Doing whatever it takes

Despite what you read in the papers, not all high-tech manufacturing has moved offshore.

For instance, the furthest StorageTek (www.storagetek.com), a $2 billion maker of tape drives, goes for its production volume is to Puerto Rico.

Most of the manufacturing is done in Colorado, where the company's headquarters and advanced manufacturing facilities are located, explains Jim Matney, StorageTek's director, global service logistics. Though manufacturing is local, Matney moves and manages StorageTek's global inventory of more than 80,000 service parts, which supports $800 million in service revenue and maintains consistent service levels for 22,000 global customers in 63 countries.

StorageTek has spare parts depots in the U.S., Canada, Mexico and Latin America. Its primary European distribution center (DC) is in the Netherlands, although it has spare parts depots in each European country.

The pattern is similar in the Asia-Pacific area — StorageTek maintains spare parts depots wherever it has customers with service agreements, including Australia, Japan, Korea, Malaysia, Singapore and even China. "We primarily use third parties to manage our spare parts depots," explains Matney.

"From a service parts perspective," he adds, "we monitor everything centrally here, in Colorado, with a software solution from Servigistics Inc. (www.servigistics.com) that tracks all our spare parts worldwide. We know where our parts are in every depot in every country in which we support equipment."

As products are introduced, they go through StorageTek's program management process. Service parts analysts are part of the program team, and they along with engineering are tasked with developing a list of parts that would likely need replacement. The Servigistics system looks at how many parts are going to be used, as well as how many machines need support, then it projects usage rates.

"The Servigistics software keeps track of how many parts we have and where they are," Matney explains. "It helps us predict use and it calculates authorized stocking levels for each of those parts. As a part is used and transacted, the software enters that data in our ERP systems. As on-hand quantities change through use, the system automatically creates an order to have that part replaced."

"We're supporting spare parts logistics for customers that have two-hour response contracts in most cases," notes Matney. "We're servicing the spare parts depots, and the customer service engineers are serviced out of those depots."

While StorageTek has been effective in getting parts in place in the U.S. and abroad, many high-tech companies have found that moving manufacturing offshore is much tougher than anyone anticipated. Going offshore is a transformational experience, and that transformation doesn't happen overnight, observes David Grasso, associate partner with Accenture's (www.accenture.com) Communications & High Tech practice.

Big companies struggle just as much as any others with insufficient capabilities and tool sets, Grasso notes. He points out that even the best enterprise resource planning (ERP) packages have only recently begun to cobble together more robust cross-border and global trade capabilities. Companies have had to do those functions manually since they have had no other choice.

"Automation is clearly a goal," says Grasso, "but before you automate something, you've got to integrate it, and before you integrate it, you've got to simplify it. For global trade and crossborder issues, we have to understand them so they can be simplified and distilled to their essential components, then we must integrate those essential components from a business process, operating model and application perspective. Then we'll automate those components and an ERP system will be able to latch on to what can be automated."

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