1. Supply Chain Management at Foxconn MIS 6352-05020
Sivapriya Aswathanarayanan
Brigett Bentley
James Fancher
Jason Hammons
Paul Lanham
Nina Thowsen
July 20, 2004

2. Introduction
Foxconn is the recognized trade name for Hon Hai Precision
Third largest electronic manufacturing services (EMS) company in the industry
Produce cables, connectors, sockets, and motherboards
Has 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 1974
Based in Taipei Taiwan
The 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 enclosures
The company continued their rapid growth which included desktop PCs, video games and other mobile hand-held devices
1998 Foxconn established additional electronic manufacturing facilities in Scotland and the United Kingdom
1999 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
Together
Analytics
Plan
Operational
Planning
Strategic Planning
Tactical phase
Analyze
Execute
Transaction
Management
information
Primary data entry
Admin
Capture
SCM

8. Industry analysis
ERP - 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 analysis
SAP is said to be the market leader in the ERP business
top 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 with
can not be any switching cost because the final product is customized to what the customer wants
dependent 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 power
when it comes to choosing the product
because there are several firms providing complete ERP solutions
there are also several best-of-breed producers that can provide different specialized applications
Some customers can also develop systems themselves.

12. Industry analysis Customers (cont.) power is found to be medium
They have low power
Because of high switching cost
Dependent 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 low
Due to the high switching cost for the customers
Recent 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 firm
switching costs are high
trend to search for a vendor that can offer stability
But:
disconnection between ERP buyers’ requirements and vendors’ performance
vendors 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 business
SAP is claiming the No. 1 market share spot in all major application categories, including ERP, SCM, SRM, CRM, and PLM, to a 36% share
strong market lead in Europe
ability to focus on business processes unique to specific industries
full commitment to openness

16. Industry analysis Strategy for the future:
build alliances with other software application providers
focus on building partnerships within their supply chains from suppliers to customers
extend 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 stability
disconnection between buyers’ requirements and vendors’ performance
product selection is great
can develop systems themselves
high switching cost
dependent on a competitive functional system
high switching costs
Recent trend to extend life of the existing system
lot of vendors
No switching cost
dependent of the capacity of the systems

18. Procurement Infrastructure Of the Future: Assemble The Building Blocks
Supplier
Portal
Asset
Proc M P R II L E G A C Y 1 L E G A C Y 2
H-R
Proc IT
Proc.
Suppliers
Transaction
Delivery
Network
Integration Broker
Future
Tech-
nology T M S
Category
Solutions
Data Synchronization
Sourcing
Buyer Portal
Logistics
Legacy Purchasing
Contracts
Engineering
Outsourcer

19. Analytics: From Technology to Business Critical
“Old speak”
“New speak”
SCM analytics
Business intelligence
Supplier
Performance
Management
reporting
ABC
Customer
profitability
Forecast
accuracy
Workload analysis
Inventory
effectiveness
Consolidation
BI/ERP
Promotion analysis
Analytics empower enterprises with perspective and insight derived from
access to and analysis of quantitative information sources

20. SWOT Analysis for Foxconn
Original Electronic Manufacturer
Largest manufacturer of connectors
Leading producers of sockets
Improved R & D
STRENGTH
To gain Design skills
To change the culture
To strengthen the management team
THREATS
OPPURTUNITIES
FOXCONN
SWOT ANALYSIS FOR FOXCONN
Many competitors: Flextronics
Solectron
Sanmina SCI
Celstica etc.
Lack of design skills
Culture is secretive
Lack of acquisition skills
Lack of a deep management team
Lack of proper channels of entry
WEAKNESS

21. CRM SCM PLM CRM, SCM, and ERP II Need a Strong PLM
Foundation to Realize Product Value
Product Data Repository
Manage resources and
production, financials
ERPII
CRM
Care for
customers
SCM
Align and manage
supply chains
Manage Product definition
and innovation
PLM

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. Threats
Many 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 and
Marketing
Logistics
Planners
Manufacturing
Customers
Suppliers
Supply Chain Applications
Performance
Measurement
Visibility and
Event
Management
Business
Process
Analysis
E – Business
Marketplace
Effectiveness and
Continuous Improvement
Trading
Partner data
Third Party
History
Analysis for all
Trading partners
Data Repository
Supplier
Performance
Forecast
Accuracy
Inventory
Analysis
Cycle
Time
Delivery
Performance
SC Response
Time

28. Building Block Approach
SCOR: a model for SCM
Plan
Source
Make
Deliver
Deliver
Source
Make
Deliver
Source
Make
Deliver
Source
Return
Return
Return
Return
Return
Return
Return
Return
Suppliers’
Supplier
Supplier
Your Company
Customer
Customer’s
Customer
Internal or External
Internal or External
SCOR MODEL
Building Block Approach
Processes
Metrics
Best Practice
Technology

29. Recommendations
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.
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. Recommendations
Creating 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 Bentley
James Fancher
Jason Hammons
Paul Lanham
Nina Thowsen
July 20, 2004