Prospering Through Collaboration and Supply Chain Visibility

1. Prospering Through Collaboration and Supply Chain Visibility Jointly sponsored by

2. Our sponsors “WMG is an outstanding example of combining academic excellence with industrial relevance – a unique international contribution, which we are all proud of”. Tony Blair.

3. Joined-up thinking “An efficient supply chain depends on the easy exchange of information between participants, but for too long IT systems have struggled to provide the smooth flow of orders, delivery notes and forecasts necessary to keep goods moving freely”. John Lamb 2005 “Strategic growth depends on integrating with trading partners in the supply chain” – Spencer Marlowe 2005

4. “The concept of supply chain collaboration has been applauded for years, but it falls short in practice because participants rarely act in concert for the greater good of their supply chain…….The goal of collaboration is to compress overall (supply chain) costs, not shift them between partners”. Finley and Srikanth 2005

5. “…..it is clear that collaborative initiatives are not being held back by systems, as generally the technology solutions are available. Where companies lag behind is in terms of their people skills…if you don’t trust and don’t know how to work effectively with your trading partners, then relationships break down and performance is impaired. For this reason, companies must adopt a mindset of sharing information – some of it potentially commercially sensitive…….” A Waller and C Geldard 2005

6. Definitions Visibility – Clarity of vision; how well we see something. The ability to understand and interact with enterprise data for analysis and for making better business decisions. Collaboration – diverse entities working together - to cooperate traitorously with the enemy

7. Building a Supply-Chain and making it visible An exploration of low cost technology. Dr. Jay Bal Warwick Manufacturing Group

8. Visibility and Collaboration – linked? Visibility "An efficient Supply-Chain depends on the easy exchange of information between participants". Collaboration Recent AMR research identified four levels of supply chain progress - Reacting, Anticipating, Collaborating and Orchestrating. The research found that only one sector - consumer electronics - had reached the collaborating stage. No company had reached the orchestrating level.

9. Moving Up the Food ChainExploiting E-Business

10. The Value System Buyers Suppliers Distributors Competitors Value and Demand Information Cost and Supply Information

11. Priess INTERPRISE RELATIONSHIP MODEL REWARD Y REWARD Y Shared Risk Shared Risk and Revenue and Revenue Variable Payment Variable Payment need for movement need for movement towards enriching solutions towards enriching solutions Unit Price Current Unit Price Current Manual Fax, Manual Fax, ENRICHMENT X position of position of ENRICHMENT X Phone, Mail Phone, Mail automotive automotive Electronic Data Electronic Data SMEs SMEs Simple Simple Much Before Much Before Interchange (EDI) Interchange (EDI) Standard Standard and After and After - - Sale Sale Development Development Product Product Value Value - - Adding Adding Process Linkage Process Linkage Business Business Knowledge Knowledge LINKAGE Z LINKAGE Z Collaboration Collaboration and Service and Service

12. mySAP Supply Chain Management Many Suppliers, with many modules!

13. Dashboards

14. Existing Solutions • Too Fragmented • Too Costly • Require Too much IT • Don’t Reach down to the small supplier • Not flexible enough

15. West MidlandsCollaborative Commerce Marketplace A FREE online hub for Small Businesses in the West Midlands to …. • Access New Business Opportunities… • …based on what you Can do, not what you do now! 2. Form New Partnerships… …to help address new opportunities. 3. Sustain that Business… …collaborate on-line to support communication & delivery.

16. Other Similar? Portal GatewayAsia

17. WMCCM Supply Chain Module • Low Cost • Many to Many Visibility • Embedded Functionality • Combines Bill of Materials (BOM) and Process viewpoints • Definable “heartbeat” • Data Collection and Store

18. SC definition • Component Process Measure Definitions Measure Values Alerts / Notifications Component Attributes Subcomponent(s)

19. Measure Property • Each measure requires the following properties: • A name by which it is identified • A ‘low’ value below which the status for the process becomes “amber” • ·         A ‘low’ value below which the status for the process becomes “red”. (this obviously has to be lower than the ‘low’ value defined for the amber status • ·         A ‘high’ value above which the status for the process becomes “amber” • ·         A ‘high’ value above which the status for the process becomes “red”. (this obviously has to be higher than the ‘high’ value defined for the amber status

20. F D E B C A BOM Structure How the solution works!

21. Black Box SN Vehicle ID Storage Activation Control SIM Card ID Vehicle ID Application Scenario

22. WMCCM Supply Chain Module Demo

23. To find out more about the complete WMCCM service and how it WILL benefit YOUR company, visit www.wmccm.co.uk Or why not register your details with us today …

24. Any Questions?

25. Contractual Problems Inherent in Collaboration Richard Hickman R.J.Hickman@warwick.ac.uk Prospering Through Collaboration and Supply Chain Visibility 14th September 2005

26. Dimensions of Collaboration • Concepts of dimensions that influence transactions from O E Williamson • Asset Specificity • Uncertainty • Frequency • Examples from LOTiSS Research in Defence Long-Term Service Support Collaborations

27. Specific Assets, Bilateral Dependency or Barriers to Entry • Tangible -non-specific - mixed – highly specific • Intangible – IPR - skills - knowledge • Ability to switch or locked into a bilateral dependency • Tendency to continue to trade – barriers to entry - effectively merge – breach competition

28. Controlling Specific Assets • Investment in pre-contractual research – limiting levels to avoid dependency – ensure competition – defer problems • International collaborations – alternative approach: • Share and balance investment • Implement a “lock-in”

29. Uncertainty – vagaries, manipulations, contracts and competition • External vagaries – force majeure • Manipulation of information for advantage • “evasive ignorance and ambiguity” • Future work? or transparency • Short-term contracts to ensure competition but used on long-term projects

30. Frequency • High costs of negotiation and contracts • Re-negotiated and standard forms: • Set industry standard – we know what to do or inertia in management and relationships • Too much of a good thing! – thousands of forms – confusion – who does what?

31. Dimensions from LOTiSS • MoD move to in-service contracting • Benefits from civil practice to reduce costs and inventory • 8 major case studies from military, civil and construction

32. Frequency • Previously maintained with spares, up-grades and long life-cycles • In-service support as growth market as major projects decline • Contracts and negotiations – complex and incomplete

33. Uncertainty • Competition is introduced or the threat of competition

34. Specific assets • Short term contracts policy restricts investment • Prime contractors have specific assets that demonstrate a bilateral dependency: • IPR • Warranty • Knowledge and skills • Management of supply chain

35. Any Questions?

36. Case Study: Capital Equipment Supplier to the Semi Conductor Industry prepared by John Garside University of Warwick

37. Background • The company designs and manufactures high technology ion implantation equipment for the semi-conductor industry. • Independent Market research (DataQuest & VSLI) showed an estimated doubling in the size of the market from 1998 to 2001.

38. Inside manufacturing plant in the UK The 3PL-managed warehouse in Partridge Green, situated 10 miles away from the main UK manufacturing plant in Horsham

40. Overall Objective • The task was to design a manufacturing process capable of increasing the volume of product shipped Machine a Week (50 p.a.) to Machine a Day (MAD - 250 machines per year generating £250m sales) within two years, without any significant increase in direct labour. • Build flexibility into the process enabling the company to accommodate future business cycle peaks and troughs, prevalent in the semiconductor industry, without having to reduce staffing levels in the downturn and also provide the basis for the next business upswing to a planned £1 billion sales.

41. Key Factors • The business had been through a recession from 1996 and the order book had dropped from 18 units per quarter to 4 units per quarter by1998 • Marketing predicted the volume would increase by a factor of eight in the next two years • The space on site was limited and the company had a policy of controlling any increase in head count • The business was managed by people who had developed the technology ten years earlier

42. Key Factors • Business has expanded from its Silicon Valley base in the USA into a multi billion international business operating in companies around the world. • The market demands new products and new orders in the market recovery will be for Quantum an up rated machine that will accommodate the standard 200 mm and also 300 mm silicone discs. • Swift a new concept machine that moves the beam across the silicone disc as opposed to moving the disc through the beam was needed to complement the product range.

43. Key Factors • New operations manager appointed but business dominated by engineering and marketing • Small number of very important and influential customers • Business was dependent upon winning the equipment order for the complete fabrication shop which included the ion implant machine • Ion implant machine was the only major product developed outside the USA • Relied on the most advanced technology of any product supplied by the company • Ranked number two in the world behind Eaton

44. Question ? • If you were the newly appointed operational director what would you do to ensure that you met the volumes predicted by the marketing department? Very significant bonuses and share options were dependent upon delivering the business performance commitments agreed with Senior Company Directors. All the managers on site depended upon you making the shipments for them to receive their rewards.

45. Course of action • Created a Teaching Company Scheme as a way of recruiting new staff without increasing headcount. • Made the well respected production manager with ten years experience of running the factory full time project manager. • Enlisted the chief manufacturing engineer full time to work on the project. • Appointed administrator / chief liaison engineer to keep everyone informed of progress and support needed from across the site. • Recruited four Teaching Company Associates and paid them industrial salaries.

46. Key Strategies • World Class Manufacturing Process • harvesting “Best Practice” from Blue Chip industries via the TCS, Networking with academic and other institutions • Automatic Link of Product Structure to BOM and Sales Order Entry • Enable system specific QMS • Outsource Material Logistics • Link with Blue Chip global logistics provider

47. Key Strategies • Outsourcing of Major Assembly work to reduce cycle time • Detailing Supply Chain and Establish Agreed Standard Operating Procedures. • Proliferate “MaD Process” through the supplier chain • Extension of Computer Aided Test System (CATS ) • Re-Engineered to include SPC, fully automated, reducing cycle time • Synchronised Site and Factory Operations • Implement TQC onsite, SPC • Factory Team to be Start Up Team

48. Policy Guide Lines • True Paperless System • Intranet/Internet/Radio Frequency LAN connections • Barcodes • Electronic image manipulation (local and remote) • Utilise existing systems • PKM/PST • FRACAS/Manman/Oracle/SAP • CATS/PDM • Seamless relationships with key suppliers

49. Purpose of the TCS project • Common manufacturing methodology for Quantum Batch Machine and new SWIFT Implant including capability for manufacturing other products • Enable $3M/Head Revenue

50. Objectives for the project • Demonstrate a machine a day capability by end of Q1 of FY2000. Actually achieve a production rate of over a 100 systems years with a maximum target of 285 • Enable Revenue per head of $3M per factory employee • Reduce Quote to Ship cycle times from 15 to 5wks • Maintain On Time Delivery at greater than 98% • Quality: Internal 6 Sigma • External < 1 field found defect per System • Support mixed model Production