Case study
In 1993, one of Air Products' business units faced a difficult challenge: the company had seventy different regional distribution and logistics hubs spread throughout North America. Each hub operated independently taking customer orders, warehousing and distributing products, and supplying Customer Service. As a result, the business had a number of inefficiencies.
After analyzing its strategic options, Air Products arrived at the decision to centralize and automate many of the support functions of the business, including customer orders, deliveries, and production, appropriately referred to internally as an Automated Chemical Replenishment (ACR) management system.
Air Products executed a two-part plan to deploy the ACR solution involving:
- The tools required to automate the supply chain.
- Changing managerial processes to utilize the automation. Devices were installed on customer tanks that measured the volume of product contained in the vessel. Taking the necessary readings and detecting problematic volume changes, these devices would communicate over a telephone service line to the back office. Back-office applications would convert raw data into actionable information for the supply and logistics planners.
Parallel to the technology efforts, a number of business processes were altered to achieve maximum returns on the technology investment. A call center, which included all route planning activity, was created as a central function, fully reliant on the output of the ACR system. The call center, and not the sales force or the customer, had the ability to demand when the product would be delivered. The sales force shifted its responsibilities to better understanding their customers' business needs and usage patterns. This helped them provide additional value to their customers and create applications for supplying new products.
With deployment, Air Products recognized operational benefits, while customer service benefits escalated. Soon after, the other main industrial gas players were forced to follow to remain competitive. Today, automated replenishment of products is a standard industry operating practice.