Links: Slinging Quotes in Singapore

The quote process can easily be the most critical and complex element of supply chain management. Enabling that process for one of the largest manufacturers in the world may be the only prospect more daunting.

[From iSource Business, November 2001] The husband and wife team that founded Flextronics in 1969 started out by hand-finishing circuit boards for Silicon Valley companies needing to farm out what couldn't be handled in-house. But 11 years later, when the McKenzies sold their little start-up, it grew to be an innovator in automated assembly, as well as the original manufacturer of the Hayes modem and Sun Microsystems' servers. Today, the company, now simply called "Flex," is headquartered in Singapore and is the world's second-largest provider of electronics manufacturing services (EMS). Last year it generated $416 million in net revenues on sales of more than $12 billion from its six business units: Design (industrial, electrical and mechanical product development); Enclosures (custom electronic housings); Semiconductors (ASIC design and manufacturing); Network Services (copper and fiber optic telecommunications switch installation, engineering and testing); Photonics (photonic packaging design and optical manufacturing); and Multek (PCB fabrication).

Flex has stirred up a mean technology cocktail that deftly manages the massive number of requests for quotes (RFQs) that original equipment manufacturers (OEMs) issue every week, all of them complex, many with exacting design specifications and each requiring a fast turn-around. One ingredient the company has added is the centralized data warehouse that collects real-time information flowing in daily from 90 percent of Flex's more than 150 manufacturing facilities worldwide. Operating within an industry that has seen the regional barriers to doing business online come tumbling down, Flex has already come a long way in Web-enabling its entire operations. And, so far, automating the quote process has produced two clear advantages that give Flex an edge: speed and consistency.

Faster than a Speeding Web

Mike Webb, Flex's vice president of IT WorldWide, skips nary a beat when he identifies speed as the biggest benefit of automation, facilitated in large part by PolyDyne Software's QuoteWin, which is being rolled out in stages throughout the company. "Typically, even on a fairly complex RFQ, we're asked to respond in 5 days. In a lot of cases, a very complex bill of materials (BOM) needs to be created, and to have a vehicle to analyze [the information] and respond more professionally is really great," Webb says. Before QuoteWin, Flex created quotes manually, line by line, in an Excel format, which took time and generated less-accurate results.

Manufacturing consistency is equally critical for the company's facilities, located in 27 countries from Asia to Latin America to Eastern Europe, and is, according to Webb, the value-add Flex provides its customers. Flex has to be able to guarantee OEMs that the quality of their products will be the same no matter where they're made. To that end, Webb says the technology gaps that once separated the company from facilities and partners in less-developed parts of the world are no longer an issue. For example, Flex is implementing a supply chain solution in its design, outbound logistics, and enclosure and assembly facilities in Eastern Europe, which would have been impossible to do in the not-so-distant past.

QuoteWin, one product in PolyDyne's eWin Solution Suite, is specifically designed for contract electronics manufacturers and works over electronic data interchange (EDI), the Web and auto-fax, allowing suppliers with a variety of technological capabilities to continue to stay in the loop. (For small manufacturers, PERQS is a less-costly lease program that PolyDyne offers.) PolyDyne's CEO, David Tabb, says QuoteWin can produce 3-day cycle times, 30 percent productivity gains, supply chain efficiencies of up to 50 percent, and 5 percent savings on materials costs. Additional tools track engineering labor costs, commodity contract development and sales margins.

Flexing Its Muscles

Flex uses the following metrics to judge QuoteWin's success: Is the quotation time an improvement from conventional quoting methods? Does the software properly utilize contract and matrix capabilities for automatically pricing most C and B components? Are automated Web and EDI quotes saving such resources as paper and manual labor?

According to Tisha Reed, Flex's materials project manager for the central U.S. region, QuoteWin has increased speed and cut costs, but adds that an additional benefit is the better reporting and analysis, which have also led to improved supplier performance. "Reporting is a valuable tool, especially for review of specific areas of concern like lead times, commodities and supplier performance. The efficiencies come from the fact that the same reports are in a universal format."

And users like it. Webb recalls many occasions when he's had to "force software down users' throats," and calls QuoteWin's implementation "a very gratifying experience." PolyDyne eased the usual stress by making its product user-friendly. The powerful Oracle database around which QuoteWin is built normalizes manufacturers' part numbers and provides a cross-reference engine that allows users to construct detailed queries. To emphasize the product's functionality, Tabb eliminates an imaginary manufacturing plant in Penang that makes an important part with a 16-week lead-time. "You can do a query for that part and it'll bring back everything on which that part was used and where the shortages are. [The user] can then immediately notify the OEM and qualifying sources," he explains.

An Added Benefit

QuoteWin is also designed to play a role in strategic sourcing by helping to spot potential excess inventory early in the process, a function Tabb acknowledges isn't normally part of the quote process. "Let's say an OEM comes to one of our contract electronic manufacturers (CEMs) to build 100 mother boards in a box build. The CEM can return a quote quickly. The problem is that it will end up with excess inventory because it's had to buy 2,500 or multiple package quantities. It's nice to identify excess upfront in the sales process so someone on the back end isn't left with the excess, because, in the end, it all comes down to supply chain versus supply chain, and the winner takes market share," Tabb explains.

While QuoteWin binds Flex to its customers through a collaborative online environment, there's more to the mix. Customers can access information through their own private "e-rooms," or Web sites. Then, as the relationship progresses, they graduate to a portal structure powered by Sequoia (now owned by Citrix). When a RFQ is received, Agile Software (which is linked to the company's Baan enterprise resource planning (ERP) system) converts it into a direct BOM. From there it's accessed by the materials organizations and readied for procurement. However, if the RFQ calls for significant design responsibility, the BOM goes directly to the design-engineering group for validation. Meanwhile, Flex works to tie QuoteWin to its SpinCircuit system, which will link historical data on customers, materials and quotes to component supplier information on the engineering side, producing business intelligence that's readily accessible to both customers and users over the Web.

In Webb's ideal world, all of Flex's supply chain processes are automated, every system is integrated, and its customers and employees are connected seamlessly over the Web. In Tisha Reed's ideal world, QuoteWin exports reports to Excel, provides a description area to identify supplier capabilities, imports data using common file formats, and is networked enterprise-wide. The IT guy and the quote manager may appear to have different wish lists, but they're remarkably similar in terms of describing the dream and the reality of building a completely Web-enabled global supply chain, which, for Webb, is where the future lies.

"Although many companies have developed a strong strategy in doing this, we are a leader in our industry in terms of the vision and implementation. But, to do it in a consistent way worldwide, we haven't completely finished that yet. We're well on our way by introducing different elements in different facilities and making them integrate better. To be able to implement something like this across 150 manufacturing facilities is a huge challenge."

Update: Author's Footnote

The terrorists that leveled 10 city blocks of New York City on September 11 had death in mind, but also the very real objective of crippling the U.S. and Western economies by targeting the center of global commerce.

When the FAA grounded the airlines, supply chain disruptions were immediate. With airports in Mexico still operating, Flextronics re-routed U.S.-bound shipments of parts and products from Asia to its Guadalajara plant to be trans-shipped over the U.S.-Mexico border. However, heightened security along the border continues to make deliveries tough-going.

One week after the attacks, Barbara Blough, marketing manager for the Americas, says that while deliveries were slowed Flex had disaster recovery and contingency plans in place and "...did not have any critical disruptions."

This experience will force companies of all sizes to reassess their emergency plans or hurry up to craft some. Without knowing now what the full U.S. response will be, one of the key foreign policy objectives is to re-define who is and isn't a friend. Maneuvering around longer-term, more intensive manufacturing, transportation and logistics disruptions may become a new feature of the business landscape.

Carrying on from here will depend in large part on the kindness of friends and strangers. As Blough says, "...the pervasiveness of the current situation goes beyond the scope of any one company's plans, creating an atmosphere which encourages unified cross-industry planning and patience." We couldn't agree more.

Stephanie Pretzer is a freelance writer based in Arizona.