Venture Outsource talked with Scott Clark, vice president, global procurement and operations with standards-based networking product company Allied Telesis, Inc. Transcripts from that discussion follow.
VO: Can you please share with our readers what you feel is one of your organization’s greatest strengths in terms of developing and managing a responsive, global supply chain?
Clark: Over the past three years, Allied Telesis has been re-architecting its supply chain from an in-house manufacturing model to a hybrid model comprised of both outsourced CM capabilities and in-house capabilities. Today, one of the greatest strengths we enjoy is flexibility across the supply chain because we are not tied to one single model.
This hybrid approach helps in allowing us to provide the best attributes of both models and it allows us to cost-effectively provide customers 1200 SKUs ranging from consumer-retail to carrier-class solutions.
VO: What changes or trends do you see developing on the horizon that will be reflected in the way companies develop and manage supply chains?
Clark: To survive in today’s market you need to provide cost-effective, quality solutions to the end-customer. I believe organizations will be forced to use supply-chain design and supplier partnerships as a differentiator in the market.
Companies adopting this approach can outpace their competition by bolstering the bottom-line through increased operational-pace and overall operational efficiencies. If you honestly survey today’s market, you’ll find we have a long way to go in achieving supply chain utopia.
Prior to the 2000 downturn, there was enough inventory in the market to allow manufacturers to succeed despite short-comings in their supply chain strategy. If the forecast was off or, if a shortage occurred, parts could still be acquired in time to make the customer shipment.
Meanwhile, the 2000 downturn has forced suppliers to focus on the bottom-line and adhere to more stringent account practices under SOX. Today, they strictly build to order.
However, this wreaks havoc on the end-to-end supply chain. If one supplier de-commits on a shipment there is no assurance parts can be acquired in time to make the customer shipment. As this occurs, revenue and net profit take the impact. Coupled with the risk of losing customers and market share, manufacturers that do not have their supply chains in check will soon be on the ropes.
VO: Time, cost, and quality are each important elements when evaluating supply chain effectiveness. If you could only use one supply chain measure, or metric, to assess the effectiveness of your supply chain, what would it be and why?
Clark: Cost and Quality are a given and have been part of the mantra for many years. The single metric I would select would be time. Faster operational pace means ‘book-ship-invoice’ cost-effectively. The more times you can achieve this three-step cycle over a 12 month period, the more it will equate to higher revenue and margins.
The key to honing this cycle, however, is visibility across the supply chain — from your customer’s customer to your supplier’s supplier. Time – definitely, time.
VO: Allied Telesis offers a broad suite of product to customers. When evaluating contract electronics manufacturing partners, which three criteria do you look for when assessing a provider’s capabilities for such a large product offering, and why?
Clark: We evaluated a number of global, tier-1 CMs. Interestingly, many of them want to force you into their operating model. If this is the case, can they help make you competitive against your competition that is being produced under the same roof?
We challenged prospective partners on how they could differentiate Allied Telesis from their other customers by way of supply chain programs and advantages. Only one CM really stepped-up to the plate and met the challenge. More so than saying, “This is how we do business…” they said, “This is what we can do to help you meet your challenges…” We did not waiver from our focus on selecting a partner that had buy-in in order to help make us successful in the market.
We also sought out a partner with a global manufacturing and logistics footprint to help reduce our effective lead-time into higher volume geographies and customer-specific locations. This type of footprint provides agility and flexibility to allow better adaptation to geo-political; market, and customer-situation changes.
Every CM has a quality program with associated metrics. As stated previously, Quality is a given and most CMs can demonstrate how they implement quality in their process. We further questioned prospective CMs on their ‘philosophy’ of quality and asked them to demonstrate how they continuously improve quality outside of the physical manufacturing process.
In some cases, we received different answers from different groups within the same CM. All of this with very little being demonstrated. A smaller handful of CMs, however, revealed the same answer and the same philosophy on quality regardless of who you asked. They had documented this; trained on it, and integrated it into their corporate culture. We were amazed how these CMs could demonstrate the various proactive ways they continued to improve overall quality outside of the physical manufacturing process.
VO: If you had the opportunity to hold a discussion with any person living, dead, or fictional, who would this person be and what would you discuss?
Clark: Why is this question the toughest? …I would want to spend a day with Albert Einstein but, I’d also like to invite Stephen Hawking to discuss the theories and possibilities of the universe and the world we live in. These types of individuals push the borders of the imagination and accept everything with possibility.
Learning from the perspectives held by these two individuals, I feel we can begin to appreciate and understand un-realized human potential — not only today, but well into the future. Suddenly, supply chain excellence looks easy.
VO: Thank you, Scott.
Clark: You’re welcome. Thank you.
VentureOutsource.com, October 2006
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