Custom Development and Sourcing - Flextronics and Supplybase

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Collaborative Development and Sourcing of Custom
Parts
Bruce Kerns VP Business Development Supplybase
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Agenda

• Custom Parts
• Flextronics Company Profile
• Custom Development Sourcing (CDS) Process
• Supplybase and Supplybase.manager
• Flextronics Supplybase.manager Implementation
• Benefits Flextronics, Nortel, Iomega and
  Lifescan
• New free service Supplybase.source
• Questions

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BOM Breakdown
Custom Parts ASICs Backplanes Cabling/Wire
Harness Harnesses Die Cuts Flex
Circuits LCDs Packaging Springs Metal
Stamping Metal Fabrication (Sheet) PCB
Fabrication PCBA - Contract Assy. Plastic
Injection Molding Shielding and Coating Design -
Industrial Design - Packaging Design - PCB
Layout Machining Prototype Modeling Tooling
Molds Dies
Standard Parts Resistors Capacitors Connectors Fan
s Blowers Fasteners LEDs Memory Chips Power
Amps Fasteners Power Supplies Shielding
Products Springs

Exploded view of a typical manufactured assembly
40 parts 200 pieces
40 parts 50 pieces
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BOM Collaboration Activities
Custom Parts
Standard Parts
Creating Developing Qualifying Sourcing Tooling Co
st Reducing Sustaining
Searching Selecting Sourcing Planning Replacing
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Cost Breakdown
The development and sourcing of custom parts
have a significant impact on product cost and
time-to-market
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Cost vs. Time
custom standard
Part Cost
Development Time

• Success Factors (custom)
• Early Supplier Involvement
• Efficient and Uniform Process
• Strong Supplier Relationships
• Monitor Time, Cost Activity
• Common Platform for Collaboration

• Success Factors (standard)
• Comprehensive Searches
• Dynamic Bidding - Competition
• Strong Supplier Relationships
• Leverage Volume Across Divisions
• Proactive Obsolescence Alerts

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Unique Challenges of Custom Parts

• extensive / complex design cycles
• development requires prototyping
• often sole sourced
• fragmented base of suppliers
• often the critical path item

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The Market for Custom Parts

• 140 Billion is spent on custom direct materials
  in the North American electronics industry with a
  projected 20 annual growth rate.
• Dataquest
• Represents 30 of total direct material spend of
  420 billion.
• Improving development and sourcing processes can
  provide significant cost savings.

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• Total Global Manufacturing Solutions
• Advanced engineering
• Design
• Manufacturing
• Distribution

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(No Transcript)
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• Customers are leading multi-national original
  equipment manufacturers (OEMs)
• Telecommunications
• Networking
• Computers
• Consumer electronics
• Medical devices

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Customers

• 3Com
• Braun
• Cisco Systems
• Diebold
• Ericsson
• Grundig
• Harris DTS
• Hewlett Packard
• IBM

• Lifescan
• Lucent Technologies
• Microsoft
• Nokia
• Nortel Networks
• Philips Electronics
• Sony
• Unipath
• Web TV

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• Key Success Factors
• Customer responsiveness
• Added value
• Low cost
• Results from Quarter Ended 12/31/99
• 1.18 billion sales
• 34 million net income
• Both doubled from 1998

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• 22 facilities around the world
• 3 million square feet of manufacturing capacity
• 12,000 employees
• Merging with April 2000
• Supplybase.manager implementation in Colorado

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Custom Development Sourcing (CDS)

• CDS Means
• Custom
• Engineers who design custom parts/assemblies for
  manufacturing companies
• Development
• Collaborative info processing communication
• Sourcing
• Outsourcing the production of custom parts
  assemblies to an outside supplier

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The Development Sourcing Process

• On-line AVL management
• Tooling lifecycle mgmt
• Critical path monitoring
• Reporting tools
• RFQ/Online bidding

• Capacity Analysis
• Utilization Analysis
• Asset Management
• AVL management
• Supplier score carding
• Forecast sharing

• Technical specifications
• Design feasibility/DFM
• Document access/transfer
• Supplier selection
• Target costing
• Project Management

Procurement
Sourcing
Engineering
Workflow
Concept Design RFQ
Forecast Ongoing

• Early design involvement
• Visibility to Forecast
• Capacity planning
• Asset Management

Manufacturing

• Consistent Processes
• RFQ
• Early involvement
• Forecast visibility
• Utilization tracking
• Capacity visibility
• Scorecard visibility

Suppliers
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Current Procurement Issues
Purchasing staff spend 74 of their time on
administering transactions and only 7 of their
time developing strategic partners. The typical
purchasing manager is not an effective
researcher. Due to poor research, an estimated
20 of suppliers are awarded 90 of purchases.
One key weakness of procurement is poor
information flow. The product side of costs can
be reduced more than 20, adding to further
efficiencies won on the process side of total
cost calculation. Source Goldman Sachs B2B 2B
or Not 2B 9/99
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If you could save 20 - 40 in development time
and cost
Concept Design RFQ
Forecast Build
Process

• Waiting For Internal
• Approvals
• Searching and organizing
• concept data
• Exploring material and
• technology options
• Not leveraging common parts
• past project history

• Searching for AVL info
• Impromptu technology
• evaluation
• Communication delays
• Lost incomplete specs
• Mismanaged schedules
• Lost history

• Searching for documentation
• Locating specifications
• Waiting for returned calls
• Inconsistent quote responses
• Chasing suppliers and data

• Sending and collecting
• supplier information
• Costs
• Commits
• Capacity utilization
• Chasing data

• Tracking tools w/w
• Administering capacity
• Tracking utilization
• Identifying under capacity

Common Issues
Engineers not engineering
Program Delays
Poor vendor choice
Production slips
Effects
Inconsistent quotes
Non-optimized design
Poor choice of technology or materials
Chasing Data
How would you use it?
Continuous Improvement Buying consolidation Life
cycle management Time to market
Data Analysis Cost reductions
Supplier Development Alternate Sourcing New
Technology Best Practices
DFMA Quality Functionality
Prototyping Market analysis
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Evolution of Collaboration Technology
e-workflow
exchanges
extranets
e-whiteboards
video conf.
B2B Tools
chatrooms
Value
intranets
email
ERP/MRP
cellphone
Internet
fax, vm
conf. calls
LAN servers
telephone
mail
PCs
meetings
Platforms
EDI
PBX
Printing press
Time
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Internet Procurement Application Revenue
( billions)
Source Lehman Brother/Understanding B2B
eCommerce, Jan. 2000
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Provides web-based solutions that integrate
products, content and services to optimize the
development and sourcing of custom parts and
assemblies.
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The Integrated Solution for CDS
Supplybase.inc provides web-based manufacturing
solutions that integrate products, content and
services to optimize the development and sourcing
of custom parts and assemblies

• Lower Direct Material Costs by
• Optimizing design w/ early supplier involvement
• Increase market efficiencies through competitive
  bidding
• Capturing ongoing cost reductions
• Increase Market Share and Profits
• Faster time-to-market on new product launches
• Minimize lost production days due to tooling
  issues
• Enabling Product Innovation w/ Less Mfg Risk
• Improve Productivity with
• Faster communications throughout supply chain
• Central repository/history of information
• Increased supplier efficiencies
• Lower supplier search costs

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Supply Chain Management Tool Landscape
Content/Reference Services
information
CAD PDM
lt Custom Parts
CDS
process
Production Supply Chain
CSM
Standard Parts gt
ERP Systems
transactions
MRO Applications
concept
development
sourcing
production
sales
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The CDS Core
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What is Supplybase.central?

• The most comprehensive global database of
  supplier information
• 40 strategic commodities
• over 100,000 supplier companies
• 50 International Content
• Information on capabilities, capacities,
  industry ranks, and certifications standardized
  by commodity
• Real-time market information
• Organized by industry, commodity and technology
• Supply vs. demand analysis
• Industry forum
• Dun Bradstreet alliance
• Cahners business information

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Supplybase.central Commodities
Custom Products ASICs Backplanes Cabling/Wire
Harnesses Connectors Die Cuts Enclosures Fans
Blowers Fasteners Flex Circuits LCDs Motors Packa
ging Power Supplies Shielding Products Springs
Materials Adhesives Sealants Coatings Plastic
Resins
Manufacturing Services Metal Casting Metal
Stamping Metal Fabrication (Sheet) PCB
Fabrication PCBA - Contract Assembly Plastic Blow
Molding Plastic Extrusion Plastic Injection
Molding Plastic Thermoforming Shielding and
Coating Application
Engineering Services Design - Industrial Design
Mechanical Design - Packaging Design PCB
Layout Machining Prototype Modeling Testing
Services Tooling - Injection Molds
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Supplybase Products
Supplybase.central (100,000 suppliers)
Product Manufacturers
Suppliers
sbn (hosted)

• Buyer Products
• Supplybase.manager (sbm)
• Supplybase.exchange (sbx)
• Supplybase.source (sbs)

• Supplier Products
• Supplybase.network (sbn)

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Buyer-side Products
Supplybase.exchange is a collaborative,
fee-based, hosted service and targets mid-level
product manufacturers to develop and source
custom parts and assemblies.
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Supplybase.manager
The Supplybase.manager Process

• Supplier Benchmarking
• Supplier Scorecards
• Request for Quotes
• Quote Analysis
• Tooling Management

• AVL Management
• Reporting Tools
• Critical Path Monitoring

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Common Platform
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• Technical Specifications
• Design for Manufacturing
• Cost Savings
• Tracking

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Supplybase.manager
Configured Development Process
Typical Stages Concept Feasibility Requisition Quo
te Award Tooling First Article Strategic
Build Part Release Ongoing Development
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Supplybase.manager
Web-based thin client software

• Accessible from anywhere through a browser
• Notification notification via e-mail
• Single server installation
• Low cost of ownership
• Flexible and configurable
• Real time data access centrally located
• Minimal IT support

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Supplybase.manager
Architecture
OEM Approved
supplybase.manager
supplybase.central
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Core Benefits
Supplybase.manager

• Supplybase.manager increases profitability by
  focusing on business fundamentals
• Increase revenues by reducing time to market
• Reduce cost of parts
• Reduce development risk

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Supplybase.manager
Design (Feasibility) Benefits

• Fast Engineering specs and drawings are served
  and tracked
• Configured forms for each commodity drives
  consistency
• Tracks response time and compiles responses
  side-by-side
• Feasibility studies archived by date
• Automatic scoring for value-added suggestions
• Early involvement history flows forward

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Supplybase.manager
Feasibility Process
OEM
Compiled Feasibility Responses
Select Suppliers
Feasibility Form
Scorecard Judgement
Electronic Mail Requests
Supplier 1
Supplier 2
Supplier 3
Consistent inquiries better suggestions
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Supplybase.manager
Quoting Benefits

• Fast Engineering specs and documents flow
  forward
• Configured forms for each commodity drives
  consistency
• Tracks response time and complies quotes
• Features standard or bidding process option
• Quoting activities archived by date
• Automatic quoting analysis

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Supplybase.manager
Quoting Process
OEM
Compiled Quote Responses
Quote Analysis
Select Suppliers
Quote Form
Electronic Mail Requests
Re-Quote
Supplier 1
Supplier 2
Supplier 3
Quote Style
You choose
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Supplybase.manager
Forecasting Asset Management Benefits

• The ability to submit forecasts by project
• Project forecast is then automatically allocated
  to project parts
• The suppliers associated to the parts are
  notified of the forecast
• The assets for each supplier/forecast are
  tracked
• Information on capacity and utilization returned
  to OEM
• Alerts notify OEM of capacity, yield, or tooling
  life issues
• All data is automatically archived for future
  reference

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Supplybase.manager
Forecasting Asset Management Process
OEM

• Forecasts
• Capacities
• Yields
• Costs

Compiled Forecast Responses
Parts, Suppliers, Assets
Volume Forecast
Breaks forecast down to part level
Suppliers notified
Suppliers view forecast
Suppliers input production data
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Supplybase.manager

• Beta customer in summer 1999
• Key feature development
• Supplier scorecards
• Document management
• AVL management
• V1.0 installed September 1999
• V1.5 installed January 2000

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Supplybase.manager

• Over 30 commodity industries configured
• More than 50 approved suppliers
• Over 80 registered and trained users
• Implemented in less than 45 days

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Supplybase.manager

• Customer Value-add
• Supplier Management
• Reduced Cost variance
• 50 Time Reduction in Quotation Costing Process
• Result Productivity Savings
• Result More Business!!

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Supplybase.manager
Comparing Flextronics Quote Times
Gather/Copy Documents
Send RFQ Packages
Suppliers Respond with Quotes
Follow up calls
Compile and Analyze Quotes
Traditional Process
14-21 days
Time Savings
Supplybase Process
7-10 days
Upload Docs
Suppliers Enter Quotes Online
Analyze Quotes
Post RFQ Package
Time Required
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Supplybase.manager

• Flexible, Disciplined Process
• Increase Productivity
• Tool Management
• Reduce Development Time

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Note Response time reduction of 5 days is not
included in the total minutes saved.
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Supplybase.manager

• Procurement Development Partner
• Reduce Part Costs
• Long term Cost Management

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Supplybase.manager

• Increase Innovation
• Reduce Development Cycle
• Increase Collaboration

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Introducing Supplybase.source
Supplybase.source

• Supplier Searching
• Supplier Communications
• Single User
• Free

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Personalized Supplier Management
Supplybase.source
Customize your Personal Sourcing Center
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Comprehensive Searching
Supplybase.source
Specify In-depth Capabilities
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Search For and Qualify Suppliers Quickly
Supplybase.source
View Supplier Search Results
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Up-to-Date, Accurate and In-Depth Profiles
Supplybase.source
View Detailed Supplier Information
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Initiate Business
Supplybase.source
Communicate with Qualified Suppliers
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On-Going Supplier Management
Supplybase.source
Enhance Your Sourcing Information withPreferred
Industries, Supplier Lists Saved Searches
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Questions?
- What is your toughest product development
challenge? - How can you improve the development
sourcing of critical parts? - Can you map your
CDS process? Is it optimized?