E-Business Strategy

— Assigment 3 Page (No title page)

— References: Minimum 3

Video: https://www.youtube.com/watch?v=l3Z6ay4pUwc 

Flextronics Case: Laudon-Traver_E-commerce12_Case12.1_Flextronics (attached)

ASSIGNMENT: Respond to the Flextronics Video Case Study Questions 1, 2, 3, and 4.

E-commerce. business. technology. society.
KENNETH C. LAUDON AND CAROL G. TRAVER

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video case
chapter 12 B2B E-commerce: Supply Chain

Management and Collaborative
Commerce

case 12.1 Flextronics Uses Elementum’s
Cloud-based Mobile Supply
Chain Apps

https://www.youtube.com/watch?v=l3Z6ay4pUwc

summary This video is about Software as a Service
(SaaS), Cloud, and Mobile, brought to bear on
supply chain management. L=2:28.

case Flextronics International Ltd. (Flex) is one of the world’s largest contract manufacturers.
Its business model is to design and build products for other manufacturers, as well as
to provide other services. Flex started out in Silicon Valley in 1969 producing electronic
assemblies and parts for computer manufacturing firms. Today, Flex is a global Fortune 500
company that offers design, manufacturing, distribution, and after-sale support to hundreds
of manufacturers worldwide. Its customers include Hewlett Packard (HP), Cisco, Apple,
Microsoft and Intel, and many other Fortune 500 manufacturers. Flex has operations in 300
countries, employs around 150,000 people, and generated $26 billion in revenue in 2015.

Flex designs and builds mostly electronic products under contract to other manufacturers,
and has developed one of the world’s largest and most sophisticated supply chains in order
to succeed. In 2014 Flex spun off its expertise in supply chain management systems to a
new company called Elementum which offers mobile, cloud-based software to a variety of
customers (some of whom are already customers of Flex). To date, Elementum has raised a
total of $67 million in two rounds of venture funcing to build its software services business.

watch the
video at

continued

CASE 12.1 FLEXTRONICS USES ELEMENTUM’S SUPPLY CHAIN APPS 2

Coordinating the flow of goods among vendors and manufacturers is an inherently
difficult task. A single manufacturer may have 100 primary suppliers, each of which has its
own suppliers (tertiary suppliers), and so forth. In the end, the “supply chain” is very large
collection of independent firms that do not share information systems, and typically rely
on fax machines, email, and the telephone to coordinate the flow of parts and goods.
The result is a kind of controlled chaos that is highly inefficient and error-prone. The
traditional solution for this problem was to have the primary product manufacturer, say a
personal computer manufacturer, build its own proprietary, enterprise-wide supply chain
management system, usually purchased from a major software firm like SAP, Oracle, IBM,
or HP, and then have all the suppliers tie into the primary firm’s system. This approach has
several problems, not least of which is that there are hundreds of primary manufacturers
each with its own proprietary supply chain system, forcing suppliers to learn many software
systems. For instance, a supplier of wiring harnesses based in Malaysia may supply products
to several hundred electronic component manufacturers, each with different supply chain
systems. Moreover, the entire supply chain is usually not visible to the primary manufacturer,
which cannot “see” the lower-level suppliers of components, just its largest suppliers. Many
elements of the supply chain remain invisible. In addition, it’s nearly impossible for one
primary manufacturer to understand how its purchasing decisions are effected by the
decisions of other primary manufacturers. These kinds of systems do not operate in real-
time but frequently are relying on data that is weeks old. Finally, this traditional approach
is poor at risk management, understanding the complexities of many different suppliers, in
different parts of the world.

Elementum’s approach is very different because it relies on a cloud-based software-as-a-
service model. One supply chain database system is built for all firms to tie into, regardless
if they are primary manufacturers or component suppliers. The world of manufacturers and
their supply chain management systems has lagged behind other areas such as customer
relationship management (firms like Salesforce.com Inc.), and work flow management (firms
like Workday Inc.), in moving to cloud-based SaaS models.

Elementum’s software has three components: Transport, Exposure, and Perspective. Each is
presented to users as a mobile app for tablets or smartphones. Transport offers visibility into
existing shipments and offers predictive and rules-based alerts to notify managers of any
potential delays. Exposure is a supply chain risk management product that monitors various
external content sources, and then based on an adverse event at a certain location, analyzes
how suppliers, suppliers’ suppliers, and all actors in the supply chain might be effected.
Perspective offers a mobile dashboard with a variety of graphics and charts showing how
suppliers are performing. Rather than create hundreds of separate databases at primary
manufacturers, Elementum’s goal is to build a single supply chain platform that leverages
multiple data sources, and then to use common mobile apps to present the results to
managers in a real time environment.

CASE 12.1 FLEXTRONICS USES ELEMENTUM’S SUPPLY CHAIN APPS 3

One of the early adopters is Dyson, the U.K. manufacturing firm best known for its Dyson
vacuum cleaners, and other household appliances. Dyson needs to keep track of two billion
parts, 300 suppliers, and four factories in order to manufacture eight million appliances a
year. This is considered a medium-sized supply chain. Dyson is building a control tower at
its main manufacturing facility in the U.K. where the supply chain is monitored 24×7 on 16
large screens by a staff of six people.

1. How does Mike McNamara, the CEO of Elementum, characterize the changing nature of
supply chains when compared to twenty years ago?

2. What does McNamara believe is the solution to highly complex and risky supply chains
that we have today?

3. What’s different about the Elementum approach to supply chains?

4. What are the three components of Elementum’s software?

Copyright © 2016 Kenneth C. Laudon and Carol Guercio Traver.

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video case
questions