gr 5_solectron case

8/3/2019 Gr 5_Solectron case

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SOLECTRONCASE

By:

Group5


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Introduction

leading companies in the electronics manufacturing servicesindustry

Founded in 1977

Headquartered in Milpitas, Calif.

Sales of $10.4 billion in fiscal 2005

More than 50 locations worldwide More than 50,000 employees

Spans five continents, in more than 20 countries

Two-time winner of the Malcolm Baldrige Award

Serving customers in communications, networking, computing andstorage, consumer products, automotive, medical and industrialmarkets

more concentration on offering supply chain integration relatedservices

emphasis on quality, as well as its corporate culture and values.


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Explain how the outsourcing requirements of OEMs evolve

during the time period from 1970s to 2001. Did the benefits

they derived from outsourcing also change during the same

period? Outsourcing requirements

Personal Computer become a Mass Market Product

In 1990s rapid growth by the development of internet

High Demand for Networking Equipment 1970s low volume production low electronic products

requirement

1980s increase in production - personal computer

1990s rapid growth internet.

Benefits - Yes

Diversification

Increase in production

More focused


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How has Solectrons value to its customers evolved over

time?

Acquired many operations all over the world

Expanded

Developed a global network through acquisitions

Strategically located

Which enabled it to respond better to customers

Global expansion benefitted the customers

Via lower cost, proximity and flexibility


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Q3. Solectrons corporate culture, and its overridingemphasis on quality, was an essential element of its

success. Explain.

Solectron cultural development started in 1978, when Dr.Winston Chen joined the company as president. He used2 basic principles to run the company:

Superior customer service

Respect for the individual

Low cost & high quality

CULTURE:

Day to day Practice meetings especially for quality.

Won prizes The Baldrige award, many quality andservice awards.

Focus on customer satisfaction.


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The Benefits customer satisfaction assurance

Created anew culture -

TotalCustomer

Satisfaction

Retaincustomers

longer

Becomemore

customerdriven

Recognisedfor excellentservice bycustomers

Used as atool for

managementinnovation

Increasedrevenuethroughexisting

customers

Solectronwon theMBNQA

twice


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The Five Ss

SEIRI

Organization: Distinguish between those things

that are needed and not needed. Keep only needed materials atthe job site Throw away all unneeded itemsimmediately


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The Five Ss cont

SEITON

Orderliness: Put things in the right order in thedesigned area

Store all materials andinformation in an orderly fashion atall times. tidy, ready to use,organized according to frequency ofuse

A place for everything andeverything in its place


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The Five Ss cont

Cleanliness Problems are more visible when

everything is neat and clean Find minor defects whilesweeping clean

SEISO


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The Five Ss cont

Standardize Clean tools, equipment, and job siteimmediately after use

Equipment that s kept clean runsbetter

SEIKETSU


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The Five Ss cont

Discipline

Use and follow standard

procedures Follow company rules andregulations Follow safety procedures at alltimes

SHITSUKE


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The Five Ss


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Solectron Global expansion

Through acquisitions, Solectron (had)developed a global network of facilitieslocated strategically close to its customers

and to emerging markets. Solectron could better respond to the

customers requirements, all over theworld

Global expansion has benefited thecustomers via lower costs by the flexibilityof production and distribution.


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Contd

Depending on the customers needs

and its own location, Solectron canserve it more differentiated

The IT-systems and ERP-systemswas integrated, because they are avery important element for Solectron

as a supply chain integrator

T h l i l d l t


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Supplier

WebPublishing

Supplier/Customer info thruthe WEB

WW Matls

Date

Sites

Report writer

Fast what if

CRM

Other FinancialApps

FinancialConsolidation

Core ERP Applications:MaterialsManufacturingFinanceService

Multisite Integration Model

Ware houseMgmt. system

PDM

Connectivity

Shop floorControl

Customer

Technological development

S l t i t d d


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Solectron introduced newbusiness model of

acquisitions in 1992 Solectron introduced a new Business Modelpurchased manufacturing sites from IBM.

Model was repeated many times, andSolectron rapidly grew.

It acquired manufacturing facilities fromcustomers, and used those to fulfill long-termsupply contracts.

It allowed for risk pooling, as fluctuatingdemands from different companies weresmoothed, and safety stock levels of commoncomponent inventory could be reduced

H did th


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How did the companysuccessfully integrate these

acquisitions? Assign An Integration Team (4 to 8members)

Consists of Finance, Human

resources, operations, Materials, IT Acquisition Business IntegrationChecklist

Work with acquired company for 3 to 6

months Until the new employees acting as a

Solectron resource


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Solectron change its organizationalstructure to facilitate end-to-end

supply chain management Technology solutions

Modular & embedded systems design manufacturing systemsoffering a wide range of memory.

Acquired- force computers in 1997 SMART Modular computers in 1999

Global manufacturing Provide new product introduction services &

pre-manufacturing capabilities. Acquired-

Fine pitch tech. in 1996 to work with small emergingindustries that required quick prototyping & high levelof engineering support in order to launch products.

Global services


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Examine the drivers that led to the difficult

situation Solectron faced in 2001.

Wrong Forecast They estimated far more than, even the most optimistic scenario. The OEMs Pressure to meet their production demand. Solectrons Consumer First belief further worsened the situation.

Economy meltdown Late 2000 & Early 2001, demand started to fall.

Important customers like Telecommunications. Orders fall from $6.5 billion --> $2.1 billion.

Increase in inventory levels Received orders from 4000 suppliers of Solectron. Inventory rose by $ 1 billion.


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MEASURES TAKEN BYCOMPANY DURING 2001

IN THE SHORT TERM

Restructuring

Workforce reductions

Facility closures

IN THE LONG TERM

The use of outsourcing asan OEM strategy

continued to accelerate


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SHORT TERM MEASURESSUGGESTED BY US

Cost reduction - e.g. cost of sales seems to be veryhigh

Combine facilities by geographical location orbusiness function, e.g. in European marketSolectron has its global operations device inGermany, France, and Hungary; global service inFrance; micro systems in Belgium and England;technology solutions in Germany; some of them

have to be combined or shut down upon realsituation and evaluation

Pay attention to the balance of global presenceand proximity to the customers and resources.


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LONG TERM MEASURESSUGGESTED BY US

Capitalize on Industry Growth Trends

Concentrate on Core and Emerging Markets

Uncompromising Quality

Efficiency and Cost Competitiveness Strategic Relationships

Align Services to Improve Customer Supply Chains

Advanced Technology Processes

Diverse Geographic Operations


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THANK YOU

gr 5_solectron case

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