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Supply Chain Management at Foxconn MIS 6352-05020 Sivapriya Aswathanarayanan Brigett Bentley James Fancher Jason Hammons - PowerPoint PPT Presentation


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Supply Chain Management at Foxconn MIS 6352-05020 Sivapriya Aswathanarayanan Brigett Bentley James Fancher Jason Hammons Paul Lanham Nina Thowsen July 20, 2004. Introduction. Foxconn is the recognized trade name for Hon Hai Precision

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Introduction 1274980

Supply Chain Management at Foxconn

MIS 6352-05020

Sivapriya Aswathanarayanan

Brigett Bentley

James Fancher

Jason Hammons

Paul Lanham

Nina Thowsen

July 20, 2004


Introduction
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


Introduction1
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.


Developmental history
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


Developmental history1
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


Developmental history2
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.


Introduction 1274980

How Analytics and SCM Applications Fit

Together

Analytics

Plan

Operational

Planning

StrategicPlanning

Tactical phase

Analyze

Execute

Transaction

Management

information

Primary data entry

Admin

Capture

SCM


Industry analysis
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.


Industry analysis1
Industry analysis

  • SAP is said to be the market leader in the ERP business

    • top competitors are Oracle, PeopleSoft, Siebel, and Lawson Software


Industry analysis2
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.


Industry analysis3
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.


Industry analysis4
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


Industry analysis5
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


Industry analysis6
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


Industry analysis7
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


Industry analysis8
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


Industry analysis9
Industry analysis

  • switching costs are high

  • 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


    Introduction 1274980

    L

    E

    G

    A

    C

    Y

    2

    L

    E

    G

    A

    C

    Y

    1

    M

    P

    R

    II

    Integration Broker

    Procurement Infrastructure Of the Future:

    Assemble The Building Blocks

    Supplier

    Portal

    Asset

    Proc

    H-R

    Proc

    IT

    Proc.

    Suppliers

    Transaction

    Delivery

    Network

    Future

    Tech-

    nology

    T

    M

    S

    Category

    Solutions

    Data Synchronization

    Sourcing

    Buyer Portal

    Logistics

    Legacy Purchasing

    Contracts

    Engineering

    Outsourcer


    Analytics from technology to business critical
    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


    Introduction 1274980

    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

    • 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


    Introduction 1274980

    CRM, SCM, and ERP II Need a Strong PLM

    Foundation to Realize Product Value

    Product Data Repository

    Manage resources and

    production, financials

    ERPII

    SCM

    Align and manage

    supply chains

    CRM

    Care for

    customers

    Manage Product definition

    and innovation

    PLM


    Strengths
    Strengths

    • Original Electronic Manufacturer.

    • Largest manufacturers of connectors.

    • Leading producers of Sockets.

    • Well spread distribution & logistical network worldwide.


    Strengths continued
    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.


    Weaknesses
    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.


    Opportunities
    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.


    Threats
    Threats

    • Many competitors like Solectron, Flextronics, Sanmina SCI, Celstica, Jabil Circuit etc.

    • The company shows no sign of changing in terms of culture.


    Roi measurement in the supply chain

    Sales and

    Marketing

    Logistics

    Planners

    Manufacturing

    Customers

    Suppliers

    ROI Measurement in the supply Chain

    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

    Data Repository

    Analysis for all

    Trading partners

    Supplier

    Performance

    Forecast

    Accuracy

    Inventory

    Analysis

    Cycle

    Time

    Delivery

    Performance

    SC Response

    Time


    Scor a model for scm

    Plan

    Source

    Make

    Deliver

    Deliver

    Source

    Make

    Deliver

    Source

    Make

    Deliver

    SCOR: a model for SCM

    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


    Recommendations
    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


    Recommendations1
    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


    Introduction 1274980

    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