High-Tech/Electronics — January, 2009

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Rethinking High-Tech Distribution
Companies that make computing, telecom, and networking equipment have in recent years improved their ability to sell directly to customers or to resellers, either online or through their own sales forces. Accordingly, they have worked to become less dependent on their old distribution partners. The new approach works well for selling to big customers in developed economies. But as OEMs look for growth in new markets, they should take a closer look at the value offered by some distributors--particularly those known as two-tier distributors--so named because they buy from manufacturers and sell to resellers.
Two-tier distributors are well positioned to boost sales in emerging markets, where these distributors' revenues have grown by 33 percent annually for the past five years. What's more, in both the developed and the developing world, such distributors can help manufacturers sell to small and midsize enterprises--for they control 42 percent of all distribution to that market--which is growing by 7 to 10 percent annually, according to recent reports by the industry analysts Raymond James and IDC.
Two-tier distributors do well in these markets for several reasons. For one, deals are...
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Cisco Unlocks Value From Product Returns
The area of product returns was "a vast uncaptured opportunity" for Cisco Systems, Inc., according to Dan Gilbert, vice president of supply chain field operations. He is joined by senior director Rehman Mohammed in discussing how Cisco transformed its returns process from a cost center to a profit-generating operation in just three years. Before the program, fewer than one in 20 of Cisco's total returns was being put back to work--and the number was zero for product trade-ins. Gilbert and Mohammed talk about how Cisco raised that overall figure to 46 percent, with more improvements expected. Meanwhile, the returns operation has gone from being $8 million in the red to yielding a net contribution of $100 million. This case study won first place in the 2008 Supply Chain Innovation Award competition, co-sponsored by the Council of Supply Chain Management Professionals and Global Logistics & Supply Chain Strategies....
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UPM Raflatac Launches New Portfolio of Near-Field RFID Tags
UPM Raflatac, a supplier of self-adhesive label materials as well as HF and UHF radio-frequency identification (RFID) tags and inlays, has launched a new product portfolio of near-field communication (NFC) tags. The items are already in use in several areas, including multifunctional media badges for music, data and movie discs, and electronics pairing. The media badge utilizes the vendor's BullsEye NFC RFID tags, under a collaborative development deal among UPM Raflatac, CDA and Master Disc. With the multifunctional NFC media badge embedded...
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IBM Discovers It Can Outsource to East Lansing and Dubuque
India has become synonymous with tech outsourcing. More than 90 percent of tech services that are performed in low-cost countries happen there. But when IBM announced its two newest global service delivery centers this week, they weren't in Bangalore, Delhi or Mumbai. Instead, Big Blue picked East Lansing, Mich., and Dubuque, Iowa.
In what may blossom into a countertrend, the company is hiring close to home. The moves come at a drama-fraught time, since the U.S. economic downturn has already claimed more than 60,000 tech jobs in...
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Exel Opens Six Multi-Client Distribution, Fulfillment Centers
Exel has created a multi-client distribution and fulfillment center network for customers in the technology and aerospace industries. The offering comprises six facilities in Chicago, Columbus, Dallas, Houston, Los Angeles and Memphis. The goal, said Exel, is to help businesses locate material and finished-product inventory closer...
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Supplier Empowerment at Celestica Lowers Total Cost of Ownership
A conversation with John Boucher, executive vice president for supply chain management at Celestica, Toronto, Canada.
Q: Tell us a little about how you came to your current position at Celestica.
Boucher: I spent about 17 years with Digital Equipment Corp. I held a variety of positions at Digital, working my way into a senior management position where I drove the supply chain for the company's personal computer division as well as its network product division. After doing that for four or five years, I became part of a management team that started up sites in low-cost geographies. During that time, one of the former executives at Digital left to join Sun Microsystems and later started an EMS company called Manufacturing Services Limited or MSL. I went to work for MSL and spent about 10 years there, during which time it grew to a $1.8bn company and went public. Then, in 2004, MSL was acquired by Celestica and I was named head of operations for the Americas. In late 2005, Celestica's CEO asked me to take on the global supply chain function and since then I have been running the company's supply chain and procurement activities. Recently, we merged all the services organizations -- from design engineering to fulfillment services to aftermarket services -- into the supply chain organization. So now I am responsible for driving the growth of end-to-end solutions for our key customers and for identifying key business opportunities in the market.
Q: Can you give us a profile of Celestica's supply chain?
Boucher: Celestica is a tier one EMS company. Our revenue was in the $8bn range last year and we have roughly100 customers and maybe 5,000 suppliers. We manage approximately 400,000 component SKUs. From a facility standpoint, we have about 30 sites within our operating network, with a significant focus on eight mega-sites, two in the Americas, two in Eastern Europe and four in Asia. These mega-sites handle 80 percent to 85 percent of our entire throughput, so you can see that we really have consolidated our operating network.
Q: Tell us more about your network strategy....
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Intel's Supply Chain Management Master Program
Intel's Supply Chain Master program is designed to recognize those supply chain experts who have demonstrated "deep knowledge" of their specific fields and how they relate to other company units, and to external partners. Intel's Senior Supply Chain Master Jim Kelso stresses that the initiative is not an educational tool but a career development program recognizing lifelong accomplishment in supply chain management. No longer exclusive to Intel, the program is available to supply chain professionals across the board....
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Past High-Tech/Eletronics issues:
November, 2008
August, 2008

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