In-Depth

From Sharp Minds Come Sharp E-Business Opportunities

• 01/01/2000

When they think about Sharp Corporation, many consumers recall the company’s slogan, "From Sharp Minds Come Sharp Products." They may also visualize some of Sharp’s products, such as calculators, televisions and notebook computers. They probably don’t realize the firm’s lineage – our company started by making buckles in 1912, added a line of mechanical pencils in 1915, and branched into electronics in 1925 with simple crystal radio sets. Today, Sharp has nearly 60,000 employees, about half in Japan, and major subsidiaries worldwide, particularly in the United States and Europe.

As a consumer-electronics company which primarily sells retail through multitiered distribution, our products go to smaller outlets through wholesale distributors, while some large retailers buy inventory directly from Sharp. That goes for new products as well as replacement parts and accessories.

Sharp’s parts business is immense, and growing worldwide. In Europe, the entire business is handled by Sharp Electronics (Europe) GmbH’s Services Division. This division is responsible for serving more than 60,000 commercial customers – its retailers and channel partners – with parts ranging from microwave oven doors to handheld computer power supplies to camcorder lenses.

The primary IT challenge faced by the Services Division in 1998 was to improve the end-to-end delivery time for parts needed by its retailers and business partners. The solution was an extranet-style approach to allowing customers direct access to Sharp Electronics Europe Group’s parts order-entry system. The result, implemented in January 1999, reduced not only delivery time, but lowered many other costs as well.

In working with Attachmate, Sharp has been able to get very quick results, including a 33-percent reduction in the delivery time of parts to customers, a projected return on investment within one year, rapid deployment of this new extranet for our resellers and other important customer improvements. The new application scales favorably so we can continue to increase sales, while knowing we can continue providing excellent customer service to our resellers.

Prior to the implementation of their new, self-service entry system, Sharp’s Services Division’s order-entry system was very traditional. Replacement-parts orders from customers – that is, channel partners and large retailers who purchased direct – were sent via fax, e-mail, or telephone, to the Services Division’s facility in Hamburg, Germany.

The order-entry system was based on an IBM MVS-based host, running CICS as the transaction-processing layer. Data-entry clerks accessed the host via 3270-type terminals and PCs running terminal-emulation software. If the customer did not know the exact part number, the clerks would need to access online technical documentation or the spare parts database, also stored on the host system, often needing to communicate back with the customer in order to determine the correct component.

Once entered into the CICS system, the order was retrieved by fulfillment centers, which might be located either in Hamburg or in any of eight other European locations, and the required parts were then shipped to the customers.

There were myriad problems with this system. From the perspective of all parties – Sharp, the channel customers and end users – the biggest drawback was time. When an order was received by our fax, phone, or e-mail system, until when the part was shipped from the appropriate warehouse could be a three-business-day process; longer, of course, if holidays or weekends were involved. Thus, a desired goal was to reduce this delay to two days – a 33-percent reduction. This would not only result in happier customers, but also reduce inventory costs at increasingly overstuffed warehouses.

A second issue was cost control. Given Germany’s high labor costs, the expense of hiring, training and employing an increasing number of order-entry staff, with the technical knowledge to help research part numbers across all product lines, was becoming increasingly prohibitive. A goal of the extranet project was to, essentially, outsource the data research and entry back to our channel partners, thereby reducing a wide range of expenses, such as headcount, telephone lines and physical space. A secondary benefit to the outsourcing would be allowing effective "round the clock" data entry, even on nights and weekends.

A third challenge was data integration. We were beginning a move toward implementation of an enterprise resource planning solution, based on SAP AG’s R/3 platform. By streamlining and automating the data-entry process, data about spare parts consumption could be more easily factored into real-time business planning.

The task of building a secure order-entry system, available for customer access, fell to my electronic data-processing group at Sharp Electronics Europe Group in Hamburg. Making the task more difficult was that our European division already had the most sophisticated EDP system in the entire corporation – there were no similar systems for us to fall back on, and in fact, whatever we would develop would likely be replicated in other Sharp geographical regions.

Given top-down requirements for a data-entry system accessible by Sharp Electronics’ customers, our team quickly came to several preliminary conclusions. First, whichever system would be installed, no changes would be allowed to the complex and intricate host systems themselves. Second, due to the large number and diverse set of customers and channel partners, client-side software downloads would not be acceptable, and the solution would need to be based on pure HTML (hypertext markup language). Third, in order to have any new system work efficiently and offer customer satisfaction, it would need to be intuitive to use, with minimal or no user training required.

We also realized that, from an operational perspective, we needed to minimize the number of new vendors involved in the data-entry system; the more vendors involved, the more time spent on phone calls, visits and information meetings. Plus, difficulties in coordinating multiple vendors would only hurt, not help, the overall quality of the finished project.

We chose to find a single prime consultant with knowledge of the problem domain and the technologies currently deployed in our data center. They also would need to have a strong presence in Europe, solid financial backing, and be able to support and maintain the installed solution.

After research and proposal reviews, we chose to work with the European offices of Attachmate Consulting. They were tasked with developing the prototype, providing training to Sharp’s staff, and completing the deployment of a solution. One factor of our choice of Attachmate Consulting was our prior experience with Attachmate’s EXTRA terminal-emulation software, which we use in our data center.

The extranet order-entry system Attachmate built and deployed consisted of three elements: customer access via the Internet; the existing CICS/MVS-based order-entry system; and Attachmate’s e-Vantage Host Publishing System (A-HPS), which works as a functional bridge between the Internet, the Sharp LAN and the MVS host.

From the customer’s perspective, all that is required is a Web browser and Internet access. The data entry system is found on our home page (www.sharp-eu.com); located at UUNET Germany, the local Internet services division of Clinton, Miss.-based MCI WorldCom Inc. At the sign-in screen, the channel customer enters a user ID and password, which is authenticated by a database also located at UUNET’s data center.

Once authenticated, the customer session is redirected from UUNET’s data center to Sharp’s LAN router in Hamburg. Once at the LAN router, the customer’s packets are sent to the LAN firewall, which redirects the customer session to Sharp’s Attachmate Host Publishing System server, running on a Windows NT 4.0 Server within our data center.

The A-HPS server translates the customer’s user ID, which was forwarded by the UUNET server, into a session user ID and adds the correct password from its Access Database valid for the access to the mainframe-based CICS system. The A-HPS server then communicates over the Sharp LAN with an IBM 3172 Nways Interconnect Controller, which provides gateway access to the MVS host. All necessary interactions for identification to the Host, session set-up, application selection and so on are then automatically done between the Attachmate Server and the Host system, without requesting interactions from the customer. Once in that system, customer inquiries about part numbers and descriptions, and orders for new parts, could be processed by the CICS host.

As you might expect, security was a major concern. For the first time, external access would be given to sensitive corporate data systems. To prevent hacking, or unauthorized access, should the UUNET-based Web server be compromised, we decided to locate the A-HPS gateway server in the DMZ, protected by the LAN router and firewall, but not inside the secured corporate LAN. Traffic from the A-HPS server would be allowed from the DMZ to the secured LAN, but our LAN firewall was configured to allow inbound traffic from the DMZ that met all of three criteria: the correct source IP address for the A-HPS server, the correct destination IP address for the IBM 3172 controller, and the correct TCP port number, reserved for traffic between those two systems.

Working full time with only two members of our EDP team, the Attachmate Consulting staff built the complete application on top of Host Publishing System version 2.3 in an intensive eight-week period in December 1998 and January 1999. The cooperation between Attachmate Consulting, our local Attachmate representative, and Sharp’s EDP team was great. We were also delighted that Attachmate completed their responsibilities for the project about one month ahead of schedule.

After testing, the complete system was deployed in the second quarter, with A-HPS configured to provide 100 concurrent sessions into the CICS manual entry system. Within three months of the A-HPS-based system’s initial deployment, approximately 20 percent of our parts orders were being handled on the new system, using a select group of high-volume customers, including both resellers and large retailers. With those customers, we have realized the expected primary benefits: products are now being shipped, on average, in two days rather than three days. We have also been able to reduce the number of staff assigned to process new orders, particularly in handling time-intensive faxes and phone orders.

From the customer’s perspective, the new system has also proven beneficial. Not only do customers receive their parts faster, but because there are fewer clerical errors, immediate confirmation of orders, and direct access to our technical parts catalog, customers do not receive "unexpected surprises." This also cuts our corporate expenses in another way, as our warehouses do not need to restock as many returns – always a customer service, logistic and financial headache. Customers have also expressed their pleasure at being presented with native-language menus when they log into the A-HPS system; nine different languages are defined in this system, and on our customers’ requests there are currently five languages available.

Sharp spare parts customers outside of East and Southeast Asia, Europe and America found this new "everywhere and anytime" system is a big improvement and enables them for quick order entry – and by that we expect also an increase of our business volume.

Over the next 18 months, we envision expansion of the new A-HPS-based order system to accommodate approximately half of the European parts business. The A-HPS system is designed to accommodate this expansion; the current implementation can scale to as many as 600 concurrent sessions with our mainframe. Within a few months after that, most parts order-entry personnel will be assigned to other tasks.

With its new order-entry system, Sharp Electronics Europe Group is well- positioned to accommodate an ever- increasing demand for replacement parts, accessories, and other custom or one-off products for both its channel partners and major retail customers. Not only that, but the system helps the company maintain a reputation as an innovative brand which is responsive to its customers – particularly important in the era of business-to-business electronic commerce.

Attachmate’s e-Vantage solution effectively met our strict requirements, developed quickly, provided a very fast return on our investment, and has allowed us to improve service to our customers. The Attachmate e-business solution extranet application complements our strategy by allowing us to capitalize on e-business today with minimal risk and investment, while accommodating future needs.

About the Author: Peter Steffen is the Manager of EDP Systems Program Administration Division at Sharp Electronics (Hamburg, Germany). He can be reached via e-mail at steffen@seeg.sharp-eu.com.