Seagate Inbound Supply Chain Demand Driven Supply Chain

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<ul><li> 1. Seagate InboundSupply Chain Demand Driven Supply ChainAdvantages</li></ul> <p> 2. Seagate Technologies Overview Largest disc drive manufacturer in the world $7.6B Revenues (FY05), 44,000 employees Vertically integrated manufacturer: Shipping ~100M drives / year Consuming ~90M parts / day 4 wks supply to hundreds of customer hubs 3. The Disc Drive Business The Extreme Sport side ofHigh-Tech Manufacturing - High Capital Costs - Demanding Quality - Seasonal Demand - Volatile Forecasts - Rapid Price Erosion - Narrow market windows- Bleeding edge technology 4. Supply Chain Building Blocks - 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 1QCY95 3QCY95 1QCY96 3QCY96 1QCY97 3QCY97 1QCY98 3QCY98 1QCY99 3QCY99 1QCY00 3QCY00 1QCY01 3QCY01 1QCY02 3QCY02 1QCY03 3QCY03 1QCY04 3QCY04 1QCY05 3QCY05 1QCY06 3QCY06 1QCY07 3QCY07 1QCY08 3QCY08 Desktop Enterprise Notebook Non-Mission Critical PVR Gaming Other CE/Non-Compute Handheld Note: % Growth/Qtr is compounded Source: Seagate market Research Minimize Labor Costs - Asia Operations </p> <ul><li>Mfg. Automation </li></ul> <ul><li>FoF </li></ul> <ul><li>FIS </li></ul> <ul><li>Flawless Execution </li></ul> <ul><li>Inbound VMI </li></ul> <ul><li>E2open </li></ul> <ul><li>eKanban </li></ul> <ul><li>Process Automation </li></ul> <ul><li>Supply Chain Dashboards </li></ul> <ul><li>EnterprisePlanning </li></ul> <ul><li>End-to-End Synchronization </li></ul> <ul><li>Mass Customization </li></ul> <ul><li>Configure-to-Yield </li></ul> <ul><li>Waterfall-to-Demand </li></ul> <ul><li>- (DBR)Drum,Buffer,Rope </li></ul> <ul><li>- TOC Decision Support </li></ul> <p> 5. Seagates Four Steps to Demand-DrivenTransformation </p> <ul><li>1. Build to Forecast </li></ul> <ul><li><ul><li>Volatile demand drove up inventory levels</li></ul></li></ul> <ul><li>2. Hybrid Build-to-Forecast Model </li></ul> <ul><li><ul><li>Implemented buy-side VMI and stocked customer VMI hubs </li></ul></li></ul> <ul><li><ul><li>Implemented PRTMs PACE Product Development Framework </li></ul></li></ul> <ul><li>3. Hybrid Build-to-Demand Model </li></ul> <ul><li><ul><li>Implemented Autoreplenishment and initiated Strategic Buffer program </li></ul></li></ul> <ul><li><ul><li>Used SCOR reference model to benchmark against Best Practices </li></ul></li></ul> <ul><li>4. Channel Synchronization </li></ul> <ul><li><ul><li>Gained complete, timely and accurate channel data reporting</li></ul></li></ul> <p> 6. Build-to-Forecast Model: 1999 Customer Suppliers Seagate Material Flow Information Flow HDD Factories Assy Factories DCs &amp; OEM Hubs </p> <ul><li> Hockey Stick demand production (~50% final 4 wks) </li></ul> <ul><li>Long production runs grouped by material availability </li></ul> <ul><li>Finite Scheduling highly variable future demand </li></ul> <ul><li>Low Customer Service levels</li></ul> <ul><li>Minimal flexibility </li></ul> <p> 7. Chasing the Forecast: 1997-2002 ~50% </p> <ul><li>Factory Capacityforces Build Aheads </li></ul> <ul><li>High inventories levels to service customers </li></ul> <ul><li><ul><li>-Model mismatches </li></ul></li></ul> <ul><li><ul><li>-Frequent stockouts </li></ul></li></ul> <ul><li><ul><li>-High logistics costs </li></ul></li></ul> <p> 8. Seagates Inbound Supply Chain Buy-Side Visibility, Efficiency, Agility DEMAND SUPPLY Customers Distributors EMS Suppliers VMI Hubs Customers - SQE Time-to-QualitySupplier quality issues, eventsReal-time visibility- Demand/Supply Visibility Real-time visibility, FP to E2open Forecast, Hub Inventory, Pulls - Process Automation Transaction, document, task and process integration with Partners - Lean Replenishment -iKanban, eKanban material kitting - Collaboration Manager, Event Manager iProcurement, eSourcing Real Time document, task management.Integrated global indirect procurement, and sourcing 9. Hybrid Build-to-Forecast Model: 2000-01 VMI Hub HDD Factories Assy Factories DCs &amp; OEM Hubs </p> <ul><li>Customers implement VMI: Seagate stocks hubs</li></ul> <ul><li>Buy side Vendor Managed Inventory implemented </li></ul> <ul><li><ul><li>Better asset utilization, greater continuity of supply visibility </li></ul></li></ul> <ul><li>Factory of the Future Automation </li></ul> <ul><li>High Finish Goods inventory</li></ul> <p>Demand Pull Demand Pull Forecast scheduled Customer Suppliers Seagate Material Flow Information Flow 10. Inbound Supply Chain Completing the Demand Driven Journey 11. Demand / Supply Architecture(via E2open Network) Singapore China 7 Seagate Sites </p> <ul><li>POs (3A4) </li></ul> <ul><li>PO Change (3A8) </li></ul> <ul><li>Forecast (4A2) </li></ul> <ul><li>Hub Rec. (4B2) </li></ul> <ul><li>Hub Cons. (4B2) </li></ul> <ul><li>Inv. Status (4C1) </li></ul> <ul><li>Pricing (3A2) </li></ul> <ul><li>BCI (3C3) </li></ul> <p>Web UI B2B Server-to-Server 36 Suppliers SC Process Manager (Order, Forecast, &amp; Inv.) Information Manager - Doc Archive &amp; Reports RosettaNet EDIFACT </p> <ul><li>Common VMI process across the enterprise </li></ul> <ul><li>Single Collaborative view of Seagate supply chain </li></ul> <p>Excel Thailand Customers RosettaNet (4) Distribution22 AsiaPac 11 EMEA 04 Americas EAI Hub 42 Customers Distribution POS,OEM PO, (PO Changes, Forecast, Commit) Information Manager - Doc Archive &amp; Reports 7 3PL Hubs Customers EDI Direct Top Tier </p> <ul><li>Business Transactions Handled (RosettaNet):</li></ul> <ul><li>Inventory Report (4C1) </li></ul> <ul><li>Purchase Order (3A4), PO Change (3A8),PO Cancel (3A9)</li></ul> <ul><li>Forecast (4A2), Commit (4A5) </li></ul> <ul><li>Hub Receipt.(4B2), Hub Consumption. (4B3),</li></ul> <ul><li>Inventory Status (4C1), Delivery Notice (3B2) </li></ul> <ul><li>Pricing (3A2), Buyer Created Invoice (3C3)</li></ul> <p>212 Suppliers Server-to-Server 42 Customers </p> <ul><li>Why it Matters: </li></ul> <ul><li>- Inventory ownership deferred to point of consumption </li></ul> <ul><li>- MRP Output to Suppliers &amp; Commit within 24 hrs </li></ul> <ul><li>- Visibility of demand, supply, inventory, delivery </li></ul> <ul><li>- Timely and labor saving transactions of POs, Receipts, Invoices, Payments </li></ul> <ul><li>Increased supply side responsiveness, agility,</li></ul> <ul><li>Scales with the business </li></ul> <p> 12. Why Use RosettaNet PIPs RosettaNet Traditional EDI </p> <ul><li>Real-time </li></ul> <ul><li>Internet-enabled </li></ul> <ul><li>XML </li></ul> <ul><li>Global </li></ul> <ul><li>All businesses </li></ul> <ul><li>Standard industry dictionaries </li></ul> <ul><li>Security support integrated </li></ul> <ul><li>Optimized for easy programming &amp; data transparency </li></ul> <ul><li>Batch </li></ul> <ul><li>VAN-enabled </li></ul> <ul><li>X.12/EDIFACT/JECALS </li></ul> <ul><li>Regional </li></ul> <ul><li>Large businesses </li></ul> <ul><li>Custom industry dictionaries </li></ul> <ul><li>Security support not integrated </li></ul> <ul><li>Optimized for compression </li></ul> <p>versus 13. The Web based VMI Management Collaboration Report 14. VMI DDSN Metrics </p> <ul><li>More than 90 millions parts used a day </li></ul> <ul><li>More than 500 different part numbers </li></ul> <ul><li>More than 100 suppliers </li></ul> <ul><li>More than 100 lines with frequent product change over </li></ul> <ul><li>Daily quality alerts </li></ul> <ul><li>In-house inventory and buffer with 3PL </li></ul> <ul><li><ul><li>Frequency changes in receiving and deliveries</li></ul></li></ul> <ul><li><ul><li>Increased receipts transactions</li></ul></li></ul> <ul><li><ul><li>Flexibility, reliability in support </li></ul></li></ul> <ul><li><ul><li>Cost </li></ul></li></ul> <p> 15. Inbound Supply Chain Results </p> <ul><li>Objectives: </li></ul> <ul><li>Multi-tier visibility</li></ul> <ul><li>Data accuracy: Eliminate manual data entry </li></ul> <ul><li>Value : </li></ul> <ul><li>Increase material velocity &amp; inventory turns </li></ul> <ul><li>Direct connection to backend systems </li></ul> <ul><li>Metrics : </li></ul> <ul><li>100% Direct Materials transactions </li></ul> <ul><li>90 million parts processed per day </li></ul> <ul><li>3000 PIPs/day </li></ul> <ul><li>212 Suppliers connected </li></ul> <ul><li><ul><li>36 via B2B</li></ul></li></ul> <ul><li><ul><li>186 via Web UI &amp; Excel Download </li></ul></li></ul> <ul><li>Project Scope: </li></ul> <ul><li>All direct materials </li></ul> <ul><li>Business Processes: </li></ul> <ul><li>Order Management, Forecast Planning </li></ul> <ul><li>Inventory Supplier/VMI, Supplier Collaboration </li></ul> <ul><li>Protocols: </li></ul> <ul><li>RosettaNet (RNIF 1.1 2.0) EDI,E2open B2B Client data transport</li></ul> <ul><li>Payloads: </li></ul> <ul><li>RosettaNet PIP, Custom XML data format </li></ul> <p>VMI Hubs SUPPLY EMS Suppliers Foundry 16. Hybrid Build-to-Demand Model: 2002-03 </p> <ul><li>Auto Replenishment implemented </li></ul> <ul><li><ul><li>Rules: 1: OEM Stock-out, 2:OEM excursion, 3:Discrete backlog etc. </li></ul></li></ul> <ul><li>Lean Manufacturing focus on Overall Equipment Effectiveness (OEE) </li></ul> <ul><li> Value stream planning launched </li></ul> <ul><li>Implemented internal eKanban demand replenishment systems </li></ul> <p>Customer Suppliers Seagate Material Flow Information Flow 17. Seagate eKanbanDrive clean room Assembly </p> <ul><li>AReal TimeMaterials Requisition pull system </li></ul> <ul><li>Each supply chain is linked with a Kanban screen</li></ul> <ul><li>Response, status and priority arevisuallydifferentiated and distinguished </li></ul> <ul><li>Keeping raw inventory between 2-5 hours </li></ul> <p> 18. eKanban Factory Replenishmentto Cleanrooms Vertiveyor System </p> <ul><li>User at production area will click on the ikanban screen to activate material request </li></ul> <p>Production Clean Room Kitting Area </p> <ul><li>Material handler will process the required material at kitting area according to color priority </li></ul> <p>Empty tote bin Fulltote bin Parts Received In Transit Parts In Demand 19. VMI Hub Replenishmentto Factory Dock Seagate Kitting Area UPS Hub </p> <ul><li>The ikanban screen at UPS will turn red when inventory at kitting area drops to a preset qty </li></ul> <ul><li>UPS will process the required material at Hub </li></ul> <p>Demand Signal In Demand In Preparation Production Received In Transit Ship parts to Seagate within the required time 20. Demand Pull Process:Machine line triggering </p> <ul><li>When a part is loaded to a machine, the qty, part number and other attributes are being captured by scanning the2D barcode label on the reel </li></ul> <ul><li>When the qty runs to a pre set level, a replenishment signal will be processed </li></ul> <p> 21. Demand Pull Process: Receiving 3PL 1. Electronic DO 2. Parts delivery 3. UPS scan parts into Seagate system and segregate parts by lines 6. Receipt transaction by scanning thebarcoded DO 5. Production collects parts 4. System perform DO data Matching 22. Demand Pull Process: Ekit system Electronic NotificationOf Shortages/Deliveries and color coded delivery status SEAGATE MachineLines Demands Request Ekit Status Confirm www B2B UPS Integratedwith WMS Auto picklist generation Kitlists Signal Closed-Loop Integration with Fritz 23. Outbound Supply Chain Beginning the Demand Driven Journey 24. Outbound Supply Chain Results </p> <ul><li>Objectives : </li></ul> <ul><li>Meet Customers demand w/o excess inventory </li></ul> <ul><li>Real time visibility into POS data &amp; channel inventory. </li></ul> <ul><li>B2B multi-language message transformation </li></ul> <ul><li>Value : </li></ul> <ul><li>Faster responsiveness, greater flexibility </li></ul> <ul><li><ul><li>Reduced commit time to customer request </li></ul></li></ul> <ul><li><ul><li>Respond to unplanned upsides </li></ul></li></ul> <ul><li>Improved inventory turns </li></ul> <ul><li>Reduced cost of doing business/fewer errors </li></ul> <ul><li>Metrics : </li></ul> <ul><li>31 connections successfully deployed in 10 weeks </li></ul> <ul><li>Project Scope: </li></ul> <ul><li>4 Key OEM Customers (newer) </li></ul> <ul><li>31 Distributors </li></ul> <ul><li>Business Processes Enabled :</li></ul> <ul><li>Order Mgt., Forecast Planning, Inventory and POS</li></ul> <ul><li>Protocols: </li></ul> <ul><li>RosettaNet (RNIF), E2open B2B Client data transport protocols </li></ul> <ul><li>Payloads: </li></ul> <ul><li>RosettaNet PIP, Custom </li></ul> <p>DEMAND Disty OEMs VARs Implementation Detail Users Integrators Retail 25. Channel Synchronization </p> <ul><li><ul><li>Goals:</li></ul></li></ul> <ul><li><ul><li><ul><li>Gain complete, timely and accurate channel data reporting</li></ul></li></ul></li></ul> <ul><li><ul><li><ul><li>Establish system-to-system integration between Seagate and each of its Distributors </li></ul></li></ul></li></ul> <ul><li><ul><li>Joint business benefits with Distributors: </li></ul></li></ul> <ul><li><ul><li><ul><li><ul><li>a. Improved overall information flow (system-to-system) </li></ul></li></ul></li></ul></li></ul> <ul><li><ul><li><ul><li><ul><li>b. Reduced cost of associated business processes </li></ul></li></ul></li></ul></li></ul> <ul><li><ul><li><ul><li><ul><li>c. Better visibility of sales out, pricing and inventory levels in the channel </li></ul></li></ul></li></ul></li></ul> <ul><li><ul><li><ul><li><ul><li>d. Availability of accurate data for making decisions relating to pricing and marketing programs </li></ul></li></ul></li></ul></li></ul> <ul><li><ul><li><ul><li><ul><li>e. Faster credit turnarounds in support of various Seagate channel programs </li></ul></li></ul></li></ul></li></ul> <p> 26. The Future of B2B:Multi-Tier Visibility SigmaTrak Integration Router B2BClient ERP Print Driver Integration Platform B2BServer RNIF Printer Emulator Send Receive B2B Client Seagate Trading Partner Process API API API - Low cost, pre-configured hardware appliance (router) that appears as a LAN printer device - The embedded E2open B2B Client manages the secure connection to the E2open Integration Platform WIP and POS Reporting </p> <ul><li>Transactions Handled (RosettaNet):</li></ul> <ul><li>Inventory Report (4C1)</li></ul> <ul><li>POS Data/Sales Report (4E1) </li></ul> <ul><li>Purchase Order (3A4), PO Change (3A8), PO Cancel (3A9) </li></ul> <ul><li>Forecast (4A2) </li></ul> <p>Back to 27. The bottom line: Supply Chain Success through Results Real-timeinformation flow: Re-plan twice/week, execute daily 90M parts Global businessvisibility:212 Suppliers, 7 JIT Hubs, 100% Direct, 35 POS Secured datadelivery:Encrypted, Redundant, Guaranteed Delivery, SLA Integrationto disparate systems: 19% server-to-server B2B vs. 1% CE, 3% EMS, 4% Semiconductor companies.Scalableinfrastructure: 3x increase in transaction volume last 18 mos. Coverageof B2B components:Most companies only get to ~50% of suppliers (80/20 rule by spend).Shortages occur on low cost parts too. Cost-effectivefor 100% connectivity: 28. 1999 2000 2001 2002 2003 2004 FP-Single plant planning Technology Enablers of Seagates Demand-Driven Journey ECNet-VMI signals to suppliers eKit-PCBA suppliers on Demand Pull IDM-Feeder Plants on Demand Pull AR-Customer JiT Hubs on Demand Pull E2open-VMI Process, RN PIPs2-D Barcode-Supplier Part Tracking eKanban-Shop Floor Demand Pull 3PL-Move Suppliers into common Hub 2005 E2open -Channel Synchronization 29. Results of Seagates DDSN Transformation </p> <ul><li>- Improved customer delivery-to-request date </li></ul> <ul><li>- Improved request-to-commitment turnaround time </li></ul> <ul><li>- More flexible, able to respond to unplanned upsides </li></ul> <ul><li>- Inventory still too high </li></ul> <p> Seagate is out in front on implementing flexible and responsive supply chains. Lora Cecere, AMR Research - 114% inventory turn improvement - 37% reduction in manufacturing cycle times - 50% reduction in global inventory - 53% reduction in Asian inventory - 500% productivity improvement (drive production per HC) 30. Seagates Demand-Driven Journey: Lessons Learned </p> <ul><li>Demand-driven journey involves internal and external transformation.</li></ul> <ul><li>Significant upfront business discussions at the highest levels in Seagate and our partners were key to agree on expectations </li></ul> <ul><li>Internal transformation can be a significant and unanticipated hurdle</li></ul> <ul><li>Successful initiatives lead with business process transformation and adopt the appropriate enabling technology</li></ul> <p> 31. Summary </p> <ul><li>Seagate is building a Real Time, Demand Pull Supply Chain </li></ul> <ul><li>End-to-end visibility and transparency using Web Portals. </li></ul> <ul><li>All collaborative processes affected: Design, Supply Chain, Channel</li></ul> <ul><li>Management, General Collaboration </li></ul> <ul><li>Seagate is using e2open as an eHub to its partners. </li></ul> <p>Supplier Seagate Customer Partners </p> <ul><li><ul><li>S/FTP, SCP </li></ul></li></ul> <p>Partner 1 Partner 2 Partner N </p> <ul><li><ul><li>RosettaNet </li></ul></li></ul> <ul><li><ul><li>EDI, EDI-INT </li></ul></li></ul> <p>Seagate SE Asia Seagate China Seagate </p> <ul><li><ul><li>RosettaNet </li></ul></li></ul>