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Emerald Group Publishing Limited
Copyright © 2001, MCB UP Limited
An agile solution to product shortages
An agile solution to product shortages
Keywords Electronics, Manufacturing, Agile production
Persistent component shortages that prevent electronics manufacturers – from makers of set-top boxes and games consoles to toys and gadgets – from achieving volume production may make product shortages as traditional a feature of Christmas as turkey and mince pies.
A major cause is the increase in Internet shopping as companies effectively train customers to place last-minute orders and thereby raise expectations of overnight fulfilment. However, while the Internet has exacerbated the problem of supply shortages. it also provides the best way to deal with it.
"Being open for orders 24/7 encourages just-in-time ordering, stokes up expectations and makes demand harder to predict", says Bob Godfrey, north European vice-president for Agile Software, a leading provider of collaborative manufacturing commerce solutions designed to decrease the time and cost of ramping to volume production. "And many electronics manufacturers are unable to move swiftly to mass production; most are now chronically short of supply in 24 of 48 key commodity categories.
"And that's where Agile comes in, leveraging the Internet to drastically reduce lead times."
Agile Anywhere™ helps manufacturers overcome many problems by connecting original equipment manufacturers (OEMs) with their suppliers via the Internet.
"Dell Computer is a great example", Godfrey continues. "Dell posts its manufacturing schedule on a private Web site which suppliers can access. Suppliers can grab the production data in XML format, so they don't have to translate between Dell's systems and their own. But suppliers also need to be wired in to product changes."
With Agile Anywhere the full product description is available to everyone involved in the production process, so product change orders can be acted upon in a fraction of the time taken by the electronic data interchange (EDI) systems of old.
"And product change orders happen often", explains Godfrey. "Consider this: the Intel 486 motherboard had about 100 passive components, but the AMD Athlon motherboard has more than 600. Companies like Dell go through well over 1,000 evolutionary changes – call them 'new models' – a year. The Web can help suppliers stay on top of demand, as products change in a way no previous system could."
Agile is at the heart of an industrial revolution that has seen many businesses – especially those in the electronics manufacturing sector – transform into lean enterprises with much manufacturing outsourced to electronic manufacturing service (EMS) providers. Consequently, supply-chain management has become increasingly complex. And the trend has seen some big names like Sony, Nortel Networks and Marconi sell manufacturing plants to EMS companies like Flextronics and Solectron (both Agile clients).
"We believe corporate collaboration and the outsourcing of many disciplines, including manufacturing, will be key drivers for the successful virtual corporations of the twenty-first century, but it can be a logistical nightmare", Godfrey continues. "Agile Anywhere helps overcome this problem by allowing users to share data and collaborate in real time. As a result, we've shortened lead times from two or three days to one to two hours in many cases."
Agile can also help manufacturers overcome component shortages through Agile Buyer™ which eliminates inefficiency in the procurement process and speeds communication between buyers and suppliers. By performing the tedious aggregation work, such as compiling and analysing hundreds of responses to requests for quotes (RFQs), Agile Buyer reduces the average quote turnaround time from weeks to hours, immediately impacting on time to volume. And by connecting manufacturers to all of their suppliers. Agile Buyer allows them to build private supplier extranets, enhancing strategic relationships with key suppliers, while simultaneously cutting time and costs from the sourcing and procurement processes.
In short, Agile Buyer takes charge of the entire transaction process to substantially reduce delivery times and ease shortage-induced crises.
For further information, contact: Agile Software Corporation, North European Headquarters, 3000 Hillswood Drive, Hillswood Business Park, Chertsey, Surrey KT16 0RS, UK. Tel: +44 (0)1932 796156.