When you talk to companies that have implemented enterprise or supply chain applications, executives will usually admit that they have under-invested in training and preparing users to use the new technology. People issues are always challenging. But change management is significantly more difficult when the technology deployed is used not just internally, but also by key trading partners.

Molex implemented a multi-enterprise supply chain network platform from SAP called SAP Business Network. Molex’s story is interesting because they excelled at overcoming these cultural issues.

MESN is a solution built on a many-to-many architecture that supports a community of trading partners. The most common form of trading partner collaboration is purchase order collaboration. With PO collaboration, buyers send digital purchase orders over the network to suppliers or other trading partners. They gain visibility into whether a supplier can fulfill the complete order in the requested time frame or not. Once the order amount and timeline are agreed upon between the parties, advanced shipping notices are used to track delivery. This collaboration allows for better optimization of the supply chain, ensuring the right products are available at the right time.

Molex is a private company headquartered in Lisle, IL in the US. Molex is a global electronics manufacturer that makes and sells over 100,000 distinct products – connectors, cable assemblies, and a wide variety of other products. They sell to the automotive, data communications, medical, industrial, consumer electronics, and other industries. The company generates over $7 billion in revenue based on a presence in more than 40 countries. 18,000 suppliers ship 70,000 different types of parts to 72 Molex manufacturing plants across the globe.

Tony Gainsford, a supply chain director at Molex, said that before implementing SAP Business Network, 70% of their purchase orders were not confirmed. For goods associated with those POs, they did not know when a shipment would arrive or whether it would be complete. “We needed assurance of supply,” Mr. Gainsford said. Since implementing SAP Business Network, the confirmation rate has gone from 30% to 88% for those on the Network. But getting there was not easy.

Molex began in October of 2022. They started by focusing on the largest and most important suppliers. They explained that they were digitizing their end-to-end requisition to payment process. Mr. Gainsford pointed out that the existing method, with PDFs attached to emails, was cumbersome not just for them but for their suppliers. “It took 7 days on average for a supplier to get a PO.” With a digital process, Mr. Gainsford explained, “we chopped that down by 4 to 5 days.”

Change management was not solely focused on suppliers, buyers, and material managers all had to change how they operated. Change management goes much easier if you can answer the question, “what is in it for me?” There were 65 material managers included in the initial rollout. He painstakingly spoke to each of them to get their buy-in. For material managers, he made the case that they would be much more likely to get their inbound supplies on time.

The buyers don’t report to Mr. Gainsford. He needed to influence them. Getting the buy-in of the material managers helped with this. The task management in SAP Business Network also helps. The application sends reminders to the buyers about actions they need to take. For example, the application sends three auto reminders to a buyer if a PO they cut does not have a corresponding purchase order confirmation associated with it. If no confirmation is received promptly, the buyer must press the supplier to send it.

Suppliers understand that the amount of future business they do with Molex is contingent upon participation. “We have not fired any supplier yet,” Mr. Gainsford said. “But the chief procurement officer has been made aware of the 10% of suppliers not participating. It will certainly be a subject of conversation” before the next contract is cut.

Training is critical. “We took a YouTube approach. We created bite-sized videos. And we had visibility to who took training and who did not.” Those who had ot viewed the videos, Mr. Gainsford explained, were told, “You did not take the training; this will be difficult for you.”

The overall impression one gains from talking to Mr. Gainsford is a systematic and methodical approach to change management. Molex knew that success with the SAP Business Network application was contingent on the successful onboarding of suppliers. The company onboarded suppliers at twice the rate they expected. Molex’s change management program is also one based on continuous improvement. The company continues to refine supplier onboarding; what used to take 6 months now takes 3 weeks.

The tool Molex used to drive adherence to the new process was, without a doubt, a major contributor to the success of this program. The company uses a process monitoring tool called Celonis. With the tool, visibility is gained when the POs are sent out, and again when the confirmations come back in. This tool helped increase supplier delivery performance by double digits. There is a dashboard that shows suppliers lit up as green – performance is good, orange, or red – there are major problems.

But it is not just the performance of suppliers that matters, the performance of their 400 buyers also matters. Mr. Gainsford explained that there is a way the PO collaboration process is supposed to work – there is a “happy path.” Participants in the process must do a series of tasks, often in a defined manner.

The tool provides visibility of what percentage of orders were confirmed, and beyond that, when there are issues, where those issues occurred. Where and how often, for example, did a buyer deviate from the happy path? The tool provides visibility to conformance by plant, supplier, and buyer. With Celonis you can view how long each step took and compare it to how long it was supposed to take. For example, once a PO is confirmed, a tender to carriers should occur within 24 hours? Did that happen? There is a digital thread with the date of the tender confirmation and the time stamp.

Every day at 7 am, the supply chain team looks at supplier scorecards. They can view overall performance and then drill down and look at problems purchase order by purchase order. They might tell a supplier, “Only 30% of purchase orders are confirmed because you are not creating them. This is actionable intelligence,” Mr. Gainsford commented. Celonis accelerated Molex’s “time to value” – their ability to get payback for their investment in SAP Business Network.

Molex has also used the tool to reduce supplier lead times. Long and variable lead times are the bane of a manufacturing supply chain. They lead to poor customer fulfillment, higher inventory, and higher shipping costs. With this tool, a supplier can be told, “Your lead time was supposed to take 10 days. You took 30 days.” Molex has an active lead time program, and they continue to work on reducing them.

Over 900 suppliers – representing $1 billion in spend, are now on the Network. But the work continues. And the benefits from the network will continue to increase with increased supplier involvement.

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