Venture Outsource talked with Kurt Doelling, vice president supplier management and worldwide operations strategy with Sun Microsystems. Transcripts from that discussion follow.
VO: Which three top metrics does Sun Microsystems use when evaluating the performance of its EMS partners and why these three, in particular? And, how does the performance of these metrics play a role in determining opportunities for EMS partners to win additional business programs?
Doelling: We use a number of metrics to manage supplier and EMS provider performance. The three categories that we focus on relate to cost; quality, and availability.
First, for cost, we measure the ability of our suppliers to hit our cost targets. The focus has shifted a lot in recent years from quarter-over-quarter cost reductions to hitting the best possible cost at introduction. Thus, we look to EMS suppliers to help us with the best possible designs for cost.
Second, we measure quality. We measure a number of in-process quality attributes but the ultimate metric is how well the product performs in the field. For Quality, we measure suppliers on early-life failures and mean-time-between failure.
For availability, we use a measure we call COSM, Customer On-time Shipment Metric. This metric is measured at the customer order-level. In order to pass on this metric, the supplier must make the product available on the original promise date
and in a very short, competitive lead-time.
VO: How does Sun motivate its EMS partners to develop a sense of urgency in order to meet customer shipment requirements?
Doelling: The best strategy is to expose the suppliers directly to the end customer requirements without filters or aggregation. For example, we show suppliers that customer orders are in backlog and when the product is required for shipment. Over half of the time, product ships directly from the supplier’s dock to the customer.
Its one thing for a supplier to react to a forecast increng what a perfect partner looks like and then selecting the three or four providers that look the most like what we envision. Rather, we seek several, different ‘best in the world’ attributes from each partner. Selecting a partner for any given program is then a matter of matching the capabilities of the EMS provider with the needs of the product.
Ideally, for any given product, several providers are capable of doing an excellent job so this, in fact, helps us to maintain healthy competition.
Attributes we look at closely include design skills; technical proficiency, cost management at high and/or low volumes, logistics, sub-tier management capabilities, degree of vertical integration, and so on.
VO: If you could have a discussion with any one person (fictional, living, or dead) whom would you choose and why?
Deolling: If I could expand on your question just a bit…I imagine sitting together with Abraham, Jesus, and Mohammed.
I would ask if the state of the world has turned out the way they expected, especially with respect to violent conflict between (and within) the great religions.
Is this something we somehow need to go through – is it part of the plan?
Or, has something gone terribly wrong and what can we do to get back on track?
More often than not, we have been trained to think of these great founders in isolation. It may be difficult for some people to picture these individuals in a room interacting with one another, but it is still rather interesting.
VO: Thank you, Kurt.
Doelling: My pleasure. Thank you.
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