v-box, inc.– an electronics manufacturing case study€¦ · • v-box, inc. – headquartered in...

Project #Project #

V-Box, Inc.– An ElectronicsManufacturing Case Study

B2B Roundtable Series

Seoul 6 February 2001

AberdeenGroup© Aberdeen Group 2000

2e-Business Case StudySource: Aberdeen Group © 2000

Case Study: V-Box

• V-Boxes are voice-activated handheld PCs• V-Box, Inc.

– headquartered in Silicon Valley– A global manufacturing company that provides

40 million V-Boxes — voice - activated handheld PCs to the international market yearly.

– Grossed $3.1B in Year 2000 revenue worldwide.

– Annual growth – 26%


Summary of Memo to Staff

From: Lou Altzer, CEOTo: Direct ReportsRe: Review of Business Practices

The Mandate:

•Re-evaluate our business practices•Review operational procedures •Develop plans to:

•curb expenditures, •eliminate waste, and• improve profit margins


The CEO’s Question: What CanB-to-B Mean to V-Box?

•How does a company like V-Box effectively utilize B-to-B e-Business technologies to improve its business?

•What are the opportunities to improve collaboration with our partners?

•How can the Internet help us provide our partners and end-customers with top-notch customer service?


Challenges for Production Planning

• Accurately plan production and gain visibility into all cross-plant operations

• End-to-end production planning and scheduling information

• Acquire and manage information detailing supply constraints and demand parameters (from sales channels) in real time

• Synchronize component deliveries with production schedules


• Can exchanges help connect these fragmented buyers and sellers?

• How can e-Business technologies help the company more efficiently deploy assets?

• Will the company be better off outsourcing more than just manufacturing?

• How can we ensure the quality of the product line?

Challenges for Production:


Challenges for Distribution & Logistics:

• Issues: the dispatch of land and sea transports; inventory and warehouse operations; international distribution and logistics; as well as miscellaneous issues relating to third-party warehousing operations.

• Shorten cycle times between design,component sourcing and delivery, production, and shipping.

• Introduce new processes for tracking products through the delivery chain


Procurement Challenges:

• Best quality /lowest price• Sourcing locally for a global company. • Increasing the size of the supplier

community given specific requirements, price sensitivity, and JIT delivery.

• Streamlining the existing antiquated procurement process.


Summary of CEO’s Needs for the Company• Get better predictive information “just-in-

time” — whether in demand or production– to reduce inventory levels, – shorten cycle times, – garner alternative production plans to meet

customer commitments;

• Integrate backend manufacturing with front-end customer demand forecasting systems

• “e-Management”of the entire supply chain

Project #Project #

Notes and Metrics to Support Case Study Discussion

AberdeenGroup


Business Benefits Used to Justify Acquisition of e-Procurement Systems

? Freeing up procurement professionals to focus on more strategic tasks

? Lower procurement administration costs? Improved data gathering and reporting on

company expenditures? Improved compliance with corporate contracts? Shorter requisition and order fulfillment cycles? Enhanced negotiation leverage with suppliers


The Aberdeen Survey:The IP Procurement Proof is in the numbers• Most respondents expect to reduce dollars spent

on MRO material & supplies 5%–10%– Savings are result of increased use of preferred suppliers and

improved contract terms – Some expect to savings in these areas to top 20%

• I/P Procurement is reducing requisition administration costs by 70% per order but this was a “Soft Dollar Savings”

• Purchase Requisitions can be processed through an automated procurement system 50%–70% faster:– Manually = 7.3 days – Automated I/P procurement system = 2.0 days– Speed driving acceptance by enterprise employees


E-Procurement benefits remain consistent

• On average, respondents expect e-Procurement to reduce requisition processing costs by 73% per order– Avg. cost of processing a purchase req.

manually = $121– Avg. cost of processing a purchase req.

through an automated procurement system = $33

• Range: $10 to $70


E-Procurement cycles reductions are also reconfirmed

• Respondents report that a purchase requisition can be processed through an automated procurement system 70%-80% faster than through traditional, manual procedures

• Average time required to process a purchase requisition manually = 9.72 days

• Average time required to process a purchase requisition through an automated procurement system = 2.53 days


Buyers are not the only ones who benefit

• Nearly 65% of respondents indicated that e-Procurement has provided benefits to suppliers as well.

• Benefits include:– Reduced transaction costs– Increased orders– More inventory turns– Reduced errors/reduced returns


However, sourcing remains a long, tedious process at most organizations

Searching for/identifying appropriate suppliers (53%)

Managing/communicating preferred supplier list (7%)

RFQ development (10%)

RFQ response/receipt (7%)

Screening/sorting proposals (20%)

Contract negotiation (11%)

Average sourcing cycle = 3.3 months to 4.2 months


Internet Procurement and Marketplaces:Their Impact on Business Systems

• Cost Savings from Administration of Purchasing– Average Cost of processing a Purchase Req. = $75-

150– Average Cost of IC Purchase = $15-40– Average Savings = $60 to $110 per transaction

• Reduced Cost of Goods– Reduction in off-contract “Maverick”buying– Support for supplier rationalization & consolidation– Improved leverage for supplier contract negotiations

• Improved Inventory Practice– Faster delivery => reduced stock or no stock


Internet Procurement and Marketplaces:The Red Hot EC Market

• Cost Savings from Administration of Purchasing– Average Cost of processing a Purchase Req. = $75-

150– Average Cost of IC Purchase = $15-40– Average Savings = $60 to $110 per transaction

• Reduced Cost of Goods– Reduction in off-contract “Maverick”buying– Support for supplier rationalization & consolidation– Improved leverage for supplier contract negotiations

• Improved Inventory Practice– Faster delivery => reduced stock or no stock


Metrics for CRM/Customer Service (CS)

Aberdeen Fall 2000 End-User Survey Findings:

• Accessed customer service/information via Web within the last six months? = 23%– Of this 23% using the Web, 35% used a

company’s Web site at least once a week– 33% used at least once a month– 31% used less than once a month during the

last six months


For what do customer use the Web?

Research69%

Seek Service7%

Purchase17%

DK/R3%

Other4%


What kinds of service was preferred?

12997

174

130

220

20

40

60

80

100

120

140

160

180

Self-Service e-Mail 800 # Text Chat DK/R


“Freshness” of Data = Competitive Advantage

• The timeliness, reliability, accuracy, and completeness of data ? and the speed with which this data is distributed throughout the supply chain ? will soon define the competitive advantage of the company.


Data Integration is Key

• Automated integration across all processes is lacking.

• Solutions to be addressed include enhanced use of the Internet, strategic buying through Internet Procurement tools, automated RFQ (request for quote) and exchange technologies, selling byproduct and oversupply through auctioning technologies, and electronic lot and sublot tracking


Supply Chain Management

• Investigate a fully integrated Supply Chain Management (SCM) software solution that enables an enterprise and its trading partners to view and exchange data. The SCM solution should offer available-to-promise capabilities as well as advanced planning engines;


eMarkets

• Explore how auctions, exchanges, and e-Marketplaces serve as new channels to buy and sell goods and services. Solution should offer a full range of dynamic trade mechanisms including auctions, exchanges, and reverse auctions as well as support for single and multi-attribute RFPs and online negotiations.


Self Service

• Enable Internet-based self-service ordering for distributors, resellers, and in some cases, the end-consumer purchasing direct. These solutions will need to support mass-customization and build-to-order processes.


Collaboration

• Web-based collaborative processes for design teams should be embraced. e-Business practices are shifting from transaction-oriented interactions to collaborative relationships. Companies must lower the barriers to participation in Internet-based trading networks.


Customer Relationship Management CRM

• The enterprise must leverage CRM applications to present a unified, data-driven “complete picture”of the direct and indirect customers. CRM applications deliver increased marketing automation capabilities as well as proactive customer service practices. Extending the processes that transform offline relationships into online environments will be an increasing focus of CRM applications.

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