Avery Dennison mines "pure profit" from unused inventory

The Reflective Products Division of Avery Dennison had a great idea: using the Web to sell remaindered—but still first quality—products. The company’s IT consultant for the project, Braxton-Reed, designed a system that turned this idea into reality.

If you use the Internet, you've likely come across claims such as "pure profit," "found money," and "get something for nothing!" Usually, these claims are found in the ubiquitous "spam" e-mail that people quickly delete. But Avery Dennison's Reflective Products Division is using the Internet in a different way to make these claims come true. Like many opportunities, this one started as a problem. Avery Dennison, a world leader in self-adhesive products, is a fast-growing Fortune 500 company with annual sales of $3.8 billion. Based in Pasadena, California, it has more than 16,000 employees and more than 200 manufacturing and sales facilities worldwide, doing business in 89 countries.

The company's Reflective Products Division, based in Niles, Illinois, makes the reflective film used on highway signs, barricades and truck trailers, among other applications. It also makes reflective markers for roads, thermoplastic paint used for highway striping, and "hot tape"-the pre-formed thermoplastic paint used for applications such as railroad crossings and drive-throughs. The Division markets the equipment used to apply thermoplastic paint, from small walk-behind units to large trucks that apply striped lines on major highways.

Avery Dennison's Reflective Products Division was facing a hard-to-solve inventory problem familiar to many companies. It sells film and tape products in custom lengths and widths, meaning that each order is cut from a parent roll. For example, the Division produces a standard size reflective tape roll 48 inches wide by 50 yards long. If a customer orders two 18-inch wide cuts, that leaves a 12-inch by 50-yard roll that may not be salable. These "off cuts" frequently languished in warehouses and were often discarded, with their value written off.

However, the company realized that if this unsold inventory could be put on the market, it would be an attractive way to increase income. Any sales would represent a direct flow to income statements at little or no additional cost.

The company began looking for a way to find customers for its off cuts, and hit upon its Web site as a means of posting inventory and making sales to some 10 major distributors. The idea was to create a Web-based order system where customers could review Avery Dennison's off-cut inventory and find a product that matched their needs. However, to create such a system, the Division needed to merge data from two major non-integrated computer systems.

A custom-designed solution was needed to connect the inventory computer system to potential customers. A chance meeting between a Braxton-Reed consultant and the information technology director for Avery Dennison's Reflective Products Division at a McDonald's restaurant-which happens to be one of Avery Dennison's major customers-led to the successful solution proposed by Braxton-Reed.

Braxton-Reed is an information technology and business consulting company based in Oakbrook Terrace, Ill. The company's expertise is in technology, and business applications, its familiarity with Web technology, and its local presence made it the best choice for this project.

Avery Dennison's AS/400 database had to be integrated with a separate, Unix-based system. The combined data had to be easily maintained, with the ability to make daily uploads to the web site, where-using a new browser interface-distributors could access the information and place immediate orders.

Conception and execution of the project was rapid. Initiated in May 2000, the new ordering system was ready by the following month. The need for a new Web hosting agreement created a short delay, but the new ordering system was expected to go on-line in mid-September, 2000.

The system is easily accessible and user friendly. The new Web browser has been a revelation to those accustomed to the drab green screens of the AS/400 monitors. The same data used in-house is now available in a form comparable to that of state-of-the-art Internet sites.

By using an integrated, Web-based solution, Avery Dennison expects to create significant income through inventory that was previously valueless, and will do so without incurring any significant costs. By any definition, that is "pure profit."