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Seagate Technology Profile: Real-Time Response to Demand
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Driven by a vision of multitiered visibility and real-time demand fulfillment, Seagate Technology is investing heavily in technology and process improvements and an electronically linked end-to-end supply chain.
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Founded in 1979, Seagate helped fuel the information age by building the personal computer (PC) disc drives needed to store vast sums of data. Today, data-storage technology has evolved far beyond the PC. And as our appetite for storage keeps on growing driven by the Internet, consumer electronics, and our desire for anytime, anywhere access to information so does the need for increasingly sophisticated disc drives. What few people realize is just how complex these products are. Seagate notes on its Web site that building disc drives is considered the extreme sport of the high-tech industry, involving expertise in physics, aerodynamics, fluid mechanics, information theory, magnetics, process technology, and many other disciplines. The company constantly strives to boost storage capacity and set new records for disc-drive performance. Besides staying ahead of the technology curve, Seagate faces a number of unique business challenges that drive its supply chain strategy.
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Seagate s products use components that are so complex to manufacture that lead times can range from one month to an entire quarter. Then there s the geographic challenge. The component manufacturing plants are often far removed from the subassembly and drive manufacturing plants. Explains Karl Chicca, senior vice president of global materials, Every disc drive has several hundred of these very complex parts, each of which
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Copyright 2005 by The McGraw-Hill Companies, Inc. Click here for terms of use.
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has process technologies that are literally bleeding edge, coming together from all corners of the world, in massive quantities we produce 15 to 20 million disc drives a quarter. This translates into about 65 million components a day many purchased from outside suppliers that go into disc drives that are increasingly customized to specific customer needs. Customers range from Sony and Microsoft which use Seagate s drives for consumer applications, to companies with high-end storage systems, such as EMC. For every customer, Seagate maintains one or more just-in-time (JIT) hubs inventory warehouses operated by a third-party logistics provider. These vendor-managed inventory (VMI) arrangements are the industry norm. Each hub is stocked with anywhere from one or two to dozens of different types of disc drives, depending on how broad a range of products the customer sells. Some of Seagate s customers have 15 to 20 locations and just as many JIT hubs but they don t pay for the inventory stocked in their hubs until they use it. Now add the complexity of unpredictable demand. In this business, customer Seagate s ambitious demand is infinitely dynamic, and Seagate s ambitious goal is to ship to real-time goal is to ship to changes in demand not to plans or forereal-time changes in casts. This means that the company has to monitor the economy, the high-tech indusdemand not to try, and the information-technology subset of the industry to get a sense of which way plans or forecasts. demand is flowing. In the early days, a plan would hold for six months. No more. Notes Richard Becks, vice president of e-business and supply chain, Looking back on almost 25 years in this business, the biggest change has been the demand dynamic. It can t be predicted anymore. We ve had to migrate from a mind-set of plan-based stability to a model of infinite flexibility and building to pure customer demand. Extreme product complexity, lengthy component lead times, global operations, high volume, dynamic demand, customized products Seagate has to meet these challenges as well or better than its competitors to sustain and build on its leadership position. The company s supply chain plays a critical, strategic role.
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