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Supply Chain Management at Foxconn

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Supply Chain Management at Foxconn MIS 6352-05020 Introduction Foxconn is the recognized trade name for Hon Hai Precision Third largest electronic manufacturing ... – PowerPoint PPT presentation

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Title: Supply Chain Management at Foxconn


1
Supply Chain Management at Foxconn MIS
6352-05020
2
Introduction
  • Foxconn is the recognized trade name for Hon Hai
    Precision
  • Third largest electronic manufacturing services
    (EMS) company in the industry
  • Produce cables, connectors, sockets, and
    motherboards
  • Has shown a 30 growth rate a year from 2000 to
    2003, 2.9 to over 10 billion respectively

3
Introduction
  • Supply Chain Management (SCM)
  • The close linkage and coordination of activities
    involved in buying, making, and moving a product.
  • Integrates supplier, manufacturer, distributor,
    and customer logistics processes to reduce time,
    redundant effort, and inventory costs.
  • Network of organizations and business processes
    for procuring material into finished products,
    and distributing the finished product.

4
Developmental History
  • Established in 1974
  • Based in Taipei Taiwan
  • The first overseas facilities, located in
    Shenzhen, in the Guangdong Province and Kunshan,
    in the Jiangsu Province, were established in 1993

5
Developmental History
  • 1996 started the production of PCs enclosures
  • The company continued their rapid growth which
    included desktop PCs, video games and other
    mobile hand-held devices
  • 1998 Foxconn established additional electronic
    manufacturing facilities in Scotland and the
    United Kingdom
  • 1999 with additional EMS (electronic
    manufacturing services) facilities in Ireland and
    the United States

6
Developmental History
  • Hon Hais combination of manufacturing skills,
    engineering capabilities, merger and
    acquisitions, and low cost control has caused the
    other EMS companies to lose market share.

7
How Analytics and SCM Applications Fit Together
Analytics
Plan
Operational Planning
StrategicPlanning
Tactical phase
Execute
Analyze
Transaction
Management information
Primary data entry
Capture
Admin
SCM
8
Industry analysis
  • ERP - enterprise resource planning - is defined
    as a business management system that integrates
    all facets of the business, including planning,
    manufacturing, sales, and marketing.

9
Industry analysis
  • SAP is said to be the market leader in the ERP
    business
  • top competitors are Oracle, PeopleSoft, Siebel,
    and Lawson Software

10
Industry analysis
  • Suppliers
  • power is found to be low
  • the ERP firms have a lot of vendors to work with
  • can not be any switching cost because the final
    product is customized to what the customer wants
  • dependent however of the capacity of the systems,
    as systems with higher capacity can give the ERP
    solution a higher speed when processing data.

11
Industry analysis
  • Customers
  • power is found to be medium
  • they have high power
  • when it comes to choosing the product
  • because there are several firms providing
    complete ERP solutions
  • there are also several best-of-breed producers
    that can provide different specialized
    applications
  • Some customers can also develop systems
    themselves.

12
Industry analysis
  • Customers (cont.)
  • power is found to be medium
  • They have low power
  • Because of high switching cost
  • Dependent on a system that can give them the
    competitive edge, by making the processes
    streamlined and connected

13
Industry analysis
  • Threat of new entrants
  • Threat is found to be fairly low
  • Due to the high switching cost for the customers
  • Recent trend is to try to extend the life of the
    existing system

14
Industry analysis
  • threat of substitutes
  • are found to be low if an ERP system already are
    implemented in the customer firm
  • switching costs are high
  • trend to search for a vendor that can offer
    stability
  • But
  • disconnection between ERP buyers requirements
    and vendors performance
  • vendors promote speeds, feeds, and technology
    prowess,
  • decision-makers want service, flexibility and
    practicality

15
Industry analysis
  • Traditional industry competitors
  • competition is fierce between the major
    competitors in the ERP business
  • SAP is claiming the No. 1 market share spot in
    all major application categories, including ERP,
    SCM, SRM, CRM, and PLM, to a 36 share
  • strong market lead in Europe
  • ability to focus on business processes unique to
    specific industries
  • full commitment to openness

16
Industry analysis
  • Strategy for the future
  • build alliances with other software application
    providers
  • focus on building partnerships within their
    supply chains from suppliers to customers
  • extend the reach of the enterprise resource
    planning system to go across the organizations to
    also include collaboration with the ERP vendors
    customers suppliers, partners, and customers
    using portal technology

17
Industry analysis
  • switching costs are high
  • trend to search for a vendor that can offer
    stability
  • disconnection between buyers requirements and
    vendors performance
  • product selection is great
  • can develop systems themselves
  • high switching cost
  • dependent on a competitive functional system
  • high switching costs
  • Recent trend to extend life of the existing system
  • lot of vendors
  • No switching cost
  • dependent of the capacity of the systems

18
Procurement Infrastructure Of the
Future Assemble The Building Blocks
Supplier Portal
Asset Proc
H-R Proc
IT Proc.
Suppliers
Transaction Delivery Network
Future Tech- nology
T M S
Category Solutions
Data Synchronization
Sourcing
Buyer Portal
Logistics
Contracts
Legacy Purchasing
Engineering
Outsourcer
19
Analytics From Technology to Business Critical
Old speak
New speak
SCM analytics
Business intelligence
Supplier Performance
Management reporting
ABC
Customer profitability
Forecast accuracy
Workload analysis
Inventory effectiveness
Consolidation
BI/ERP
Promotion analysis
Analytics empower enterprises with perspective
and insight derived from access to and analysis
of quantitative information sources
20

SWOT Analysis for Foxconn
  • Original Electronic Manufacturer
  • Largest manufacturer of connectors
  • Leading producers of sockets
  • Improved R D

STRENGTH
  • To gain Design skills
  • To change the culture
  • To strengthen the management team

THREATS
OPPURTUNITIES
FOXCONN
  • Many competitors Flextronics
  • Solectron
  • Sanmina SCI
  • Celstica etc.
  • Lack of design skills
  • Culture is secretive
  • Lack of acquisition skills
  • Lack of a deep management team
  • Lack of proper channels of entry

WEAKNESS
21
CRM, SCM, and ERP II Need a Strong PLM Foundation
to Realize Product Value
Product Data Repository
Manage resources and production, financials
ERPII
SCM Align and manage supply chains
CRM Care for customers
Manage Product definition and innovation
PLM
22
Strengths
  • Original Electronic Manufacturer.
  • Largest manufacturers of connectors.
  • Leading producers of Sockets.
  • Well spread distribution logistical network
    worldwide.

23
Strengths continued
  • Acquisitions in 2003 has helped to make cell
    phones, servers networking gears.
  • Improved Research Development.
  • Started manufacturing its own brand motherboards
    in 2004.

24
Weaknesses
  • Lack of design skills.
  • Culture at Foxconn is secretive.
  • Lack of acquisition skills.
  • Lack of a deep management team.
  • Lack of proper channels of entry.

25
Opportunities
  • To improve in their design skills.
  • Necessary to change the culture in the company.
  • To strengthen their management team.
  • Improve the methods of entry in to new products.

26
Threats
  • Many competitors like Solectron, Flextronics,
    Sanmina SCI, Celstica, Jabil Circuit etc.
  • The company shows no sign of changing in terms of
    culture.

27
ROI Measurement in the supply Chain
Sales and Marketing
Logistics
Planners
Manufacturing
Customers
Suppliers
Supply Chain Applications
Performance Measurement
Visibility and Event Management
Business Process Analysis
E Business Marketplace
Effectiveness and Continuous Improvement
Trading Partner data
Third Party
History
Data Repository
Analysis for all Trading partners
Supplier Performance
Forecast Accuracy
Inventory Analysis
Cycle Time
Delivery Performance
SC Response Time
28
SCOR a model for SCM
Plan
Source
Make
Deliver
Make
Make
Source
Deliver
Source
Deliver
Deliver
Source
Return
Return
Return
Return
Return
Return
Return
Return
Suppliers Supplier
Supplier
Your Company
Customer
Customers Customer
Internal or External
Internal or External
SCOR MODEL
Building Block Approach
Processes
Metrics
Best Practice
Technology
29
Recommendations
  • Hon Hais combination of manufacturing skills,
    engineering capabilities, merger and
    acquisitions, and low cost control has caused the
    other EMS companies to lose market share.
  • Research and development (RD) is one area in
    which Foxconn has been weak. In the rapidly
    changing world of electronics manufacturing
    investing into the RD

30
Recommendations
  • Creating a regionalized Help Desk to support
    customers/Foxconn users requests, service level
    agreements (SLA) these are agreements between two
    parties that determine how quickly tickets are
    processed. A priority 1 ticket might indicate
    that a work order has to be completed in one hour
    or one day, depending upon the agreement.
  • creating a hot site for core applications using
    disaster recovery techniques is critical

31
Supply Chain Management at Foxconn MIS
6352-05020 Sivapriya Aswathanarayanan (aka no
show) Brigett Bentley James Fancher Jason
Hammons Paul Lanham Nina Thowsen July 20, 2004
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