1. James Simpson Senior Director, eBusiness San Jose, CA
Getting Ready
For the Rebound
Case Study:
James Simpson
Senior Director, eBusiness
San Jose, CA

2. Overview
About Flextronics
Hypothesis
Lethal Trends
Driving Out Costs by Reacting Quickly to Demand
Changes

3. Source: Goldman Sachs Global Electronics OEM Survey Mar. ‘03,
EMS Marketplace
“OEMs find lower-cost manufacturing, reduced inventory costs and faster time to market as the top benefits to outsourcing”.
Flextronics ranked #1 in customer satisfaction in this Goldman Sachs survey.
Do EMS companies have power over what products get produced?
Will the consolidation remove competitiveness?
Source: Goldman Sachs Global Electronics OEM Survey Mar. ‘03,
Over 1000 respondents and more than 200 OEMs around the globe were surveyed.

4. Flextronics Today Fiscal year 2003 revenues of USD$13.4 billion
95,000 employees globally
100 manufacturing/design locations on 5 continents
17.9M ft.² of manufacturing capacity in 29 countries

5. Flextronics Market Segments
Handheld Communications Devices
Telecom Infrastructure
Mass Storage
Digital Imaging & Display Technologies
Datacom & Broadband Access
Servers &
Personal Computers

6. It’s all about supply chain execution…
Hypothesis
It’s all about supply chain execution…
Supply chain planning isn’t enough.
Actually, it’s quite useless if you can’t execute.
Can ERP systems do this?

7. What makes collaborative planning work within the supply chain?
Hypothesis
What makes collaborative planning
work within the supply chain?
Safety stock.

8. Lethal Trends and Challenges for the Rebound
Managing Material Lead Times & Obsolescence
Shortened Product Life Cycles
Pricing Pressures
New & Erratic Demand Cycles
Customization
Reducing Time to Market
Customization and Build to Order
Managing Change- Planning vs. Reacting

9. Supply Chain Trade-Offs
TOTAL
COSTS
ASSETS
TIME
CASH
MATERIAL VARIABILITY
CUSTOMER DEMAND
SERVICE
QUALITY
Trade-Off

10. Driving Out Costs by Reacting Quickly to Demand Changes:
Agility in Integration and Automation

11. Integration Objectives
Visibility from Unrestricted Information Flow
Exception Management
Minimizing Platforms and Systems Reduces Complexity and Maximizes SPEED

12. FlexFlow- Automated Data Collection

13. Driving Out Costs by Reacting Quickly to Demand Changes:
Agility in Integration and Automation

14. FlexPASS- Procurement Automation and Support System
Project Description:
Automate the procurement execution process and collaboration with Suppliers. Toolset will transmit forecasts, purchase orders, change orders, and cancellations on the web, via EDI or RosettaNet. Responses from suppliers automatically updated in Baan.
Key Product Features
Forecast Generation
Auto PO generation & auto data load (e.g. pre-pricing, Buyer review, ack data auto load into Baan)
Increased B2B penetration
Automated change process
Transparency of transactions for both Suppliers and Flextronics
Exception management
Integrates with current EDI and RosettaNet efforts
“Any-to-any” communication with Suppliers – EDI, RosettaNet, Web

15. Driving Changes in Real-Time
Buyer
“System of Record”
Suppliers
FLEXTRONICS
3PL

16. Quickly & Cost Effectively Managing Change
Accept As Is
Forecast Commit
3C3
MPN Change
Quantity Change
PO Ack
4A4
3A8
3A4
Reply with Change
850
Invoice
PO Change
Price Change
830
Split Line
Header Level
3A9
Forecast Notify
3A7
Create PO
855
810
Line Delete
4A5
Date Change
865
PO Change Ack
860
Line Level

17. Objectives
Buyer Efficiency
Less Complex Procurement Processes
Accurate and Consistent Information
Visibility for Flextronics and Trading Partners
Sourcing Savings
Automation- Reviewing Recommendations
and Exceptions

18. Evaluating Success Fewer Line Stops
Measure line-stop shortages per week before / after
Improve Responsiveness to Demand Changes
Measure $ reschedule push-outs before / after
Measure 1-week % execution of new buys before / after
Measure $ cancellations executed before / after
Real Data on Supplier Performance
Implement objective measurements of supplier
performance and Flextronics communication to suppliers

19. Summary
Conventional wisdom once told us, “big companies are unbeatable…and eat smaller competitors for breakfast.”
Not anymore.
Do EMS companies have power over what products get produced?
Will the consolidation remove competitiveness?
These days “It’s not the big that eat the small…it’s the fast that eat the slow.”
Source: Jennings and Haughton Apr. ’02