Gradual market changes had convinced Seagate that it was time to revamp its supply chain, but it was disasters in Asia that last year that convinced the company it could wait no longer. "Market forces were telling us it was time to change, but like everyone else we were busy running a large company and had other initiatives going on," says Meirelles, vice president-supply base management. "The crises in Asia showed us there is no better time than now."
These crises included the Asian flu, volcanic eruptions and, most importantly, the floods in Thailand. Meirelles explains that Thailand is a manufacturing center for hard drives and their components. "Our factories were not much affected, but some of our suppliers were hard hit and without supplies we could not make enough product to meet demand," he says. "We needed to step in and help some of these suppliers get back on their feet."
The market factors driving change center around the emergence of the cloud as a means of storing data. "Today a lot of storage happens at the end-user level, on laptops and PCs," says Meirelles. "With cloud-based services like Twitter and Facebook we are starting to see consumers create and store content in the cloud." In addition, companies are using private clouds for storage. This trend is shifting the market toward larger and heavier hard drives that are manufactured closer to customers, he says. This is happening much faster than expected, he says.
Seagate began its transformation process by talking to internal stakeholders and to customers and suppliers, he says. "We came up with an overall vision or strategy of all the things we wanted to do and broke that down into a very large number of projects to get us there." It was such a large undertaking and had so many different parts that it was hard to convey a coherent message, Meirelles says. "So we had to simplify the message to get everyone behind us. Instead of talking in detail about 8 to10 projects, we stuck to explaining the key drivers we wanted to affect and why- and we gave that message over and over."
Basically the message focused on three key levers that the company wanted to impact, he says. The first was tailoring fulfillment to different types of customers, using such concepts as reconfiguration and postponement. The second lever was collaboration with customers and suppliers. "We want to collaborate with customers on forecasts and then create a common thread and information flow through our factories and back into our suppliers to enable better and faster decisions," Meirelles says.
The third lever was product and process simplification. "What is different about this is that we want to really engage our customers to make sure they understand how some of the customizations they are asking for impacts our ability to get products to them. These were very open conversations, where we said, "˜as our customer we will do whatever is needed, but you have to understand there is a cause and effect regarding some of things you are requesting and we want to share that with you so we can come up with the best result.'"
The end goal is to create a very demand-driven supply change that allows Seagate to quickly react to changes in demand to the upside or downside, says Meirelles. "We also want to end up with a much simpler product portfolio that attends to the needs of customers while eliminating waste throughout the entire chain."
This project naturally has involved a lot of change management. "People generally don't like change, but also we were a very successful company and when you have been successful doing things a certain way, people question the necessity for change," he says. "Our message was that the future is not equal to the past and we got that message throughout the organization in many different ways - through email, newsletters, face-to-face conversations and more."
These efforts are never ending, Meirelles says, because the transformation is never really complete - it just transitions into a process of continuous improvement.
