1. Vince Rubiera CIS 621 Otis analysis What are the major critical success factors associated with the e*Logistics initiative at OTIS? In 2002, the new president of Otis stated the company needed to become focused on reducing cycle time while improving service. The goal behind this re-engineering effort was to redefine their business model and become a service and logistics company. To facilitate this change all the business units had to operate across standardized platforms, use common verbiage and improve the flow of information. E*Logistics was established by Otis to support some of the re-engineering efforts taking place within the company, and tie them together with IT. The e*Logistics program was developed to be the core of the companys initiative to improve the flow of information. A team of 70 was assembled to develop, automate, standardize and integrate value-added processes and tools into the business. These processes were all linked through internet-based communications and connected to databases, which stored all the data. This program would span the entire value chain within Otis. Key activities on Otis value chain included: the initial proposal of a new project to a customer, processing an accepted proposal, order fulfillment, field installation and closing activities.1 E*Logistics role was to tie these activities together, and streamline the process with IT. At the project proposal stage, e*Logistics automated the SIP (sales and installation process); allowing both sales and field teams to approve these projects. E*Logistics also integrated the gathering of account information, determining elevator configurations and proposal preparation using a web interface tied to a back-end database.1 It also tailored access to the information based on individual roles. This could be interpreted as a shift up on the information intensity matrix, since it saved transaction costs through automation. It also shifts to the right, since the access to information increases dramatically across teams. Once the order was placed, it needed to be booked, validated and scheduled. After e*Logistics automated all these steps, the system was able to provide necessary documentation to the teams as needed for verification and approval. As part of this new process, the field teams could verify site readiness and the timing of deliveries. The systems also posted the data from the proposals into Otis financial systems.1 Access to these systems made midstream changes to the orders less costly and transparent across the organization. This would be illustrated as a shift to the right (information sharing), and up (cost savings) on the information intensity matrix. Contract logistics centers (CLCs) were created to manage the supply chain functions within Otis. Some of their major roles included: on-time delivery to the field, market analysis, and communicating with all the parties involved in the process.1 E*Logistics provided the connectivity between the CLCs and the rest of the company. It also helped the CLCs manage project timelines through email reminders, and adjust deliveries according to status updates from the field. Consequently, Otis could cut costs and avoid delays with timely deliveries. The information intensity matrix would shift right, since the system is built on information flow between the CLCs, sales and the field. It would also shift up, since transaction costs are reduced. Using Porters 5 Forces model to analyze this organization, it appears that Otis was using e*Logistics as part of their strategy to counter the threats of competitive forces.2 E*Logistics enabled Otis to develop a cost leadership strategy by decreasing costs internally and for their suppliers. This was done by centralizing and supporting the ordering activities within the CLCs. Furthermore, Otis used its ACE (Achieving Competitive Excellence) program to incentivize its suppliers. Ace was an exclusive program where only its best suppliers reside.6 They also used the e*Logistics program to support a differentiation strategy. E*Logistics allowed Otis to improve its cycle time and its flexibility to change through standardization and improved information flow. This differentiation allowed them to stand out from the thousands of competitors.3 Innovation was also built into the core of the program, since it would institutionalize best practices across the organization. This would encourage continuous improvement. From a growth strategy perspective, Otis created a program that was scalable and standardized across international boundaries. That gave them access to markets around the world. Otis now conducts business in over 200 countries.5 Although e*logistics faced some challenges with training, technological adaptation and platform standardization, Otis had created a program that would be the foundation of their new strategy. This was accomplished by thinking long- term, integrating IT effectively and managing around their core strengths and weaknesses. This strategy seems to be working well, since Otis is the world's #1 maker of elevators, with more than 2 million elevators, escalators, and moving sidewalks in service worldwide, and it contributes to 20% of UTCs (its parent company) sales.4 1. Otis Elevator: Accelerating Business Transformation with IT, 2005, HBS 2. Porters 5 Forces Model (Class Documents) 3. United Technologies Formula: A Powerful Lift From Elevators, 2003, The Wall Street Journal 4. Hoovers.com (http://cobrands.hoovers.com/global/cobrands/proquest/overview.xhtml?ID=56332) accessed 5/14/08 5. Otis' 'Green' Elevators Selected for Prominent Commercial Developments in Russia, 2007, PR Newswire 6. Dynapar Recognized for Outstanding Customer Support, Achieves Level 3 Supplier Certification from Otis Elevator, 2007, Business Wire