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ANOTHER LOOK Business Functions and Business Processes 15

Integrated Information Systems
Large organizations dealing with hundreds or thousands of suppliers have a difficult task
in keeping information flowing to the right person at the right time. At one point,
Lockheed Martin Aeronautics, with $13.2 billion in sales (2010) and over 29,000
employees, was running 75 legacy systems, some dating from the 1970s. To stay efficient
while keeping customers happy and taking on more aircraft orders, the company
decided to implement an Enterprise Resource Planning system.
Lockheed Martin’s final system allows suppliers to handle more of their own
transactions by accessing the new ERP system through an existing secure Web portal.
For example, using the portal, a supplier can now track each step of an order. In
addition, the supplier can see the production trends at Lockheed Martin, and plan its
own production to satisfy Lockheed Martin’s needs—in effect, anticipating orders.
Through this integration of many systems into one large ERP system, Lockheed Martin
was able to cut costs and connect suppliers worldwide into its system, enabling the
company to become more efficient.
In another industry, Tumi, Inc., the luggage and travel products company, was
running several legacy systems that were written “in-house,” meaning they were
programmed by company staff. The different systems covered processes such as taking
an order, running the warehouse, and completing financial statements. None of the
systems were linked; therefore, passing information from one system to another was a slow
and cumbersome process. Tumi could not fill its orders on time, had excess inventory in
the warehouse, and was frequently unable to meet customers’ shipping deadlines. To
address these issues—and to better support the company’s expansion plans—Tumi made
a conscious effort to make information technology a business driver, and the company
brought in an ERP system to integrate the business functions.
With the new integrated ERP system, Tumi has been able to expand its business,
decrease inventory by 30 percent, cut its warehouse space by 38 percent, and increase
sales by 25 percent. Tumi’s management believes that one of the company’s primary
strengths lies in its integrated systems. Manufacturing is now quick to react when
demand increases, and forecasting is more accurate.

Question:
1. Using the Internet, research how many suppliers are typically used for
manufacturing large commercial aircraft. List 10 such suppliers and what they
do. How would an integrated ERP system, such as the one at Lockheed Martin,
help manage all those suppliers?

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