Presentation on theme: "Supply Chain Management at Foxconn MIS"— Presentation transcript:
1 Supply Chain Management at Foxconn MIS 6352-05020 Sivapriya AswathanarayananBrigett BentleyJames FancherJason HammonsPaul LanhamNina ThowsenJuly 20, 2004
2 IntroductionFoxconn is the recognized trade name for Hon Hai PrecisionThird largest electronic manufacturing services (EMS) company in the industryProduce cables, connectors, sockets, and motherboardsHas shown a 30% growth rate a year from 2000 to 2003, $2.9 to over $10 billion respectively
3 Introduction Supply Chain Management (SCM) The close linkage and coordination of activities involved in buying, making, and moving a product.Integrates supplier, manufacturer, distributor, and customer logistics processes to reduce time, redundant effort, and inventory costs.Network of organizations and business processes for procuring material into finished products, and distributing the finished product.
4 Developmental History Established in 1974Based in Taipei TaiwanThe first overseas facilities, located in Shenzhen, in the Guangdong Province and Kunshan, in the Jiangsu Province, were established in 1993
5 Developmental History 1996 started the production of PCs enclosuresThe company continued their rapid growth which included desktop PCs, video games and other mobile hand-held devices1998 Foxconn established additional electronic manufacturing facilities in Scotland and the United Kingdom1999 with additional EMS (electronic manufacturing services) facilities in Ireland and the United States
6 Developmental History Hon Hai’s combination of manufacturing skills, engineering capabilities, merger and acquisitions, and low cost control has caused the other EMS companies to lose market share.
7 How Analytics and SCM Applications Fit TogetherAnalyticsPlanOperationalPlanningStrategic PlanningTactical phaseAnalyzeExecuteTransactionManagementinformationPrimary data entryAdminCaptureSCM
8 Industry analysisERP - enterprise resource planning - is defined as a business management system that integrates all facets of the business, including planning, manufacturing, sales, and marketing.
9 Industry analysisSAP is said to be the market leader in the ERP businesstop competitors are Oracle, PeopleSoft, Siebel, and Lawson Software
10 Industry analysis Suppliers power is found to be low the ERP firms have a lot of vendors to work withcan not be any switching cost because the final product is customized to what the customer wantsdependent however of the capacity of the systems, as systems with higher capacity can give the ERP solution a higher speed when processing data.
11 Industry analysis Customers power is found to be medium they have high powerwhen it comes to choosing the productbecause there are several firms providing complete ERP solutionsthere are also several best-of-breed producers that can provide different specialized applicationsSome customers can also develop systems themselves.
12 Industry analysis Customers (cont.) power is found to be medium They have low powerBecause of high switching costDependent on a system that can give them the competitive edge, by making the processes streamlined and connected
13 Industry analysis Threat of new entrants Threat is found to be fairly lowDue to the high switching cost for the customersRecent trend is to try to extend the life of the existing system
14 Industry analysis threat of substitutes are found to be low if an ERP system already are implemented in the customer firmswitching costs are hightrend to search for a vendor that can offer stabilityBut:disconnection between ERP buyers’ requirements and vendors’ performancevendors promote speeds, feeds, and technology prowess,decision-makers want service, flexibility and practicality
15 Industry analysis Traditional industry competitors competition is fierce between the major competitors in the ERP businessSAP is claiming the No. 1 market share spot in all major application categories, including ERP, SCM, SRM, CRM, and PLM, to a 36% sharestrong market lead in Europeability to focus on business processes unique to specific industriesfull commitment to openness
16 Industry analysis Strategy for the future: build alliances with other software application providersfocus on building partnerships within their supply chains from suppliers to customersextend the reach of the enterprise resource planning system to go across the organizations to also include collaboration with the ERP vendors’ customers’ suppliers, partners, and customers using portal technology
17 Industry analysis switching costs are high product selection is great trend to search for a vendor that can offer stabilitydisconnection between buyers’ requirements and vendors’ performanceproduct selection is greatcan develop systems themselveshigh switching costdependent on a competitive functional systemhigh switching costsRecent trend to extend life of the existing systemlot of vendorsNo switching costdependent of the capacity of the systems
18 Procurement Infrastructure Of the Future: Assemble The Building Blocks SupplierPortalAssetProcMPRIILEGACY1LEGACY2H-RProcITProc.SuppliersTransactionDeliveryNetworkIntegration BrokerFutureTech-nologyTMSCategorySolutionsData SynchronizationSourcingBuyer PortalLogisticsLegacy PurchasingContractsEngineeringOutsourcer
19 Analytics: From Technology to Business Critical “Old speak”“New speak”SCM analyticsBusiness intelligenceSupplierPerformanceManagementreportingABCCustomerprofitabilityForecastaccuracyWorkload analysisInventoryeffectivenessConsolidationBI/ERPPromotion analysisAnalytics empower enterprises with perspective and insight derived fromaccess to and analysis of quantitative information sources
20 SWOT Analysis for Foxconn Original Electronic ManufacturerLargest manufacturer of connectorsLeading producers of socketsImproved R & DSTRENGTHTo gain Design skillsTo change the cultureTo strengthen the management teamTHREATSOPPURTUNITIESFOXCONNSWOT ANALYSIS FOR FOXCONNMany competitors: FlextronicsSolectronSanmina SCICelstica etc.Lack of design skillsCulture is secretiveLack of acquisition skillsLack of a deep management teamLack of proper channels of entryWEAKNESS
21 CRM SCM PLM CRM, SCM, and ERP II Need a Strong PLM Foundation to Realize Product ValueProduct Data RepositoryManage resources andproduction, financialsERPIICRMCare forcustomersSCMAlign and managesupply chainsManage Product definitionand innovationPLM
22 Strengths Original Electronic Manufacturer. Largest manufacturers of connectors.Leading producers of Sockets.Well spread distribution & logistical network worldwide.
23 Strengths continued…Acquisitions in 2003 has helped to make cell phones, servers & networking gears.Improved Research & Development.Started manufacturing its own brand motherboards in 2004.
24 Weaknesses Lack of design skills. Culture at Foxconn is secretive. Lack of acquisition skills.Lack of a deep management team.Lack of proper channels of entry.
25 Opportunities To improve in their design skills. Necessary to change the culture in the company.To strengthen their management team.Improve the methods of entry in to new products.
26 ThreatsMany competitors like Solectron, Flextronics, Sanmina SCI, Celstica, Jabil Circuit etc.The company shows no sign of changing in terms of culture.
27 ROI Measurement in the supply Chain Sales andMarketingLogisticsPlannersManufacturingCustomersSuppliersSupply Chain ApplicationsPerformanceMeasurementVisibility andEventManagementBusinessProcessAnalysisE – BusinessMarketplaceEffectiveness andContinuous ImprovementTradingPartner dataThird PartyHistoryAnalysis for allTrading partnersData RepositorySupplierPerformanceForecastAccuracyInventoryAnalysisCycleTimeDeliveryPerformanceSC ResponseTime
28 Building Block Approach SCOR: a model for SCMPlanSourceMakeDeliverDeliverSourceMakeDeliverSourceMakeDeliverSourceReturnReturnReturnReturnReturnReturnReturnReturnSuppliers’SupplierSupplierYour CompanyCustomerCustomer’sCustomerInternal or ExternalInternal or ExternalSCOR MODELBuilding Block ApproachProcessesMetricsBest PracticeTechnology
29 RecommendationsHon Hai’s combination of manufacturing skills, engineering capabilities, merger and acquisitions, and low cost control has caused the other EMS companies to lose market share.Research and development (R&D) is one area in which Foxconn has been weak. In the rapidly changing world of electronics manufacturing investing into the R&D
30 RecommendationsCreating a regionalized Help Desk to support customers/Foxconn user’s requests, service level agreements (SLA) these are agreements between two parties that determine how quickly tickets are processed. A priority 1 ticket might indicate that a work order has to be completed in one hour or one day, depending upon the agreement.creating a hot site for “core” applications using disaster recovery techniques is critical
31 Supply Chain Management at Foxconn MIS 6352-05020 Sivapriya Aswathanarayanan (aka no show)Brigett BentleyJames FancherJason HammonsPaul LanhamNina ThowsenJuly 20, 2004