High-Tech Looks To Supply Chain Partners

     Timed to coincide with the ongoing resurgence in this vibrant industry sector a major conference was held in San Francisco titled “Hi-Tech & Electronics Logistics Conference."
     The Eyefortransport gathering featured a lot of new players and “futurists” willing to take on more risk.
     “Now is the perfect time to invest in research and development,” proclaimed Kevin Wrenn, senior vice president for operations and quality, Fujitsu.
     “As we continue to save money by synchronizing our global supply chain, we can afford to do more in the way of innovation and design.”
     Indeed, it is Wrenn’s contention that the reason FedEx and the U.S.Department of Homeland Security rely on Fujitsu for “mission critical” projects is due to its physical product flow.
     “This one factor forged a whole new business model for us,” he said.
     “Transport is a profit driver with bottom-line results.”
     Supply chain innovation is also a key competitive differentiator, said Wrenn, noting that R&D ensures that “quality” becomes part of a business culture, rather than just a temporary adjustment.
     “With a single hub of information linking carriers with their collaborators, a company can squeeze out significant profit and reduce waste,” he said.
     “But only if you pick the right partners to begin with.”
     Knowing when to discontinue part of your product line is just as important, however.
     “Your first loss should be your smallest loss,” he said.
     “By learning which pieces in your product line are likely to become obsolete, you can develop ways of anticipating recurrences.
     “And with a good distribution system in place, you should be able to turn on a dime.”
     For Fujitsu, “demand planning” has replaced “forecasting” as an operational strategy. Wrenn explained that this involves working closely with its freight forwarders and Customs brokers at several key U.S. air cargo load centers.
     “We have identified the greatest domestic customer sectors, and how we can reach those densified areas through nearby cargo hubs,” he said.
     “So we partner with intermediaries at LAX, for example, or JFK, or in Dallas, Denver, and Atlanta.”
     Fujitsu is the world’s third-largest IT service provider, with over half of its customers comprising the Fortune Global 500.
     It’s also one of the world’s top five supply chains for the distribution of servers and PCs.
     “Phased implementation is critical with products that have a legacy problem,” he allowed.” “That’s why we concentrate on our core competency, and let the specialists deal with transport.”
     Rosalie Cmetak, senior product strategy manager for Oracle Transportation Management, concurred.
     “Whether you are a high-tech organization servicing your customers directly or a LSP (logistics service provider) managing transportation and logistics for them, logistics accountability and visibility are the forefront of your responsibilities,” she intoned.
     With much fanfare last year, Oracle completed the acquisition of Global Logistics Technologies, Inc. (“G-Log”).
     According to Cmelak, Oracle customers in all industries are being provided with integrated transport solutions across global supply chains.
     “Everyone is facing increasing pressure to get products to marketfaster,” she said, “and to keep inventory levels low.
     “This takes visibility that only specialists can provide.”
     “Logistics, for most major manufacturers, has moved from the basement to the Boardroom over the past decade.”
     John Lebowitz, senior high-tech vice president for Kuehne + Nagel agreed that data integration and synchronization “is absolutely necessary” for a leaner supply chain.
     “Transportation represents at least five percent of sales for most of our clients,” he said.
     “As a transport manager, you can be a superstar if you shave off just a few points.”
     To do this, he insisted, they must establish a “single source of truth,” that serves as a common data model.
     “This will enable you to manage goods in a consistent framework within a changing and dynamic network,” he said.
     To Vanita Wells, director of customer operations at OQO, reliability in a transport partner is a “must.”
     “We have very limited ‘people’ resources,’” she said, “so we have to outsource a lot of transport functions.
     “This means building a solid partnership between our manufacturing and spare parts, service, supply chain and operations management teams.”
     OQO, a world leader in pocketable devices and miniaturization, is a new company funded primarily by venture capital.
     According to Wells, their supply chain philosophy is “to own the recipe and outsource the sous chef.
     “There’s a delicate balance that has to be struck if you are separating manufacturing and spare parts operations,” she said.
     “On one hand you risk sacrificing valuable synergies between these two functions.
     “On the other hand, a cross-organizational supply chain can satisfy customer needs in a multi-tiered manner.”
     And as far as tiers go, Wells is bullish on going with the first all the way.
     “Who wants to do business with a second- or third-tier player anyway?” she asks.
     “Only the best 3Pls and 4Pls can properly address velocity, flexibility and transparency in the product pipeline.”
Patrick Burnson