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Teradyne is a supplier of automatic test equipment and interconnection systems designed to deliver competitive advantage to the world's semiconductor, electronics and network systems companies. Each of Teradyne's complex products comprises 3,000 to 5,000 parts. In 2004, Teradyne had sales of $1.8bn, and currently employs about 5,900 people worldwide.
"As Teradyne seeks cost savings through outsourcing relationships, new complexities are introduced into our global supply chain," says Jim Wood, Teradyne's head of supply chain information systems.
Challenges for a global supply chain that spans five Teradyne and four subcontractor sites include long lead times-a constant hindrance to responsiveness to change-and managing the liability of excess and obsolete inventory spread across many outsourced partners.
"Perhaps our most significant challenge is the transmission of frequent demand changes and the inability to lock in the supply with 'frozen' demand windows," says Wood. "Teradyne faces significant demand fluctuations. The market has seen significant upswings during good times, while customers are quick to 'slam on the brakes' in soft markets. It is not uncommon to see a product's shipments double in one quarter and be cut in half over sequential quarters."
To deal with this supply chain complexity and volatility, Teradyne sought out a solution that offered global visibility and rapid response capabilities in order to manage changes in demand, understand supply consumption and how to manage supply disruptions, shorten lead times and reduce excess and obsolete inventory. Teradyne selected RapidResponse from Kinaxis (formerly Webplan) because of its architecture's ability to integrate with Teradyne's Oracle ERP system and with the ERP systems of its contract manufacturers while enhancing their responsiveness.
Teradyne planners, inventory managers, commodity managers and others use RapidResponse to view data across their extended supply chain and to create enabling tools to manage constantly changing business processes and business situations.
"RapidResponse is a critical tool in terms of helping Teradyne execute the reconfiguration of their supply chain to meet changing requirements," says Wood.
For example, RapidResponse is used to determine how to manage part suppliers when parts are purchased by Teradyne or subcontractors. And, when Teradyne looks to send more product to a subcontractor, RapidResponse is used to get a detailed list of parts and inventory to be transferred. Teradyne staff utilizes RapidResponse what-if capabilities to compare various action alternatives to determine the best course of action for a given change.
"RapidResponse has allowed Teradyne to save money by reducing excess and obsolete inventory and liability to suppliers resulting from unnecessary materials purchases," says Wood. "Teradyne is developing a core competency in response management that enables them to meet both customer and internal objectives by being able to respond effectively to ever present changes in our business."
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