Executive Summary

Electronics manufacturers operate in one of the most volatile and competitive markets in the world. Product lifecycles can be shorter than their development cycles. New features mean more to consumers than brand loyalty, making it crucial to be first-to-market. And the rapid pace of innovation means inventory can become obsolete before products are even built.

To win in this challenging environment, Original Equipment Manufacturers (OEMs) and Electronics Manufacturing Service (EMS) providers are seeking a new kind of supply chain/demand chain management solution. Tired of being held back by the limited scalability and long processing times associated with ERP and MRP systems, these manufacturers are demanding solutions that support real-time analysis and data sharing. Only with current supply and demand information and more accurate demand forecasting can electronics manufacturers achieve the rapid product development and fast inventory turnover required to increase profitability in an industry known for razor-thin margins.

Figure 1 - Four of the world's top five EMS providers use webplan.

Today, a new breed of electronics manufacturer is taking the lead in marketshare, revenue and profitability by setting new standards in the areas that matter most to their customers: speed, customization and visibility. How are these companies delivering the level of service and innovation that customers now demand while keeping inventory levels and costs at a minimum? Many of them are creating their own secure e-Business private marketplaces that include suppliers, customers and other trading partners exchanging information in real time. To make these web-based marketplaces work, many of these companies are using webplan.

webplan is a unique supply chain and demand chain management solution designed specifically to run over the Internet. Unlike web-enabled legacy systems that simply allow users to view static data, webplan's open, web-intrinsic architecture and single data model let users continually model the supply chain and demand chain based on live data using only a browser. webplan allows all users, including customers, suppliers, manufacturers and other trading partners, to collaborate on supply chain management, product lifecycle management, customer relationship management and strategic and enterprise planning in real time.

webplan has proven so valuable to electronics manufacturers that it is now the choice of four of the world's top five EMS providers (Ranking source: Electronic Business, Sept. 2000) and seven of North America's top 25 electronics companies (Ranking source: The Electronics Industry Yearbook 2000, Cahner's Research). This white paper focuses on several of those companies, offering real-world examples of electronics manufacturers that have used webplan to increase visibility, streamline management of global operations, outsource without losing control of operations and deliver unparalleled customer responsiveness. By offering a real-time, integrated solution, webplan helps these companies and leaders in other industries - including industrial manufacturing, aerospace, automotive and consumer durable goods - transform their supply chain/demand chain into a key source of competitive advantage.

"Whether the challenge is to provide a Web-based order-and-configuration application, to build an infrastructure for collaborating on product design with partners or to manage the supply chain by making use of the Internet, just waiting is not a strategy. It's a formula for getting run over."
Electronic Business
July 2000

The webplan Platform for Supply Chain/Demand Chain Management

webplan began building supply chain/demand chain solutions to run over the Internet in 1994. The webplan solution-set, webplan CeO™, is optimized for real-time decision-making because it delivers up-to-the-minute demand and supply information to all trading partners. With webplan CeO, electronics manufacturers can create a live e-Business private exchange that allows all parties to simultaneously collaborate on even the most complex products and schedules based on a single data model.

At the heart of webplan's solution-set is webplan Collaborative Resolution Engine (webplan CoRE™). Designed to build on the investment manufacturers have already made in their legacy systems, webplan CoRE extracts data from virtually any ERP/MRP system and transforms it into live memory-resident data that can be accessed and manipulated by users inside and outside the organization using only a browser. Users can perform sophisticated 'what-is' and 'what-if' analysis in order to optimize production planning and fulfillment. webplan can update the host system as part of a 'closed loop' process, so that all data reflects the most current information.

webplan recently expanded its solution-set to extend webplan CeO's collaborative capabilities to the infrastructure level. The recently released webplan Xtream™ uses eXtensible Markup Language (XML) to dramatically accelerate communication across the supply chain and demand chain community. With webplan Xtream, trading partners can seamlessly integrate their systems to greatly reduce the need for manual intervention in standard transactions. By incorporating XML into its solution, webplan enables electronics manufacturers and their partners to exchange information across different proprietary systems without the expense and complexity associated with traditional EDI.

Why webplan is the Choice of Top EMS Providers

"More and more large OEMs have gone beyond outsourcing single products or even product lines. These companies are outsourcing in a single pass across entire business segments. Outsourcing has evolved from tactical to strategic to enterprise based."
Manufacturing Market Insider
June 2000

According to analysts and industry experts, the trend toward outsourcing in the electronics industry has only just begun. But to make outsourcing work, OEMs and EMS providers need a platform for collaboration that makes it easy and cost-effective for users at all points in the supply chain and demand chain to participate in their trading networks.

webplan is an open, flexible solution that allows customers, OEMs, EMS providers, suppliers and other trading partners to exchange current supply and demand information without having to integrate their back-end systems. Built for the Internet from the ground up, webplan offers high levels of visibility, responsiveness and speed that other products cannot match. All parties can model the entire supply and demand chain for true collaborative planning. For the industry-leading companies discussed in this section, these benefits have formed the basis of a unique competitive advantage.

Increased Visibility

The biggest problem with most tools for supply chain and demand chain management is that they do not offer the level of visibility necessary to manage complex supply chains and demand chains. Desktop scheduling tools like spreadsheets or legacy ERP/MRP systems that rely on batch processing to update data only display static information, making it impossible for customers, suppliers, schedulers and other users to see the impact of their changes in real time. This lack of visibility has serious implications for electronics manufacturers, who are leading the way in two trends that demand extremely high visibility: globalization and outsourcing.

End-to-End Supply Chain/Demand Chain Visibility

webplan CeO enables electronics manufacturers to create a private on-line exchange that integrates customers and suppliers with manufacturing systems in real time. Participants throughout the supply and demand chains collaborate on orders and fulfillment using only a browser. They serve themselves, making it possible for electronics manufacturers to produce and deliver products faster than ever before, with dramatically increased levels of customer service and satisfaction.

Insight into Global Operations

According to the January 2000 issue of the Manufacturing Market Insider, a new definition of global is emerging among top-tier providers that demands not only a presence in the three major world markets, but also manufacturing in low-cost regions serving each of those markets. But successfully managing inventory for a number of dispersed sites, ensuring that capacity is used effectively and controlling costs requires a much higher level of connectivity than most electronics manufacturers have today.

SCI Systems

The challenges of managing multiple sites effectively recently led SCI Systems of Huntsville, AL, one of the worlds largest EMS providers, to deploy webplan CeO across 38 sites around the globe. The implementation is believed to be one of the largest of its kind in the world.

SCI is committed to providing unparalleled customer service to its OEM customers, which include Philips, Compaq and IBM, and was seeking a solution that would offer greater visibility into its own facilities and the operations of its global suppliers. In a recent discussion with Software Strategies magazine, SCI's Chief Information Officer, Vin Melvin explained why SCI chose webplan. "What we have now is a tool that allows us to become more responsive, with a greater level of analysis in terms of how we look at risk factors within the supply chain than we have been able to do in the past," said Melvin.

webplan allows SCI to model its entire internal supply chain and collaborate with vendors more effectively, which results in a high level of customer service. Said Melvin, "Looking forward, as we begin to build tighter and tighter relationships and linkages in the supply chain, clearly webplan is a core capability set that we're going to use to extend that relationship between customer and supplier."

Outsourcing and Staying in Control

"On average, OEMs responded with a long-term goal to outsource 72 percent of their cost of good manufactured; a number which is almost five times higher than the current industry estimate of 15 percent outsourced. This figure implies that over the next five years the current contract manufacturer industry of $75 billion could grow to $350 billion."
Third Annual Electronics Manufacturing and Supply Chain Survey, June 2000
Bear Sterns

Fierce global competition means electronics manufacturers are constantly working to accelerate time-to-market. The race to be first to deliver new technology to customers demands fast ramp up and production and the ability to quickly implement product changes. In response to these pressures, many leading OEMs are outsourcing much more than product assembly.

webplan connects systems and synchronizes activities among multiple trading partners to ensure visibility into processes even after they are outsourced. With webplan CeO, electronics manufacturers do not need to physically manage inventory, production, procurement or design. Instead they can outsource almost any activity that falls outside their core competencies to suppliers that can add greater value to that part of the process.

GE/FITCH

One hundred percent outsourcing may sound extreme, but it is standard practice at GE/FITCH, a unique manufacturing services company created as a joint venture of General Electric Plastics and renowned design firm FITCH in 1989. Using webplan CeO, GE/FITCH operates as a virtual company, assembling the best team of manufacturers and suppliers for a given project and orchestrating the process using real-time collaboration over the Internet. This 'next generation' manufacturing model has created a new paradigm for how products are designed, developed and brought to market.

In a recent interview with Fortune, V. Pete Werwick, Vice President of Sales and Marketing for GE/FITCH discussed the importance of ensuring that customers remain connected to outsourced activities. "webplan is key to our process, because it enables us to offer the customer a feeling of control. Having visibility into the process and knowing where a product is at specific times during the process makes the client comfortable that things are moving along," said Werwick.

With webplan, GE/FITCH can offer customers Internet-based collaboration that improves customer service and shortens delivery times. Customers can focus on core competencies, including product development, research and marketing. webplan helps GE/FITCH customers save money, which increases profitability. Says Werwick, "We can reduce our clients' opportunity costs, which is the whole foundation of outsourcing."

Customer Responsiveness and Competitive Advantage

Customer responsiveness is a tall order for electronics manufacturers for a variety of reasons. The extreme volatility of demand associated with this industry means orders can be sudden, erratic and constantly changing. Orders can also be extremely complex because of the number of parts involved, which increases the potential for production delays. Despite these challenges, customers still expect electronics manufacturers to offer a high level of product customization and virtually immediate Capable-to-Promise capabilities.

With webplan, electronics manufacturers can offer customers a self-service environment that allows them to enter orders and get real-time Available-to-Promise/Capable-to-Promise information. Customers can use webplan's 'what-if' features to experiment with different product configurations to see how changes in their order will impact pricing and delivery dates. Once customers commit to an order, demand signals flow across the demand chain and supply chain instantly, allowing electronics manufacturers to build-to-order for maximum efficiency, faster inventory turns and dramatically increased customer satisfaction.

SMTC Manufacturing Corp.

Canada's SMTC, a world leader in the EMS sector, has turned innovation into a competitive advantage. For several years, SMTC has used its Team Oriented Production System (TOPS) to provide personalized service from teams of specialists that are usually dedicated to just one customer.

This spirit of innovation led SMTC to institute advanced supply chain management processes well ahead of its competitors. In fact, SMTC's supply chain is so efficiently managed that the company has become a leading EMS provider for one of the industry's most demanding customers: Dell Computer.

To achieve this high level of supply chain responsiveness, SMTC uses webplan to create an e-Business private marketplace that links suppliers, manufacturing sites and customers from around the world. According to Phil Woodard, SMTC's Senior Vice President, Enterprise Development and Integration, the difference between an MRP-based system and the webplan solution is dramatic. "By the time we ran MRP once a week and got all these faxes out, it was two or three days into the cycle, and then it took the rest of the week to get the answers back. Now, when there's a change, literally in 10 or 15 minutes, all the suppliers have the changes out on their desktops, and they can be processing this in parallel."

SMTC chose webplan after evaluating and testing five competitive products from vendors claiming to offer supply chain solutions. Following a successful pilot, SMTC deployed webplan to five sites in just nine weeks. Since then, SMTC has held a supplier summit to show suppliers how to make the most of its webplan-driven supply chain.

Woodard calls webplan "the cornerstone of our new millennium business model." He adds, "webplan enables us to truly collaborate up and down the supply chain, link management of global operations, reduce execution times, increase customer service levels and rapidly grow our business."

Identifying the Best Use of Inventory

One of the best ways for electronics manufacturers to reduce costs is to streamline inventory management. But with inventories that can include thousands of components, complex bills of materials and volatile demand, trying to reduce inventory without real-time information about supply and demand is a serious risk. The fact is, with the ERP/MRP systems they are using today, most electronics manufacturers still find it impossible to quickly answer crucial questions, including:

• When will a particular order be available to the customer?
• Which customer order should take priority?
• What is the impact of building one product on the availability of parts required for other products?
• What is the most profitable use of existing inventory?
• How can I use existing resources to maximize customer satisfaction?

webplan provides the information required to optimize production planning and resource allocation because it not only allows users to access supply and demand data in real time, it also supports 'what-is' and 'what-if' planning. With up-to-the-minute inventory and demand data, electronics manufacturers can see the impact of various decisions on production, inventory and schedules immediately. Inventory levels can be reduced because the manufacturer is less dependent on safety stock to guard against fluctuations in demand. And profitability increases because inventory turns go up, capacity utilization is optimized and the right products are built at the right time.

Hughes Network Systems

Hughes Network Systems (HNS), a leading provider of digital satellite communications and an industry pioneer in the development of leading-edge commercial networking applications and services, is on an ongoing quest to improve customer service.

With an annual consumption rate of 550 million separate components a year, HNS frequently challenges itself to manage inventory and capacity more effectively by asking questions such as: 'What if we got that order we've been pursuing? What parts would we have to buy, and in what time frame?' or 'How would a cancellation impact inventory?' or 'What if we moved one project back and accelerated another?'

"It was truly frightening to hear those questions," said Darwin Fox, Products Planning Manager in HNS' Satellite Network division. "I shuddered when someone came to me to ask something like 'suppose we pulled this job in from December 1 to September 1 - what would we have to do?'"

With webplan, HNS dramatically accelerated this type of 'what-if' analysis by automating analysis that was once done using calculators. Says Fox, "We can now have that analysis completed in less than four hours. The accuracy level has increased and we have much more confidence in the results because we're dealing with much more contemporary data. Previously, the information was compiled over two weeks and a lot can change in that timeframe."

The ability to evaluate alternate scenarios and make the best decision is critical for maximizing profitability and customer service. Dealing with this analysis manually, however, adds an incredible cost to the process and there is no guarantee that the best course of action will come to light. webplan offers HNS immediate insight into production planning and scheduling. Adds Fox, "We're now getting reports out of webplan in seconds which, before, used to literally take months!"

Automation: The Key to Rapid Growth

Any successful manufacturer must grapple with the problems associated with growth. Dealing with hundreds of suppliers and customers through thousands of transactions each month puts a significant drain on human resources and adds significantly to administrative costs. For electronics manufacturers, the pressure to commit to orders in real time and get products to market faster than competitors has pushed automation to the top of their list of priorities.

Streamlining transaction processing by reducing your company's dependence on phone calls, faxes and e-mails is critical to long-term growth and success. By automating these everyday transactions, electronics manufacturers can free up resources to deal with exceptions and reduce the amount of errors that are generated by using a manual system.

webplan Xtream™ uses XML technology to allow electronics manufacturers to accelerate data sharing by seamlessly integrating systems across the supply chain and demand chain - even if trading partners are using different systems and applications. This system-level integration allows electronics manufacturers to eliminate outdated processes, including e-mails, faxes and phone calls that restrict their ability to collaborate with customers and suppliers in real time. Because accurate demand and supply information travels fast, electronics manufacturers can offer immediate Capable-to-Promise dates, reduce inventories and build customized products to order. This level of responsiveness results in higher levels of customer satisfaction and loyalty for an uncommon competitive advantage.

"The idea that you can almost instantly transmit a change on the demand side of the supply chain at the OEM through the contract manufacturer out to the material suppliers is extremely powerful."
John Tuck, Managing Editor
Manufacturing Market Insider

How webplan Xtream Works

In a typical transaction, a trading partner's XML request moves across the Internet to the manufacturer's web server, where it is passed on to the webplan Xtream Server. After validation, the requested information is retrieved from webplan CoRE Server via webplan Open API. After processing, webplan Xtream Server issues an XML response, which is sent over the Internet to the trading partner's server.

Support for Next Generation e-Business Technologies

As manufacturers and their trading partners perform more and more transactions over the Internet, the capacity and performance of their IT infrastructure becomes critical. That is why webplan is continually refining its solutions to work with next generation servers and platforms that support greater data volumes, faster transaction processing and more complex networks of partners.

webplan and Intel® Itanium™

In October 2000, webplan became the first supply chain and demand chain solution provider to demonstrate its solution running on the new Intel Itanium platform. Intel Itanium is a family of processors designed to deliver a more powerful infrastructure to support e-Business. The implementation featured data from SCI System's 40 sites running on one Intel Itanium-powered server. This powerful combination of webplan's solution and Intel's newest processor offers a wealth of benefits to manufacturers and their customers and suppliers, including:

A single-server solution for complex, data-intensive supply and demand chains that rely on powerful in-memory data models like webplan's single data model.

The higher levels of scalability and reliability required for multi-partner collaborative trading networks that need dependable, 24X7 support for a high volume of online transactions.

An ideal platform for remotely managing a global supply and demand chain.

Enhanced speed and responsiveness to support the ever-growing number of transactions required for real-time collaboration among multiple trading partners.

webplan and Microsoft® .NET™

Both webplan and Microsoft share a vision of the Internet as much more than a platform for displaying static information. This shared view has led webplan to announce its support of Microsoft .NET, an initiative to make information available any time, any place on any device. This initiative is focused on creating networks of computers, devices and services that deliver a higher level of collaboration, a key benefit of webplan CeO.

Microsoft .NET will use XML to make the Internet itself the basis of a new operating system to maximize interactivity and connectivity. Like Microsoft, webplan has integrated XML into its solution to enable the seamless system-to-system interaction required for breakthroughs in efficiency and productivity.

Conclusion

In the electronics market, customers are constantly asking 'who can deliver the products that I want, when I want them?' It is already clear that the companies that will win in this ultra-competitive market will not be the ones managing inventory and forecasting demand with spreadsheets, or communicating with suppliers and customers with phone calls and faxes. The winners will manage their supply chain and demand chain over the Internet with a solution specifically designed for the web. A solution that supports real-time collaboration today and is compatible with the next wave of e-Business infrastructure, including XML, Intel Itanium and Microsoft .NET. For companies like SCI Systems, SMTC, GE/FITCH, HNS - and many more - the solution of choice is webplan.

About webplan

webplan has achieved first-mover position in the growing market for web-intrinsic e-Business solutions. An April 1999 Gartner Group report stated that "webplan has clearly the most innovative, collaborative, Internet strategy on the market today."

webplan's solution to the e-Business imperative faced by manufacturers today is webplan CeO. It integrates supply chain management, product lifecycle management, customer relationship management and strategic and enterprise planning with tactical execution systems over the Internet. webplan CeO is a strategy and solution-set for increasing shareholder value with an e-Business model that amalgamates self-service, visibility, collaboration and optimization with a web-intrinsic architecture. webplan solutions have been adopted across multiple tiers by visionary companies such as Lucent Technologies, SCI Systems, Jabil Circuit, SMTC, Nortel Networks, Honeywell Aerospace, Cessna Aircraft, Black & Decker, Ryobi Outdoor Products, John Deere, Caterpillar and Epson.

webplan Inc. is a privately held company with corporate offices in Newport Beach, CA. A global community of over 8,000 users now employs webplan as its e-Business and supply chain solution. For more information on the company, its services and its products visit www.webplan.com.