Vigilant Information Systems: The Western Digital Experience

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Vigilant Information Systems The Western Digital
Experience

• Yu-Hui Tao

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Case Structure

• Vigilant Information Systems
• OODA Loops and Vigilant Information Systems
• Business Challenges of WD
• WDs Vigilant Information System
• The VIS Architecture
• Three Foundation Capabilities
• Revamping WDs Business Process
• The Management Dashboards
• The Factory Dashboards
• The Corporate Dashboards
• How the VIS Accelerates WDs OODA Loops
• The Business Impacts of WDs VIS
• Cost Savings
• Strategic Advantages
• Lessons Learned
• The Future of Vigilant Information Systems

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Abstract

• Cost-conscious turbulent economy
• Lean and high-velocity supply chain
• High volume suppliers whose large customers
  change requirements often
• To be vigilant means to be alertly watchful
• Sensing and responding capabilities
• Western Digital (WD) VIS
• underlying layer of business intelligence
  applications
• Analyzing data from numerous sources
• A management dashboards automating alerting
  process
• Means for responding

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Vigilant Information Systems

• VIS allows information and business intelligence
  to be integrated and distilled from various
  sources to detect changes, initiate alerts,
  assist with diagnosing and analyzing problems,
  and support communication for quick actions
  (Walls et al., 1992)
• How VISs differ from traditional ISs (Figure
  17.1)
• User vs. system initiates the process
• How the concept of OODA (Observe/Orient/Decide/Act
  ) loop is useful (Figure 17.2)
• U.S Air Force Coloner John Boyd (1986)
• How fighter pilots flying aircraft with inferior
  maneuverability won air combat engagements (dog
  fights)?
• Compressed the cycle of activities
• Observe (see the situation and adversary)
• Orient (size up vulnerabilities and
  opportunities)
• Decide (choose the combat maneuver to take)
• Act (execute the maneuver)

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Vigilant Information Systems(count.)

• Stalk and Hout (1990) Haeckel and Nolan (1993)
  converted OODA to business use
• Observe (see the changes signals)
• Orient (interpret the signals)
• Decide (formulate and appropriate response)
• Act (execute the selected response)
• Four requirement of VIS
• Capabilities for observing visibility into
  critical business process capturing KPIs in real
  time information from various sources
• Capabilities for orienting graphical
  dashboards sending alerts drilling in data
  slice-and-dice data report trends
• Capabilities for deciding asking what-if
  questions descriptive statistics time series
  comparison
• Capabilities for acting architectures for
  communicating decisions quickly follow-up
  tracking

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Business Challenges of WD

• 2 billion global designer and manufacturing of
  high-performance bard drives for desktop personal
  computers, corporate networks, enterprise
  storages, and home entertainment applications
• Founded in 1970
• 10,000 employees worldwide
• Top five challenges
• Constantly changing customer requirements
• A fiercely competitive global industry
• Avoiding business disruption, product returns,
• Short product life cycle
• Need for extremely high quality and reliability
• Early 1990, over 11 manufacturers 3 to 5 now
• 2002 unit volume rose 30 - toughest years in
  IT industry
• Survival strategy
• React more quickly to changes integrated
  information Follow-the-sun
• Difficulties for consolidating data different
  results from ERP reports using different filters
• Solution VIS and its real-time management
  dashboards

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WDs Vigilant Information System

• Too complex four sections below
• Architecture
• Three foundation capabilities
• Revamping WDs business processes
• Management dashboards

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WDs VIS - Architecture

• Bottom-up schematic view (Figure 17.3)
• Layer 1 Raw data
• Layer 2 Functional Applications (Observe)
• Layer 3 Business Intelligence (Orient)
• Layer 4 Dashboards (Decide and act)

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WDs VIS Three foundation capabilities

• As can be seen in Figure 17.3
• ERP system - 1997
• Data warehouse - 1999
• Quality Information System (QIS) - 1999
• ? They capture and integrate the data need for
  the VIS
• However
• Legacy systems remained disconnected
• The data refresh rate was inadequate
• Managers needed better analysis capabilities

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WDs VIS Revamping WDs Business Processes

• New business policies and processes to put the
  VIS to work
• Three critical ones
• Align time-based objectives across the enterprise
• Capture KPIs in real time
• Foster cross-team collaborative decision making

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WDs VIS The Management Dashboards

• Two real-time dashboard systems
• for the factory developed in house and rolled
  out in late 2000
• for demand planning, distribution, and sales
  information
• Figure 17.4
• Top 4 types of factory and 10 types of corporate
  dashboards
• Middle VIS and its information flow
• Bottom three constituencies factories in Asia,
  corporate offices in California and customers
  around the globe
• Information flow from right (customers) to left
  (corporate and factory)
• Core requirements for the 5 factory dashboards
  (Figure 17.5) were to
• Show KPIs
• Display metrics
• Allow drill down
• Issue alerts distinguishes them from EIS
• Allow staff and managers to see KPIs in near real
  time
• Each parameter on a dashboard target value to
  be triggered.
• Corporate dashboards can be see from Figure 17.4

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How the VIS Accelerates WDs OODA Loops

• A well-designed dashboard can help people
  accelerate the OODA loop of the processes
  monitored
• The factory and corporate dashboards are used in
  a three-level nesting of OODA loops (Figure 17.6)
• Shop floor OODA loop
• Factory OODA loop
• Corporate OODA loop
• Factory and corporate dashboards
• Not electronically connected but through the data
  the share and the communications of the managers
  who use them

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The Business Impacts of WDs VISCost Savings

• 225 managers and professional use the dashboard
• Better visibility, more efficient querying, less
  information overload, faster decision making
• increasing inventory turns from 22 to 29
• decreasing inventory by 25 million in 2002
• annual savings of 3 million in inventory
  carrying costs
• estimated cost to be 1.2 million
• ROI to be one year (actually less than 1 year)
• Margins more than doubled over the three-plus
  years
• It cost 1500 for DBA one cross-application or
  cross-database report users create multiple
  views on the fly
• Reports request dropped from 200 to 50 per
  quarter ? savings 900,000 per year
• Printer paper save 800,000 per year
• Customer reports 10 minutes for managers to
  create
• Daily production meetings now take 1.5 hours
  rather than 3 hours involve 15 supervisor and
  managers ? 350,000 saving per year

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The Business Impacts of WDs VISStrategic
Advantage

• Faster analysis and decision making, immediately
  available information, quicker reflexes, and
  faster OODA loops
• Help focus management attention
• Everyone sees the same information, anytime,
  anywhere, and updated at the appropriate time
  intervals
• Shortened reaction time between receiving data
  and acting on it from hours or days to minutes
• Longer-term exist and are clearly strategic
• Agile competitor
• Ties together executive decision making, supply
  movements, and internal operations into a
  virtuous circle that can function effectively as
  various situation unfold

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The Business Impacts of WDs VISLessons Learned

• 1 Design the real-time management dashboards to
  be the nerve center of a VIS
• 2 Plan and schedule the coordination among teams
  to use real-time dashboards to manage
  enterprise-wide
• 3 Build a learning loop around each OODA loop to
  foster group learning because the faster the
  loop, the more important and frequent the
  learning reviews need to be
• 4 Match the time latency of each OODA loop to
  the organizations needs and cap bilities to
  become truly vigilant do not indiscriminately
  chase zero latency
• 5 Vigilant information systems may need to be
  justified on some basis other than return on
  investment
• 6 Implementing an enterprise-wide VIS is a
  management initiative more than a technology
  initiative because it requires active,
  collaborative engagement from all top management
  to install the needed organizational
  transformation

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The Future of Vigilant Information Systems

• Internally, output to wireless device is planned
• Externally, dashboards for collaborating with
  supply chain partners
• Figure 17.7 four types of real-time management
  dashboards based on the amount of business
  horsepower required of their underlying VIS.

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Figure 17.1
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Figure 17.2
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Figure 17.3
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Figure 17.4
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Figure 17.5
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Figure 17.6
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Figure 17.7