the message brokering software component of Net.Commerce, to perform the R/3 integration. "We see Commerce Integrator as a really strong solution for integrating with R/3," says Hargreaves. "As we move to a broader range of R/3 transactions, we're hoping for something that would provide as much automation for interface development as possible. And IBM's Commerce Integrator is exactly that solution."

Coincident with its R/3 conversion, Goodyear also plans to bolster the XPLOR platform by adding Goodyear's Kelly Springfield brand to the XPLOR catalog, as well as additional content delivered to dealers. Longer term, Goodyear plans to aggressively pursue other customer groups - such as OEM, aviation, national account, government, and mass merchandisers - with the XPLOR platform. "We want XPLOR to be the business-to-business platform for all Goodyear channels," says Hargreaves.

For more information,
please contact your
IBM marketing representative or
IBM Business Partner.

Visit us at:
www.ibm.com/e-business
www.lotus.com

For information on
Goodyear North American Tire, visit:
www.goodyear.com

© International Business Machines Corporation 1999
IBM Corporation
Internet Division
Route 100
Somers, New York 10589
10-99
All Rights Reserved

DB2, the e-business logo, IBM, MQSeries, RS/6000 and S/390 are trademarks of International Business Machines Corporation in the United States, other countries or both.

Lotus and Domino are trademarks of Lotus Development Corporation in the United States, other countries or both.

UNIX is a registered trademark in the United States, other countries, or both and is licensed exclusively through X/Open Company Limited.

Other company, product, and service names may be trademarks or service marks of others.

This case study illustrates how one customer uses IBM/Lotus products. Many factors have contributed to the results and benefits described. IBM does not guarantee comparable results. All information contained herein was provided by the featured customer and IBM Business Partners. IBM does not attest to its accuracy.

References in this publication to IBM/Lotus products or services do not imply that IBM intends to make them available in all countries in which IBM operates