Description
Seagate : Real Time Respone to Demand
Case 09
Seagate Technology : Real-Time response to Demand
SCM Case Presentation
Hard Disk Driver Market
?
?
World’s largest hard disk manufacturer Customer responsiveness primary goal Demand driven supply chain
Short product life cycle High Volume, Highly volatile demand High product complexity Short lead time expected by customer Long lead time for component High customization Customer willing to premium Manufacturing strategy : capacity flexibility Customer driver: availability
Matching supply chain with market requirements
Functional products
Predictable Few changes Low variety Price stable Long lead-times Low margin
Nature of demand Innovative products
Unpredictable Many changes High variety Price markdowns Short lead-times High margin
Supply chain objectives Responsive Efficient
Low throughput times High utilization Deployed inventory Flexible suppliers
Lean
supply chain management Mismatch
Low cost High utilization Minimum inventory Low-cost suppliers
Mismatch
Agile supply chain management
Real Time Demand Fulfillment
End-to-End Connectivity
Multi-tiered visibility
Flexibility
Real Time Demand fulfillment
VMI JIT hubs Buildtoorder
End-to-end connectivity
Multi-Enterprise process management solution
Integrates processes Upstream and Downstream Two-way, rapid response communication channel between partners and between its plant and inventory hubs. Order placement and Order commit status Connects 160 suppliers handling 65 million parts per day RosettaNet -based messaging Webbrowser interface
Server-toserver
End-to-end connectivity purpose
Providing visibility across the multi-tier integrated demandsupply network Integrating multi-enterprise demand and supply processes CPFR
• Planning, inventory and order management processes • Suppliers track changes in Seagate’s demand and consumption rate
Monitoring of the supply chain
• Immediate updates on order status • Check inventory position of the order in the queue
Automatic Shipment request
Supplier
VMI Hubs
Manufacturin g plant Subassembl y plant
Customer
Order to backfill
Supplie r Supplier
VMI Hubs VMI Hubs
JIT Hubs
JIT Hubs
JIT Hubs
Outcome
Inventory turns 8 to 15 Request to commitment turnaround 7 days to 1 day Better capacity utilization
Aligning supply chain strategy with business strategy
Change Management Challenges
?
Customer
challenge s
Used to the security of a well-stocked JIT Hub Performance measurement of customer’s procurement people are not measured against excess inventory Cut inventory levels, higher responsive
Factory of the future – fully automated assembly line
?
Suppliers
Suspicion that Seagate was just passing cost to them Value proposition of sharing consumption data with the suppliers
Vertical Integration
Breadth, control and flexibility Co-develop and co-design components Manufactures high cost high complexity components in house $ 700 million R&D cost $ 600 million capital investment more than non-vertically integrated companies
Customers are willing to pay premium
New Reward System
Incentives for using capacity to the fullest level Challenges
• Oversupply of finished good inventory • Opportunity cost of wasted capacity
Now incentives for
• Meeting customer demand • Reducing inventory levels
doc_324281710.pptx
Seagate : Real Time Respone to Demand
Case 09
Seagate Technology : Real-Time response to Demand
SCM Case Presentation
Hard Disk Driver Market
?
?
World’s largest hard disk manufacturer Customer responsiveness primary goal Demand driven supply chain
Short product life cycle High Volume, Highly volatile demand High product complexity Short lead time expected by customer Long lead time for component High customization Customer willing to premium Manufacturing strategy : capacity flexibility Customer driver: availability
Matching supply chain with market requirements
Functional products
Predictable Few changes Low variety Price stable Long lead-times Low margin
Nature of demand Innovative products
Unpredictable Many changes High variety Price markdowns Short lead-times High margin
Supply chain objectives Responsive Efficient
Low throughput times High utilization Deployed inventory Flexible suppliers
Lean
supply chain management Mismatch
Low cost High utilization Minimum inventory Low-cost suppliers
Mismatch
Agile supply chain management
Real Time Demand Fulfillment
End-to-End Connectivity
Multi-tiered visibility
Flexibility
Real Time Demand fulfillment
VMI JIT hubs Buildtoorder
End-to-end connectivity
Multi-Enterprise process management solution
Integrates processes Upstream and Downstream Two-way, rapid response communication channel between partners and between its plant and inventory hubs. Order placement and Order commit status Connects 160 suppliers handling 65 million parts per day RosettaNet -based messaging Webbrowser interface
Server-toserver
End-to-end connectivity purpose
Providing visibility across the multi-tier integrated demandsupply network Integrating multi-enterprise demand and supply processes CPFR
• Planning, inventory and order management processes • Suppliers track changes in Seagate’s demand and consumption rate
Monitoring of the supply chain
• Immediate updates on order status • Check inventory position of the order in the queue
Automatic Shipment request
Supplier
VMI Hubs
Manufacturin g plant Subassembl y plant
Customer
Order to backfill
Supplie r Supplier
VMI Hubs VMI Hubs
JIT Hubs
JIT Hubs
JIT Hubs
Outcome
Inventory turns 8 to 15 Request to commitment turnaround 7 days to 1 day Better capacity utilization
Aligning supply chain strategy with business strategy
Change Management Challenges
?
Customer
challenge s
Used to the security of a well-stocked JIT Hub Performance measurement of customer’s procurement people are not measured against excess inventory Cut inventory levels, higher responsive
Factory of the future – fully automated assembly line
?
Suppliers
Suspicion that Seagate was just passing cost to them Value proposition of sharing consumption data with the suppliers
Vertical Integration
Breadth, control and flexibility Co-develop and co-design components Manufactures high cost high complexity components in house $ 700 million R&D cost $ 600 million capital investment more than non-vertically integrated companies
Customers are willing to pay premium
New Reward System
Incentives for using capacity to the fullest level Challenges
• Oversupply of finished good inventory • Opportunity cost of wasted capacity
Now incentives for
• Meeting customer demand • Reducing inventory levels
doc_324281710.pptx