Technology: Supply Chain

Over the past several years, Mike Webb has helped build a global supply chain for Singapore-based Flextronics International Ltd., one of the world’s largest makers of electronic components, that’s the envy of manufacturers around the world. From their desktops, the company’s purchasers, who buy components that will eventually go into products sold by such customers as Nokia Corp., Xerox Corp., Ericsson Inc. and Cisco Systems Inc., can see data pulled together from practically every Flextronics plant on four continents. They know exactly how many components for a given product are available in-house, where they can source more and at what quantity, and which supplier is offering the best price.

But while real advances have been made in improving communication and wringing out inefficiencies, Webb, Flextronics’ senior vice president of information technology, is still struggling to overcome the thorniest problem facing his supply chain: accurately forecasting demand. Says Webb: “We take a view that the whole supply chain is a dynamic environment you’re constantly trying to keep on top of. But what’s ultimately driving all that plumbing is demand. If you can get that part right, the rest is relatively easy.”

The fact is, says Webb, you can have the best supply chain technology and the best intelligence-gathering systems available, but they mean little if the information going into the system is flawed, or if the forecasters fail to listen to data they may not want to believe. As John Fontanella, of AMR Research Inc., a Boston technology research firm, points out: “Who’s going to tell [Cisco CEO] John Chambers, after he’s just had his best year ever, that he’d better cut back production by 30 percent? How would you like to be that sales manager?” And yet, that’s exactly what Chambers should have heard much earlier than he did. “There are a lot of tools out there, and they’re pretty damn good tools, but they’re all dependent on getting good information, and getting that information shared,” says Webb. “So there’s a cultural issue that’s probably just as big as the technological issue.”