HD28
.M414
LITHONIA LIGHTING:
CASE STUDY
Debra Hofman
John F. Rockart
J.
December 1989
CISR
Sloan
WP
WP
No. 201
No. 3121-90-CISR
Center for Information Systems Research
Massachusetts
Institute of
Sloan School of
Technology
Management
77 Massachusetts Avenue
Cambridge, Massachusetts, 02139
w
APR 15.1990
LITHONIA LIGHTING:
CASE STUDY
Debra Hofman
John F. Rockart
J.
December 1989
CISR
Sloan
WP
WP
No. 201
No. 3121-90-CISR
©1989 Massachusetts
Institute of
Technology
Center for Information Systems Research
Sloan School of Management
Massachusetts Institute of Technology
LITHONIA UGHTING CASE STUDY
ABSTRACT
The use
of information technology in the 1980's has evolved from the traditional
transaction-based systems built in the 1960's and 70's toward more innovative and far-
reaching applications.
As
the industry matures, studies have been undertaken to better
understand the impact of information technology on organizations. Results of a recent
study by the Center for Information Systems Research, MIT Sloan School of
Management, suggest that information technology has joined the arsenal of traditional
tools used by an organization to manage the multi-dimensional interdependence of its
subunits (Rockart and Short, 1988).
Lithonia Lighting provides an interesting example of this trend. As the number
one player in the $4-i- billion lighting and related products market, Lithonia has
emerged from a seven-year process of implementing a series of systems to
electronically link the entities in its marketplace. This effort was spearheaded by the
company's visionary Chief Information Officer and Senior Vice President, Charles
Darnell. This ^document will discuss the implementation of this process and its impact
on the lighting marketplace and on the organization within the context of "the
management of interdependence" (Rockart and Short, 1988). The information
presented here is the result of discussions with Darnell and other members of the
Lithonia team, and of a reading of a number of documents provided by them.
recently
LITHONIA LIGHTING
I.
INTRODUCTION
2
II.
MARKETPLACE
3
III.
rV.
V.
A.
Changes
3
B.
Impact of Changes
3
DESCRIPTION OF LITHONU LIGHTING
7
MANAGING INTERDEPENDENCE: LITHONIA'S
APPROACH TO ITS MARKET IN THE 1990s
11
A.
12
Strategy
1.
The
2.
The Lithonia Way
Lighting Business Cycle
12
16
B.
Organization
18
C.
Systems
21
ACE
Development of
2.
Forward Integration
24
3.
Impact of Forward Integration
30
4.
Backward Integration
31
LITHONIA: LOOKING TO THE
A.
B.
ACE+
1.
Managing Interdependence
and
39
1990s
in the
21
1990s
40
1.
Continued Value Chain Integration
42
2.
Continued IS Organization/Line Integration
44
3.
Functional Integration and Coordination
47
4.
Planning and Control Systems
48
Continuous Improvement and
New
Platforms
49
I.
INTRODUCTION
The use of information technology
in the 1980's
has evolved from the traditional
transaction-based systems built in the 1960's and 70's toward
As
reaching applications.
more
innovative and far-
the industry matures, studies have been undertaken to better
understand the impact of information technology on organizations.
Results of a recent study by the Center for Information Systems Research,
MIT
Sloan School of Management, suggest that information technology has joined the
manage
arsenal of traditional tools used by an organization to
interdependence of
the multi-dimensional
subunits (Rockart and Short, 1988).
its
Lithonia Lighting provides an interesting example of this trend.
one player
recently
in the $4-1- bilhon lighting
emerged from
As
the
number
and related products market, Lithonia has
a seven-year process of implementing a series of systems to
electronically link the entities in
its
marketplace.
This effort was spearheaded by the
company's visionary Chief Information Officer and Senior Vice President, Charles
Darnell.
This document
will discuss the
implementation of
this
process and
its
the lighting marketplace and on the organization within the context of "the
of interdependence" (Rockart and Short, 1988).
result of discussions with Darnell
reading of a
number
Section
II
its
market
management
The information presented here
is
the
and other members of the Lithonia team, and of a
of documents provided by them.
describes the lighting marketplace.
overview of the Lithonia organization.
to
impact on
in the 1980's
LITHONIA LIGHTING
and
Section
Sections IV and
V
III
provides a brief
discuss Lithonia's
approach
1990's.
2
II.
MARKETPLACE
A.
CHANGES
:
The process described above was
in the lighting industry
driven largely by profound changes occurring
throughout the 1970's and into the 1980's.
equipment had been supplied by a
lighting
each specializing
in a
few
large
Prior to that time,
number of independent manufacturers,
lighting products in localized markets.
This highly
fragmented market began to consolidate, through mergers and acquisitions, into a
number
smaller
of producers, each providing a greater array of products.
time, the products themselves
became
technologies exploded onto the scene.
emergence of "super
lighting
offer a diverse product
increasingly
By
At the same
complex and sophisticated as new
the end of the 1970's, the industry
saw the
companies," large conglomerates with the capabilities to
package to the
lighting market.
In the late 1960's there
were
approximately 1,300 lighting manufacturers; by the mid 1980's, only about one-third of
these continued to exist in
today
is
some form. The commercial and
dominated by nine major players
$600 million
in sales in 1988,
(Electrical Wholesaling, 1988).
Lithonia Lighting holds the
number one
industry in market share, and has held this lead since 1970.
market
With over
position in
its
(See Exhibit A).
IMPACT OF CHANGES;
B.
Changes and consolidation within the
in three
emerging
its
lighting industry
have impacted the market
primary areas:
First,
up
industrial lighting
the competitive nature of the marketplace has changed radically.
lighting giants
commitment.
were committed
to success,
The
and each had the resources
to
back
Increasing volumes and economies of scale allowed vigorous price
LITHONIA LIGHTING
0)
<
<
CO
< ^ o
O
DC Dc
0)
o
CO
03
>>
8
c
o
O
>
o
CO
CD
CO
O
_J
_i
to
D
_c
c
CO
o
CO
(U
C/D
CO
LU
O
c
to
0)
o
CO
O)
o
o
3
C
T3
0)
re
(U 0}
•c >*
S
c
o
(0
30.
Q.
O
O
c
o
to
c
CO
o I
OL
"2C O
si
75
taam
O
Hi
Q>
E
E
o
O
£
CT>
in
in
o
1in
CO
c
CO
(Z
O
c
o
c
0)
O)
CO
in
CO
c\j
O
Q)
a
D
I-
Most of the
competition.
whereby each
players began to lean toward a "product package strategy,"
strives to provide a
complete lighting package which
will satisfy a
given
customer's or project's needs.
Second, the challenges faced internally within each of these organizations have
become
Many
increasingly complex.
to multi-product, multi-function
Management
period of time.
of
them have grown from "mom and pop" shops
and multi-geographical
of this growth
is
entities in a relatively short
essential in order to maintain quality
and service and remain competitive.
Third, the roles of the market entities and the nature of the distribution
On
channels have shifted.
the building and
site.
The
a typical lighting job, the owner hires an architect to design
architect submits his plan to a
the specs for the project, including the electrical work.
materials which
lists
Once
The
The
specifiers,
specifiers
who
produce a
write
bill
of
the materials to be used on the project; typically, the materials are
referred to generically, but in
specified.
team of
some
cases the actual manufacturer to be used
may be
specifier then puts the job out to bid with the appropriate contractors.
they receive the specifications, the electrical contractors seek quotes and the
contractor awarded the job orders the material.
It is at this
last
ten years.
through an
point in the distribution chain that the roles have changed over the
In the era of fragmentation, the contractor
electrical distributor,
who kept an
would order the equipment
inventory of items from multiple
manufacturers; the distributor ordered these items from the various independent
manufacturers representatives, also
known
provided three important functions:
as agents.
During
this time,
1) technical (lighting) expertise; 2)
the actual goods from various manufacturers; and 3) financing.
distributor served to coordinate the purchase of the specified
LITHONIA LIGHTING
the distributor
an inventory of
Essentially, the
equipment from multiple
5
lighting manufacturers,
each of
whom
produced a few products.
With the consolidation
of the industry and the emergence of the "product package strategy"
feasible for contractors to deal directly with agents.
distributors' ability to provide technical expertise
it
became more
At the same time, the
and on-hand inventory began
to
dwindle with the increasing number and complexity of products available, further
hastening a key
shift in roles.
Agents have taken over the "centrar position between
the customer and the manufacturer, with the distributor providing
inventory of commodity items.
LITHONIA LIGHTING
some
financing and
DESCRIPTION OF LITHONIA LIGHTING
III.
Lithonia Lighting was founded in 1946 in Lithonia, Georgia as a manufacturer of
fluorescent fixtures, selling on a local and regional basis to customers in the Southeast
and Midwest.
To
its
In the late 1950's, the
company went
finance future growth, the
product
company expanded and moved
line, services, capabilities,
to nearby Conyers.
public in 1961 and continued to expand
and geographical customer base throughout the
Lithonia's introduction of an extensive system of field warehouses in the late
1960's.
1960's catapulted
it
to the
In 1969, Lithonia
since.
broaden and strengthen
Throughout the
expansion of
its
number one
position in
such, the
its
(See Exhibit B).
capabiUties.
has held
financial base.
Unlike many of
line.
Each new product
is
it
Industries, Inc., to further
1970's, Lithonia continued to increase sales
product
company
industry, a position
merged with National Service
primarily through internal development of
acquisitions.
its
line
was
its
competitors, this growth
new product
Support functions
division has
(i.e.,
offerings, as
typically offered
organized along product lines
Each product
its
through the
in
came about
opposed
to
through a new division.
As
dispersed geographic locations.
own marketing and manufacturing
personnel, finance, etc.) are generally centralized at
corporate headquarters, with certain exceptions based on geographical considerations.
Exhibit
C
By
shows a senior managerial organization
the niid-1980's, Lithonia distributed
of 86 independent agents.
Its
its
chart.
products through a national network
agents are not permitted to carry competitive
though they may carry complementary
lines.
lines,
These agents work with approximately
2500 distributors nationwide, carefully selected from a pool of approximately 30,000.
There are 14 manufacturing
LITHONIA LIGHTING
plants, 3 distribution centers,
and 40
field
warehouses.
LITHONIA LIGHTING
Organizational Overview
NSI
Chairman
the Board
of
NSI
President/CEO
Lithonia
Lighting
President
Senior
VP
Senior
VP
Senior
VP
Finance/
Sales
Admin.
Marketing
Senior
VP/GM
Senior
VP/GM
Senior
VP/GM
M.I.E.S.
Fluorescent
(Darnell)
l&MS
Controls
Emergency Systems
RELOC
Exhibit
C
Hi-Tek
Lithonia handles both stock and manufactured items.
which the equipment
is
manufactured for a
are orders from the distributor to stock his
distributor buys directly
Lithonia's business
is
from the
million, representing
senior
management team
increase
is
specific project; "Distributor Stocking"
own
were
inventory; or "Will Call"
warehouse
domestic, with exports at
In 1983, Lithonia's sales
$600
field
at
Orders may be "Job" orders,
$300
more than 40% of
for a specific customer.
2-3% of
million.
its
total
in
which
where the
Most of
sales.
By
1988, sales
had doubled
parent company (NSI)
sales.
to
The
of Lithonia strongly believes that a significant portion of this
a result of the innovative use of information technology resources.
LITHONIA LIGHTING
10
rV.
MANAGING INTERDEPENDENCE: LITHONIA'S APPROACH TO
ITS
MARKET
In 1979-80, the
IN
THE
members
1980'S
of Lithonia's senior
A
of strategic planning discussions.
member
key
only)
programmer,
department.
He
programming
Management Information and
Darnell had joined Lithonia
to take care of the
in
1963 as
new Univac computer purchased by
reported to the Assistant Controller.
staff
initiated a series
team was Charles Darnell, the
of the
Senior Vice President and General Manager of the
Electronic Services group (MIES).
management team
By
its first
the Finance
1965, Darnell had hired a
and had created a separate Information Systems department
order to support functions
company other than Finance.
the
in
(and
From
in
there, he rose
quickly through the positions of Manager, Director and Vice President, until he
became
a Senior Vice President in charge of both the Systems group as well as three product
divisions.
As
the top
MIS person
in the
company, Darnell possessed a rare
combination of both business and technical knowledge, as well as a clear sense of the
potential advantages to be gained by aligning information technology with the overall
business strategy.
The
focus of the
initial
management
discussions in 1979
was the development of
a business vision for the 1980's, and a clear definition of Lithonia's approach to the
market.
The challenge was
clear.
There was a need
accomodate continued future growth
marketplace.
As one member
the industry, but
we
also
heart of the matter.
senior executive
in
of the team expressed
how
better."
it,
"we knew we were the best
Three questions were
could Lithonia "be better?"
Second,
team proactively manage the organization and
integrated and coordinated fashion, and retain the
LITHONIA LIGHTING
and
order to best serve the needs of the lighting
knew we could be even
First,
to intelligently plan for
number one
its
how
market
position?
in
at the
could the
in
an
Finally,
how
H
could Lithonia competitively position
itself in
the evolving marketplace for even greater
market share?
of these discussions was a
The outcome
strategy, organization,
three critical arenas:
three arenas, the
organization.
new
That
is,
strategy
was
new approach, encompassing change
and information systems.
to be the driver for
Among
in
these
change throughout the
the development of a strategic vision
would be operationally
implemented through substantive and focused organizational management programs,
and through the concurrent development of appropriate information systems.
interaction of the programs for change in the three areas
is
is
depicted
in
The
Exhibit D, and
further discussed below.
STRATEGY:
A.
The
first
was a
strategy which
clear, unified
entities in its external
communicated
in the
The second was
emerged from these meetings had two
critical
segments.
The
understanding of Lithonia's structural relationships with the
marketplace. These relationships were embodied and
form of a diagram, referred
to as the Lighting Business Cycle.
the development of a vision of Lithonia's internal approach to doing
business in this external marketplace, a set of defined objectives which would enable
to
is
remain successful
in the
decades to come.
The
explicit
it
statement of these objectives
referred to as "The Lithonia Way," and would eventually form the internal guidelines
leading to the creation of a coordinated orientation to the business on the part of each
and every member of the Lithonia organization.
1.
The Lighting Business
The
entities
Cycle:
which comprise the distribution channel for Lithonia's products are:
Specifiers; Contractors; Distributors; Agents; the Lithonia Sales
LITHONLA LIGHTING
Management Team;
the
12
X
UJ
13
Field Warehouses;
and the Lithonia Product
are described above in Section
manage
The product
items.
The
the agent network.
The charter
II.
Field
divisions develop,
The
divisions.
functions of the
of the Lithonia Sales
Warehouses provide
Team
first
is
four
to
localized access to stock
market and produce products within
their scope
of knowledge.
management team ran
In their discussions, the
when
into difficulty
they
attempted to define and draw the inter-relationships and connections between
As Darnell
enfifies.
describes
in a traditional hierarchical
The
a
lines
maze
it,
when
organizational chart, they ended
up with
"spaghetti" charts.
and connections went every which way, crossing and re-crossing each other
of complexity.
The drawings served
what the problem was:
"universe," rather than Lithonia
agent.
these
they drew the boxes and tried to connect them
With
this realization
clearer understanding of
importance of each.
and
it
was the agent who belonged
itself.
in
as the focus of the discussions, a tangible
vehicle by which to test proposed theories of the inter-relationships.
realized
all
The remaining
in
Finally, Darnell
the center of their
entities revolved
around the
and the resulting Lighting Business Cycle drawing came a
insight into the interactions
This understanding
in turn led to
the entiues which comprised the business cycle
came
to
among
these entities, and the
a vision of a
new approach:
be viewed as Lithonia's
partners in the process of getting the product to market. (See Exhibit E).
Once
market, the
approach
they developed an improved and unified understanding of the external
management team could concentrate on developing
to operating within that market.
a definition of the relationships
among
The
explicit
a coordinated internal
statement of
these market entities, was
this
approach, and
embodied
in
"Vie
Lithonia Way."
LITHONIA LIGHTING
14
LU
X
LU
15
The Lithonia Way;
2.
As defined
LITH0NL4 WAY
and caring
that
in
is
an internal company manifesto by the same name,
providing the best value
we do
being easy to do business with,
things right for our business, our customers
Lithonia, each portion of this definition
operational implementation
of customer service:
in lighting,
is
defined
is
what
give the customer
and our people." At
translated into a slogan,
in detail.
"THE
and
its
daily
The common underlying theme
s/he needs to succeed,
is
and Lithonia
that
in
turn will be successful.
"BEST VALUE IN LIGHTING"
refers to product value,
product performance relative to
its
quality, competitive costs/prices,
and superior
cost.
describing quality, price and service
compete on
a price basis, since
economies of
scale with
which
Customers would have
to
in the
number one
"BEING EASY TO
This portion encompasses the notions of high
The choice
service.
no accident.
it
could not
the super lighting companies had achieved the
to drive
down
prices.
The company which
Quality was also relatively
excelled in customer service would
position.
DO
BUSINESS WITH' means
means employees with expert knowledge of
communication, prompt fulfillment of orders, and
documents.
of adjectives
Lithonia realized that
"being responsive to the needs of
our customers and our agents and having a can do attitude
It
defined as
be able to get the products they wanted, when they wanted
them, easily and painlessly.
others."
is
Therefore, the competitive differentiator would have to be service.
homogenous.
remain
all
is
which
And,
it
means
clear,
in
our business dealings with
the products, quick and accurate
understandable business
"going the extra mile."
"CARING ABOUT DOING THINGS RIGHT FOR OUR BUSINESS, OUR
CUSTOMERS AND OUR PEOPLE"
LTTHONLA LIGHTING
refers to stockholders, customers
and employees.
16
Lithonia defines
its
"customers" as "those persons
position to influence the purchase of our products."
are:
1) their "partners" the agents; 2) their
The
who purchase or who
are in a
four primary customer groups
"teammates" the
distributors; 3) their
"judges" the specifiers (this group includes architects, building* owners, corporate
occupants, electrical engineers and lighting designers) and 4) their "friends" the
contractors
each are
who
install their
The
products.
value, contributions
explicitly stated.
The
sales agents are
independent companies with exclusive rights to
Lithonia's products in their sales territories for a commission.
the Lithonia family" for their local
their
power
Some
market knowledge,
existing
sell
consist of
more people. These agents are valued
person, while others have 20 or
and
and unique needs of
as
one
"members of
customer relationships,
to represent Lithonia to other buying influences in their territories.
Agents work with
specifiers to get Lithonia's products specified; they
distributors to quote prices, enter orders
work with
and pass on order status information; and they
provide contractors with product information.
In turn, Lithonia strives to
make
the
agents successful through superior commissions, training, product performance
^^^
information, and product availability.
Distributors serve local markets and
and other buying influences.
agents,
work
regularly with contractors, purchasing
They provide an extended
inventory and bearing the payment risk from customers.
pricing,
sales
arm by
stocking
They require competitive
on-time delivery and quick response to questions and problems.
The
specifiers
their specifications.
judge the appropriateness of Lithonia's products for inclusion
They look
for high quality
lighting science technical data to
LITHONIA LIGHTING
make
and dependable products, and
in
utilize
their configuration decisions.
17
Electrical contractors
and cost of
They look
depend on the
and ease
design, quality of construction,
installation of the lighting products for
which they
in
turn are responsible.
and easy
for trouble-free products, on-time deliveries to avoid job delays,
installations.
The Lithonia Way
also provided the
employee development program.
implement a career plan
it
is
thrust of the
for each employee.
for
and communication
possible,
is
an
program
explicitly
is
to
Promotion from within
is
the belief that
do the job and
is
the
to provide a
norm wherever
emphasized.
ORGANIZATION:
Lithonia's organization
was designed
to support
market/customer orientation.
its
With the development of each new product came an addition
to the organizational
structure with the charter to conceptualize, design, develop, produce
product
such, each product corresponds to a division;
into logical families or groups of products.
High
and market the
line.
As
its
defined
develop and
Underlying the program
Lithonia's responsibility to "help the employee learn to
climate of opportunity for growth".
B.
The
framework
Intensity Discharge products)
Lighting, Industrial
is
the divisions are
combined
For example, the Hi-Tek group (named for
comprised of the Downlighting Division, Track
and Outdoor, National Lighting Standards, and Major Reflector
Products.
At
Lithonia, the terms "division" and "seat of knowledge" are used inter-
changeably.
The
responsible.
In keeping with
division
is
the seat of knowledge about the product for which
The Lithonia Way, everyone
about that product, from clerks to senior managers.
LITHONIA LIGHTING
In a
in the division
company which
is
is
it
is
an expert
determined
18
to provide the best value in lighting
the seat of knowledge
company.
The
king.
is
and service the needs of the
industry
demands
a
broad product
At the same time, products have become more complex.
able to provide a large
number of products and
still
retain expert
each one, Lithonia decentralized the organization along these
its
own
lighting marketplace,
design, purchasing, manufacturing
and marketing
line
from each
In order to
be
knowledge about
Each
lines.
capabilities.
division has
Finance,
Human
Resources, Distribution and Information Systems are generally centralized; the
exceptions are based on geographical need.
manages the agent network.
A
A
centralized Sales
Management group
centralized Marketing group coordinates the activities
of the divisional marketing groups, and also provides those services for which
diseconomies of scale would
exist
if
decentralized; this includes, for example, video
production, merchandising materials and national advertising.
The
organizational structure described above thus serves to reinforce the
Lithonia strategy of providing customer service through a broad product line with
The
expertise in each product.
on
this
responsibility for
Lithonia
new product development and
Way
goods inventory.
strategy:
it
is
divisional
and knows the needs of the market
drives
In addition to
its
have recently been given
for product sales/service,
Again,
this reflects the
marketing which
it
is
is
implementation of
customer
marketing which
the manufacture of existing products.
implementation through the organizational structure,
the organization's
Educational programs were set up to carry the
newsletters are circulated periodically which describe the
LITHONIA LIGHTING
which includes
closest to the
divisional
The Lithonia Way can be seen throughout
programs and processes.
Company
addition to handling product pricing
best, therefore,
new product development and
manifestations of
in
each function are also based
divisional marketing groups at Lithonia
setting levels for finished
The
For example,
customer orientation.
and agent margins, the
responsibilities assigned to
new message.
components of The
19
Lithonia Way, and the progress being made.
and Darnell
Slogans and acronyms are
fact,
Lithonia
new
heights of creative application, as will be seen below.
-
in particular
The educational program
permeates every function and
level of the organization.
never see the external customer
strive to
make
more
closely
The
The Lithonia Way
Functional areas which
Finance or Manufacturing, for example,
is
best for the customer.
-
For
Finance area, a recent project has been to redesign the invoices to
clearest manifestation of
embodied
member
to
resemble the customer's original order.
Super Seven, a
ideas
-
based on what
their daily decisions
in the
naming and acronyms
has been an ongoing effort, and
typically
example,
takes the art of
-
In
visible.
list
The Lithonia Way was
of seven short-term objectives for the 1980's.
The Lithonia Way
in
the development of
of the organization.
They
2.
Be more
3.
Expand
4.
Develop and implement programs
new
converts the
are:
Get our agents' support
into
list
into short, easy-to-remember, steps for every
1.
effective in
This
The
for
all
division products.
communicating with and servicing our customers.
lighting markets;
fill
gaps
in existing
product packages.
to gain greater preference
from
all
buying influences.
5.
Improve our
6.
Provide employees the opportunity to grow professionally and personally
and
7.
The
logistical
performance.
to contribute to our customer satisfaction.
Be more
seat of
sensitive
and responsive
knowledge concept
and expertise along product
LITHONIA LIGHTING
lines.
to customers'
satisfied the
and employees' needs.
company's need for differentiation
At the same time, however, there
is
a substantial
20
need
for
mechanisms which integrate these disparate functions
into
one company.
At
Lithonia, information technology has been used alongside alternative structural
mechanisms
to provide this integration.
SYSTEMS:
C.
Between 1980 and
of information systems.
1988, Lithonia Lighting developed and
These have been divided
into the
The
or field systems, and internal, or corporate systems.
and the ways
its
competitive advantage
in the
series
broad categories of external,
capabilities of these systems
which they have been used have played an important role
in
ability to retain
implemented a
Moreover, as
market.
will
in Lithonia's
be seen
below, the application of information technology at Lithonia has evolved to the point
where
it
is
being used not only to enable the company to manage
external interdependencies, but to transform
1.
Development of
ACE
and
In 1980, a separate group
them
ACE. The
and
internal
as well.
ACE+:
was created within the Information and Management
Systems group (I&MS) to work on a new system:
Environment, or
its
the
Agency Communication
original concept of the system
a direct outgrowth of the strategic
management
was a simple one, and was
discussions described above.
If
the
agent was the hub of the wheel, and service the key theme, then the easier and faster
Lithonia was able to get the agents' orders
conceived as one small step
in the effort to
in,
the better.
ACE
was
originally
speed up the order fulfillment process by
simply eliminating the mail float which existed
when
the agent mailed an order to
Lithonia.
Prior to
it
ACE,
agents
in the field
onto an order form, and mail
LITHONIA LIGHTING
it
would take an order over the telephone, write
to Lithonia.
Once
it
was received
at Lithonia, clerks
21
would convert the information
and key
it
these
original
manual
understood by the system
ACE
product codes),
system was a simple order entry system, designed to combine
steps by allowing the agent to enter the order directly into the system.
This would eliminate the steps involved
mailing and entering the order to
in writing,
Lithonia's internal systems, as well as the time the order
The
(e.g.,
company's databases.
into the
The
to codes
original
ACE
programmer, and one
was
in the mail.
team was comprised of three people:
training analyst.
While the concept of the system was
straightforward, the specification development process
was
was a diverse group dispersed throughout the country, and
varied greatly from one to the next.
fiercely protective of their
one technician, one
Compounding
this
not.
relatively
Lithonia's agency force
their operational processes
was the
most were
fact that
independence from Lithonia; they were suspicious that
Lithonia might use the proposed
new system
how much
to see
the agents were actually
charging for their equipment, and might then cut into their profits by raising the price.
However,
actually
them
at the
demand an
same
time, a core group of higher
talking with
them
to
electronic order entry capability as a critical support tool to enable
to further increase volume.
a "beta" test group.
volume agencies began
The
ACE
team spent
to understand
in Lithonia's best interests to
Lithonia decided to use this
how
more
receptive group as
a great deal of time visiting the agents
them
that
directly contradicted
The
they did business, to reassure
reduce their profits
(it
Way), and to interactively write the specifications for the new system.
system was implemented,
it
was only
for themselves the potential benefits,
LITHONIA LIGHTING
a matter of time before the
and began
to
Once
it
and
was not
Lithonia
the
remaining agents saw
clamor for their own.
22
By
The
using different hardware.
communicating
nominal
typical site
installed at 17
agency
had one user dedicated to order
sites,
each
entry,
Lithonia licensed the systems to the agency for a
directly to Lithonia.
fee, providing
At
basis.
been developed and
1982, the system had
both the hardware and the support services on a subsidized
systems group began to develop a
this time, the
module which would
filter
accept and convert some of the orders directly to Lithonia's databases, thus reducing
the
amount of work performed manually by
The
the order entry clerks.
functionality
of this module was later expanded to include price checking and credit approval;
became known
for
as
more agents
The
to "get
Express after Darnell's invitation at a national sales meeting
on board the
next critical step
ACE+. The
ACE
ACE
ACE
the process
in
Expressl"
was the enhancement of the
major difference between the two systems had
had been based on an order orientation, while
ACE+
ACE
system to
strategic significance:
was designed wath
a job
This change was directly correlated to the recognition of two conflicting
orientation.
demand
while the
needs:
it
for extensive technical expertise
and
local
presence
necessitated an organizational structure comprised of different divisions for each
demanded
product, the market also
this set of products.
The new
the ease of dealing with one
ACE+
company
system would begin to serve
to provide
this coordinative
function.
For example, the
products for
ACE
its
job.
would enter
keeping
in
mind
ABC
construction project might specify five different lighting
The agent who was ordering
five different
that they
all
separately through delivery.
these products from Lithonia through
orders (one for each Lithonia product division),
belonged to the same job, and then track these orders
Using
ACE+
on the other hand, the agent could
one job and specify the various products which belonged
into Lithonia,
it
would be
LITHONIA LIGHTING
split
and sent
to
it.
Once
set
the "order"
up
came
off to the appropriate divisions through the
23
ACE
Express processing module.
In this way, the system
was adjusted
to better reflect
the realities of business operation.
2.
Forward Integration;
The development and
successful implementation of
ACE
and
ACE+
ACE+
stage for a continued, ongoing field systems development process.
set the
represents
the use of technology as a tool to connect an integral piece of the external sales and
distribution chain directly to the organization.
functions of
ACE+
Since
its initial
implementation, the
Job processing capabilities now
have continually been expanded.
include the ability for the agent to automatically price an entire
by
bill
of materials, either
item or lump sum, based upon factory authorized price/commission
line
The
levels.
quote can then be converted by the system into an order, and sent electronically to
The system provides information on
Lithonia's internal systems for order processing.
the status of each order (as of the previous day) as
initial
it
travels through Lithonia,
from
order processing to manufacturing, distribution and invoicing.
Today, however, the system provides much more than
extensive Engineering Applications
just
order processing.
module allows computer-aided
lighting design
An
and
layouts, providing a base of technical expertise for the agent to use in his dealings with
the customer.
An
Office
Management module
provides access to off-the-shelf office
processing systems such as word processing or spreadsheets.
System helps the agent to analyze and better manage
enhancements have served
independent agents.
to strengthen the ties
Moreover, the new
simply speeding up the process, and have
An Agency Management
his business.
These system
between Lithonia and
capabilities
a strategic
weapon
now helped
LITHONIA LIGHTING
in the battle for
network of
have gone beyond the goal of
Lithonia achieve
being easy to do business with and doing things right for the customer.
become
its
market representation.
its
goals of
Technology has
As Darnell
24
explains
it,
even
if
Lithonia's competitors start copying them,
would take seven years
it
just to catch up.
But Lithonia has taken the concept of electronic integration even
Concurrently with the expansion of
ACE+
cycle.
(See Exhibit F.)
distributors)
is
been the development and
capabilities has
placement of appropriate information systems for each
entity in the lighting business
Each of the systems serving each user
connected directly to the agent system,
are transmitted to Lithonia.
further.
ACE+,
(e.g.,
DIAL-L
through which
themselves.
itself,
orders
all
With the placement of each system, Lithonia has taken a
step-by-step approach to integrating and connecting the critical entities in
distribution chain to
for
to the
Agent
as the
hub of the
The communication network which enables
cycle,
its
and among the
entities
this electronic interaction
was
christened Light*Link at Lithonia's annual national sales meeting in 1986.
Each system was designed
(Exhibit
G
provides a
summary
for the specific
needs of Lithonia's "customers."
of each field system.)
of Lithonia, utilize a Stock Order System (SOS).
It
The
Field Warehouses, as part
includes an order function, which
provides the ability to place a stock order directly with the warehouse, and an
inventory tracking capability.
It is
connected directly to ACE-I-, and to
DIAL-L
(the
distributor system) as well as to Lithonia's internal systems.
The
Specifier customer group has
SPEC-L, CALC-L
systems give these customers what they need:
I
and
CALC-L
IL
computer-aided lighting design and
economic
layouts through access to Lithonia's lighting science database, as well as the
analysis associated with varying design considerations.
name
While the
specifiers
Lithonia's products in their specifications in return for
the system serves to remind
them of
an
Essentially, these systems are
extension of the engineering applications capabilities of ACE-(-.
are not required to
These
Lithonia's existence
on a continual and
its
use,
visible
basis.
LITHONIA LIGHTING
25
26
EXHffilTG
LITHONIA LIGHTING
FIELD SYSTEMS
SUMMARY OF
1.
Agency Communication Environment (ACE+)
*
Used by
*
Capabilities include:
*
the agents
Job Processing
*
Job ID identifies project
*
Enter specification for bill of materials
*
Enter a bill of material and generate a price quote on it;
*
Receive requests for quotes from the DIAL-L system used
by distributors, and respond with a confirmed quote;
*
Convert quotes into orders;
*
Transmit orders to Lithonia;
*
Confirmed orders sent back
acknowledgement
*
Transmit notes - short notations which can be attached to
any point (electronic document) in the system.
Transmit memos - messages and memos can be sent via
system to any user including company personnel
*
*
*
*
agency as an
Status
*
*
to
Access factory and field warehouse inventory
Receive updated order/inventory status daily;
status;
Engineering Applications
*
Lighting layout design
*
Economic
analysis
Agency Management module (currently in testing)
*
Reports and information to help analyze the
business;
e.g.,
backlogs, commissions by manufacturer, sales and product
history;
*
Office
Management
*
Access off-the-shelf office systems
27
EXHIBIT
G, com.
(SOS+)
Stock Order System
*
Used by
*
Capabilities include:
*
the field warehouses
Orders
DIAL-L
*
Receive orders from
*
Allocate available inventory
*
Print
and/or
ACE+,
or enter orders
directly
*
bill
of lading for shipment
Daily Transactions
*
Keep
*
Adjustments to inventory
Receipts by item and by trailer
*
track of inventory
movements
in
and out of warehouse
in total
SPEC-L, CALC-I and CALC-II
*
Used by
*
Capabilities include:
*
specifiers, lighting engineers, etc.
same
as those provided in Engineering Application portion of
ACE+;
DIAL-L
*
*
Used by
the distributors
Capabilities include:
*
Job Processing
*
Request quotes
*
Convert quotes into orders
*
Access order/inventories status information
*
Create quotes for their customers (the contractors)
28
EXHBIT
G, cont.
Test
*
Sell
Query
warehouse inventory status
Allocate and reserve inventory to the on-line transaction
Enter a purchase order directly to the field warehouse
*
*
*
&
Memos and
field
messages
Contractor Access to Lithonia
*
Used by
*
Capabilities include:
(CALL)
contractors
same
as those provided for the distributors through
DL\L-L
(with
the exception of quote creation for customers)
29
Distributors use
DIAL-L.
Connected
directly to
ACE+, DIAL-L
allows a
an electronic quote from the agent for job or stock business.
distributor to receive
system can then convert the quote into an order and electronically transmit
The
the agent.
the contractor.
back to
it
distributor can also convert the quote into a quote for his customer,
The
status capability allows a distributor to use the system to check
the status of an order and inventory, thus eliminating the time consuming
frustrating task of constant telephone calls
newest feature of
to the field
The
warehouse SOS system
to
and
between the distributor and the agent.
TEST&SELL,
system,
this
on
The
connects certain select distributors directly
query inventory there and enter an order for
shipment.
With the
cycle will
installation of the latest field system,
be electronically connected.
Lighting system.
distributor,
SOS
CALL
will
and ultimately
system as well.
This
is
CALL, each
the Contractor Access to Lithonia
place the contractor in direct communication with the
will
allow the contractor direct access to the field warehouse
Distributors will be allowed to transmit prices to each contractor
for doing business with the
Currently, both the
distributors, specifiers
SOS
system.
Agent and Lithonia's
and contractors receive
sales
management team
their systems.
arrangements for these systems are similar to those for
3.
least,
these systems "make
it
easier to
Certainly, by offering their customers systems to help
that
it
The
control which
financial
and service
ACE.
Impact of Forward Integration:
At the very
and easier
entity in the business
at
do business
them do
with" Lithonia.
their jobs faster, better
minimal cost and with no obligation to Lithonia, the organization "cares
does things
right
for
its
immediately whether an item
LITHONIA LIGHTING
customers."
is
And, of course, the
ability to
available, or the ability to optimally
know
and cost
effectively
30
design a lighting layout, exemplifies Lithonia's continuous attempt to provide the "best
value in lighting."
However, the impact of
forward integration of systems and technology into
this
the marketplace has even greater significance.
As mentioned
Section
in
II,
changes
in
the lighting industry over the past ten years have resulted in a changing role for the
distributor.
Connecting the contractors through the
warehouses
effectively allows
services,
and
to start dealing
them greater and
more
marketplace.
The
to actually
the market and/or to target
4.
facilitate a strategic
and Lithonia's
Not only are these
its
marketplace,
transformation of
ability to
choose
this
who
change the interactions among the members of
new customer groups
field
systems took priority at
importance of internal systems which could
with which to directly interact.
1)
first,
Towards the middle of the
Lithonia quickly realized the
\
support the external systems' capabilities
2) allow Lithonia to handle the increased order
EXCEL
1980's, Darnell
volume which had
resulted.
launched a new campaign:
the
Excellence through Customer Service Emphasis at Lithonia was
program.
conceived as an extension of The Lithonia Way, "dedicated to achieving new heights
customer
and
Backward Integration;
While the
and
easier access to Lithonia's products
the interdependences in
availability of these systems,
empowers them
gets them,
manage
being utilized as a tool to
is
system directly to Lithonia
closely with Lithonia's agents.
systems enabling the organization to
the technology
CALL
service",
entry level.
The
and was aimed
at
every position in the organization, from senior to
drivers behind the resurgence of effort in this area
heated competition
in the
in
were increasingly
newly consolidated marketplace, an increased understanding
on the part of customers regarding
service performance,
and an increasing trend among
competitors toward better internal productivity and efficiency.
LITHONIA LIGHTING
31
The
EXCEL
campaign was based on both the strengths and weaknesses of the
Management
organization.
believed that continuous improvement in process was
necessary to stay ahead, that the structure and framework existed within which to
improve, and that Lithonia had a vision of excellence and a unified set of goals,
At the same
philosophies and policies which far exceeded the competition.
explicitly
recognized those areas
in
which
had exploded beyond the capability of
it.
For example, investments
point where existing
loads; and,
in
possibilities for
improvement
existing internal processes
time, they
existed.
and systems
Volume
to handle
manufacturing plants had increased capacity to the
human and automated
manual handling of inventory
resources could not optimally schedule
levels could not
These problems had an adverse impact on customer
keep pace with the volumes.
Complaints were received
service.
regarding shortages, missed promises, and non-availability of inventory.
In addition, the
functions of the field systems had been enhanced to the point where external units had
more
capabilities than Lithonia's internal employees; for example, agents often
more information on
the status of an order than the Lithonia marketing
and
had
sales
liaison.
Driven by the need to improve quality of service and reduce
organization began to apply the
"market" as
it
same
spirit
had to the external one.
of innovation to
Darnell developed a
categorized the processes used by Lithonia to
fulfill
its
costs, the
internal operations
and
new framework which
an order into
logical functional
groupings, as follows:
*
SELL =
Sales Environment at Lithonia Lighting
*
MILL =
Manufacturing Information
*
ROLL =
*
BILL =
Routing Orders
at Lithonia Lighting
at Lithonia Lighting
Billing Information at Lithonia Lighting
LITHONIA LIGHTING
32
The concept and view
it
The
interfaced within the organization.
for the groupings (which crossed
which
many
EXCEL
a
new theme.
campaign and the new names
functional lines) provided the vehicle through
The
concept was communicated throughout the company.
this
became
each function was both a customer and a supplier of those functions with
In this view,
which
of the organization as an internal market
orientation
toward customer service thus permeated the entire organization, from senior to entry
level.
It
became
the
norm
for
each person to view his/her role
in relation to the larger
business processing chain.
Darnell then categorized Lithonia's automated information systems according to
the business functions they supported, and reorganized the
categories.
(See Exhibit H.)
In addition, the training function
evolved into a separate group comprised of three subunits:
training,
and
I&MS
a telephone support center.
The
group under these
was enhanced and
field training, internal
goal of the reorganization was not only
to better support the business cycle, but for line personnel to begin to view information
technology as an integral tool with which to improve their business functionality, rather
than as the sole jurisdiction of the
A
series of Excel
Today
I&MS
group.
tasks, including
both manual and automated systems
improvements, were targeted for immediate action.
EXCEL:
list
of longer-term tasks and
framework which then became a separate
future improvements evolved into a cohesive
but complementary program to
A
the
One
Lithonia Architecture, or
OLA,
program.
The concept behind
OLA
was
to proactively create
which to coordinate and unify Lithonia's many product
company
the
first
to
market
its
product lines as one
entity.
an architecture through
divisions,
The
thereby enabling the
external systems had provided
steps toward this goal by providing the capability to enter
LITHONIA LIGHTING
all
the orders for
33
^
o
c
o
*^
(0
N
C
n
;—
^^
•
o
I*
00
CO
I
00
(0
,
one job under "one order number.
multiple
divisions
However, agents were
and product locations
in
On
did not have the capability to consider each job as
was viewed
-
required to deal with
order to price the job and to place and
track the status of the line items in the order.
perspective, each job
still
and priced
-
the other side of the coin, Lithonia
one company; from the company's
The work
as multiple, divisional jobs.
which had begun on the external systems had to be continued on the internal systems.
OLA
which
set
made
the
pursue the
to aggressively
up within
as well as the
I&MS
one-company goal
EXCEL
explicit,
and provided a foundation from
campaign
to specify the necessary
A
goals.
enhancements to
separate
OLA
team was
existing internal systems
development of new systems which would lead Lithonia down the road
toward the one-company goal.
Changes
to the information systems
SELL, ROLL, MILL and BILL
were specified and scheduled under the
categories.
The SELL
function
the internal and external systems used to obtain the business.
this
On
has been described above.
the order processing
modules
(i.e.,
is
supported by both
The
external portion of
the internal side, improvements were scheduled for
upgrades to Ace Express) and for the systems used
by the Lithonia divisions for quotations, product information, and order status
information.
In
some
cases, the
planned divisional
SELL
systems would simply bring
the capabilities of the internal marketing teams at Lithonia
installed for the
independent agents.
order processing systems would
on routine order processing
mean
on par with those already
Conversely, the scheduled enhancements to the
that divisional
tasks while delivering
employees could spend
more
less
time
consistent, timely information
to their multiple clients.
Improvements were scheduled
for the
MILL
support systems
in the
areas of
scheduling and expediting as well as material/capacity requirements planning.
LITHONIA LIGHTING
Additions
35
and enhancements
in
ROLL
the
systems included a Finished
management and
inventory planning, carrier/transportation
would provide a greater
ability to
improvements were scheduled
meet ship-promise
Goods Flow
system,
various modules which
dates.
In the
BILL
for claims processing, cash application,
area,
and
credit
approval functions.
In addition to the system
improvements within each functional area, new systems
were specified which would allow greater coordination and connection between the
functional areas as well.
*
(Exhibit
The Available
to
I)
For example:
Promise
f
A2P) system would use MILL information
calculate product availability dates to be used in the
requested product was not
A2P
in
SELL
function.
to
If
a
inventory or in the production schedule, the
system would check inventory for availability of each of the product's
components and
calculate the time
it
would take
to
manufacture the
product, instead of automatically reporting non-availability of the product
and possibly
*
The
losing the sale.
Effective Scheduling System fESS)
ROLL
would connect the
MILL
functional areas by scheduling the load for each plant based on
shipping date requirements from the nearby distribution center.
example, products scheduled to be shipped out of Conyers
manufactured
in
Conyers;
ESS would schedule
on the shipping requirements
*
and
for the
will
For
be
the Conyers plant based
Conyers distribution center.
Credit authorization systems would connect the
ROLL
and BILL areas;
prior to shipment, the product would be held for an automatic credit
authorization check.
LITHONIA LIGHTING
36
37
In addition to the development of
implement a
example, dramatic changes
re-tooled to be
The
in the
new management
more
its
efficient.
installed.
This included, for
Reponing
manufacturing processes.
structures
were
Procedures and work environment were
Teams and group problem
and quality became key words and
Safety, productivity
"right-sized" for
coordinative systems, Lithonia began to
managerial and process improvements as well.
set of
reorganized and
new
solving
goals.
were encouraged.
Each organization was
duties.
EXCEL
campaign and the implementation of the
continued through the 1980's.
Significant progress has
OLA
been made
concept have
in
the development
of these systems, as Lithonia looks ahead to the next decade.
LITHONIA LIGHTING
38
LITHONIA; LOOKING TO THE
V.
As
reshaping
the 1980's
its
come
strategy.
goals and objectives.
*
More
to a close, Lithonia
The Super Sevens
Lithonia plans
effectively
1990'S
is
in the
process of re-thinking and
for the 1980's are giving
to a
new
set of
to:
market an increasingly complex
coordinated, integrated
way
company
unit,
set of
products as a
while retaining the independent
nature of each product;
*
Achieve a sales goal of $1
*
Improve
logistical
billion
by the early 1990's;
performance, with special emphasis on the distribution
function;
*
Enter the arena of world
cost, highest quality
class
manufacturing; strive to become the lowest
producer of lighting equipment
in the
world.
Driven by increasingly heated market competition, with an emphasis on
improved service and decreased
technology as a tool to more effectively manage the interdependence
and external business processes.
its
external customer base have
their ability to
manage
among
its
internal
Already the boundaries between the organization and
begun
to blur, as
an increasing number of customer
groups are provided with more advanced capabilities
and
"^-
Lithonia continues to utilize information
cost,
in their
the order fulfillment process.
connections to Lithonia
Development of technological
bridges between functions within the organization has begun.
These and other
efforts
continue.
Rockart and Short describe
technology (IT)
is
six
organizational contexts within which information
being used to integrate and more effectively manage a company's
subunits (Rockart and Short, 1988).
use of IT as an integrator
LITHONIA LIGHTING
To
date, Lithonia has primarily concentrated
in the following areas: 1)
its
within inter- organizational
39
contexts; 2) across parts of
its
value-added chain,
manufacturing and distribution; and 3)
in
e.g.,
between marketing,
the coordination of
its
Information Systems
(IS) organization with the line organization.
In Lithonia's case, the inter-organizational
and value chain areas of
interdependence have been combined through the use of IT into one extended industry
value chain.
(See Exhibit
J.)
Lithonia's inter-organizational integration efforts have
extended forward to the "customer", using information systems to connect
customer groups with each other and
to the organization itself.
its
This effort
many
now
is
extending backward through the organization's internal value chain, integrating and
coordinating each piece of the chain through appropriate information systems.
date, these efforts have extended as far
processes.
back as the distribution and manufacturing
Using the concept of a "collapsed" value chain with three macro-
organizational categories, Lithonia has concentrated
its
Customer Service/Management and Product Delivery.
efforts to date in the areas of
Inter-organizational integration
using IT has continued within this process through the application of
its
To
distribution function with external shipping companies.
EDI
to connect
In these contexts, Lithonia
has successfully used IT as an alternative to a matrix or other type of organizational
structure tool to network the
As described
in
company
in multiple
dimensions.
Section IV, Lithonia has also
made
great strides in the area of
is/Line integration, both through structural reorganizations of the
I&MS
group and
through ongoing educational and cultural efforts to bring technology to Line personnel.
A.
Mana£ing Interdependence
Lithonia
is
integration across
in the 1990's;
currently continuing
its
its
efforts in the
two areas described above:
industry value chain, and 2) IS/Line integration efforts.
LITHONIA LIGHTING
1)
In
40
03
c
0)
O
re
c
e
O
company
addition, the
mechanism
into
is
expanding
its
use of information technology as an integrating
two new organizational contexts:
the company's multiple functions to each other
3)
new systems which
(e.g., all
will
connect
the divisional marketing
These four areas of new and continued
groups); and 4) planning and control systems.
efforts are discussed below,
1.
Continued Value Chain Integration;
Systems are currently under development which
integration within the customer service
In addition, plans are being
the product
made
to continue to
Customer Service/Management
and Specification System (PASS)
is
serve to reinforce
and product delivery sections of the value chain.
development area, and eventually
In the
will
move backward through
the chain into
to suppliers.
area, a divisional Product Administration
currently being
implemented
enormous volum'e of product information resident within each
to help
division.
manage
the
This system
will
codify and allow widespread access to a comprehensive base of product knowledge
including product nomenclature, valid combinations of different products and parts,
pricing information
and picture images of the products.
marketing functions within the
customer
in
divisions, this information
various formats (see discussion of
electronic bridges will be built
COG
SELL and new
between the
CAD
its
use by the
may be passed outward
system below).
functions to capture customer and market information:
forward from
In addition to
to the
In the future,
product development
part drawings could be passed
systems to the product database and out to the customer, and
customer requests for product combinations can be passed back from the market
through the order and product databases to
The order processing module,
complex product
ACE
CAD
Express, has been enhanced to include
verification, pricing authority
LITHONIA LIGHTING
systems.
and
credit authorization capabilities,
more
and
42
has been renamed the
outgrowth of
this,
implemented
to
COPS
system (Corporate Order Processing System).
a Divisional
Order Process System (DOPS)
automate a greater portion of the
As an
currently being
is
divisional order processing tasks,
to provide the divisions with online access to internal databases
and
and information.
Continuing into the Product Delivery area, efforts are currently underway to
implement a
fully
integrated flexible manufacturing system.
The
first
operational changes and automation of the entire assembly process.
being
made
in
new technology and equipment which
will
phase includes
Investments are
automate and increase the
speed of the currently manual movement of material between steps
in the
process, thereby increasing the capacity of existing assembly machinery.
processes are
fully
these
For example, the Effective Scheduling System
(ESS) discussed above would be electronically connected
LAPS
Once
automated, automatic bridges can then be installed between the
manufacturing and distribution functions.
through
assembly
(Lithonia
Automated Production System).
System (LIDS) would use information on
daily
directly to the
An
shop floor
Integrated Distribution
manufactured volumes from the
automated manufacturing systems to arrange and schedule the
availability of
distribution support materials (pallets, forklifts, etc.) at the various distribution centers.
Continual enhancements to the distribution systems which
service are also underway.
range of
reside
its
docks
if
at the
customer expected date.
New
in the
warehouse are now rerouted
the system calculates that the order
is
within a certain
tracking systems are planned which will
on the trucks themselves, allowing a customer
an order.
improve customer
For example, using bar coding and a new module
warehouse system, completed orders received
directly to the loading
will
to pinpoint the exact location of
Plans are underway to offer customers an Estimated
Time
of Arrival date
with each order, upgrading from the traditional Estimated Ship Date.
LITHONIA LIGHTING
43
Improvements
have resulted
in a
in
both process and computer systems
reduction
in the
companies
to lower their
their "inventory
own
spurring a
is
new
trend in the industry for
internal inventory buffers, essentially using Lithonia as
manager."
In addition to expanding
its
and integrative systems,
internal coordinative
Lithonia continues to monitor the needs of
improvements
its
customer base, and provide ongoing
The Customer Order Guide system (COG)
in its external systems.
currently being introduced for the agents and field warehouses.
the
improved internal product database (now available
system),
COG
A
direct
will offer
and
their prices.
varying product arrangements and with customized prices.
products are maintained on a separate database, and can be
An
catalogue.
CALL
use
it
is
outgrowth of
internally through the
catalogue can be created for each distributor and/or contractor with
in
J
PASS
provides the agent with the ability to automatically generate a
customized catalogue of the products s/he
works,
function
turnaround time for stock orders from seven days to
This reduced turnaround time
one day.
in the distribution
electronic version of the catalogue can
and DIAL-L systems from agents
A
whom
this
feature and the
embedded
capabilities are expected to reduce the
processing systems, thus reducing the
number of
number
in
each
be transmitted through the
to distributors
COG's system
the agent
Pictures of the
and contractors, who can then
to place their orders instead of keying in extensive product codes.
being easier to use,
different
In addition to
front-end validity checking
errors
coming
into the internal order
of orders which require manual
intervention.
2.
Continued IS Organization/Line Integration;
The
IS organization at Lithonia,
I&MS, has
recently
been reorganized a second
time to more closely resemble the actual business cycle, and to reflect the recognized
importance of the internal systems.
LITHONIA LIGHTING
(Exhibit
K)
Changes include:
44
C 8
*
The
and external systems development
internal
efforts
have been organizationally
integrated along the lines of the business cycle, reflecting the blurring of the
internal/external organizational boundary; previously, the Field Systems portion
of
SELL was
structurally separated
from the Corporate SELL, MILL,
ROLL
and BILL applications.
*
Within each of the groups, systems development efforts
divisions; previously, they
All systems engineering
be aimed across
concentrated mainly on the fluorescent divisions' needs,
with subsequent installations
*
will
is
in
other divisions.
now grouped
together under one director; previously,
micro engineering was grouped with Field Systems software
field systems'
development.
*
A
Systems Assurance function has been created, comprised of business analysts
with responsibility to ensure that the systems being developed satisfy the business
needs and are
*
The
in
conjunction with overall business strategy.
training function
is
undergoing change both
in
content and structure.
keeping with the customer service orientation, emphasis
has been on
field
systems training; extensive support
external entities including agents, distributors, etc.
were the primary emphasis, the
The
group.
shift in strategy
been mirrored
made
systems.
With the
LITHONIA LIGHTING
provided
Because the
training function could reside in
in the training function,
to the content
at Lithonia traditionally
in this
field
area for
systems
one centralized
toward the development of internal systems has
training for internal personnel.
being
is
In
and
with
At the same
new emphasis on
time, ongoing
level of training
providing systems
improvements are
provided for the external
structural changes to the IS organization described above,
46
certain training functions have
and
development groups
into the
been taken
steps have
been moved out of the centralized training group
for the systems they support.
In addition,
to coordinate systems training with the other types of
training provided by the organization (e.g., orientation, procedural, etc.).
*
The
OLA
effort,
been dispersed
which was previously centralized
to
one dedicated group, has
each of the systems development groups.
Functional Integration
3.
in
As described above,
And Coordination:
extensive strides have been
made
in
the effort to use
technologv' to integrate the organization across product lines, so that, as Darnell
explained, "today,
when
However, he went on
the market
comes
to us, Lithonia looks like
to explain. "Lithonia
still
cannot go
to the
one company."
market as one
company."
One example
commission rates
different divisions.
division.
(Overage
of where this occurs
which each product
at
he keeps
will
is
and commissions.
Prices and
be sold to an agent are determined by the
Overage and actual commission
dollars are calculated separately by
the difference between the standard authorized price
actual negotiated price on each product;
division,
in pricing
is
this difference).
if
and the
the agent negotiates a lower price with a
Therefore, the capability exists for the agent to
manipulate the different divisions as
if
they were separate companies; for example, the
agent could negotiate a lower price with a division which offers him a relatively low
commission
rate, take the resulting overage, split
it
with a second division where he
receives a relatively higher commission rate, and increase the price
division's product,
thereby resulting overall
eventual installation of the
PASS
in
on the second
higher commission dollars.
With the
system and unified pricing and commissions
in all the
divisions, the capability for the agent to interact with Lithonia's divisions as separate
LITHONIA LIGHTING
47
companies
(MOMS)
will
be eliminated.
take this concept one step further by tracking and managing the separate
will
divisional orders as
compensated
The new Major Opportunity Management System
one job where appropriate.
for their
work without having
to
Lithonia agents will be appropriately
be involved
consuming"
in "time
manipulations between divisions.
Connecting the various distribution centers
functional integration.
Currently,
when
warehouse, the system queries inventory
stock, the system reports to the
distribution systems
warehouses
in that
would allow the system
to
it
warehouse
is
only.
If
not available.
comes
the part
in to a
is
not in
Networking the
go one step further and look
In addition, using technology to
existing distribution centers will enable the
centers.
another area of impending
the request for a stock order
customer that
to find the part requested.
is
in
other
connect
planned introduction of regional distribution
Similar benefits could be gained by connecting the multiple manufacturing
plants for each division.
customer date
in
one
If
an order could not be scheduled
in
time to meet the
plant, the system could automatically schedule production for
another plant.
These and other changes
will
serve to shift Lithonia from a
company comprised
of a collection of regional subunits to becoming a truly national presence.
4.
Planning and Control Systems;
In addition to the changes described above, systems
which would provide greater
planning and control capabilities are currently under consideration for development or
purchase.
These
include, for example:
LITHONIA LIGHTING
48
The One Page System, (TOPS)
-
this
the director level in the company.
to a
*
is
an executive support system, targeted
The system would provide information
at
similar
paper-based management report, one "page" at a time.
Sales
and Marketing Management Systems
current tasks, they
will
these systems will not only facilitate
-
enable a redefinition of the sales and marketing roles.
Sales personnel will use the systems to: 1) develop marketing plans (budgets and
actions to achieve them) for each agent, distributor and product for which they
are responsible, and 2) to automatically track to plan. These functions currently
are not performed.
senior
The systems
management can monitor
The implementation
will
be integrated across the country, so that
on a national
sales efforts
of these systems represents a
move by
basis.
the
company away
from purely transactional systems which generate information toward the use of
technology to analyze and manage
this
Other
information.
capabilities will eventually
include aggregate order trend analyses, and budgeting and business plan
B.
Continuous Improvement and
New
Platforms
Underlying Lithonia's ambitious efforts
systems platform, which
is
is
a complete overhaul of the information
currently considered too fragile to adequately support
current and future applications.
1) increased
management.
This need
is
driven by a
number of
factors, including:
complexity of the systems being produced; 2) increasingly complex use of
older systems as users
become more
sophisticated;
and
3) rapidly rising transaction
volumes as the number of users has increased and the capabilities of the systems have
been expanded.
The multi-phase
LTTHONIA LIGHTING
effort includes
upgrades
in
micro and mainframe hardware.
49
operating environment, application software, database architecture, and the
communications network.
Lithonia
is
replacing the current assortment of
microcomputers used both internally and
in the field
and has entered into a service contract with
IBM
by
its
for all
customers with
equipment;
the reliability and serviceability issues which previously existed.
examination of
CASE
development time
The
is
and other productivity
ability to build
expert systems; 3) a
will
PS2's,
addresses both
In addition,
shorten software
currently underway.
result of all of these
volumes; 2) the
which
tools
this
IBM
more
changes
more
will be:
1)
expanded capacity to handle the
sophisticated and complex systems, including
stable data transmission
environment with greater data
tracking capability; 4) continuous, online communication between the field systems and
the mainframe; and 5) a greater ability to electronically network the organization in a
distributed environment as databases and systems
become more
consistent across the
company.
Changes
in the lighting industry continue.
translates to reduced buffers
Closer coupling of business processes
between those processes.
Continued technological
advances create an increasingly complex and enlarged product
customer groups with which to
strategic, organizational,
1980's, Lithonia
is
interact.
set,
and open up new
Continually striving to fine-tune the solid
and technological infrastructure
it
created throughout the
well-positioned for the 1990's.
LITHONIA LIGHTING
50
REFERENCES
Rockart and James E. Short, "IT in the 1990s: Managing Organizational
Interdependence," Sloan Management Review, Winter 1989.
John
F.
Electrical Wholesaling
.
'Today's Lighting Giants", April, 1988.
Date Due
DEC
»*Ay
f
3
6 1998
^
1997'
j-
h-^,
MIT LIBRARIES
3
TOfiO
00Sfi31D3
^