Continuous and Sustainable Improvement Through SCPM

In 2001, electronics manufacturing services (EMS) provider Flextronics International Ltd. was facing an exciting, but challenging environment. Fueled by the outsourcing trend of high tech original equipment manufacturers (OEMs) like HP, 3Com, and Nokia, Flextronics’ annual revenues topped $12bn after three years of annual growth in excess of 50%. However, orders across the EMS industry were slowing down and, at the same time, OEMs continued to press for significant reductions in manufacturing and direct materials costs. Unfortunately, Flextronics did not always source at the lowest available prices, despite having purchasing power that often exceeded their OEM customers. Flextronics’s disparate information technology (IT) systems led to purchasing compliance problems that made it difficult to identify and correct sourcing problems with high prices, or take advantage of low prices available in the market. Why? All of the top EMS providers, including Flextronics, had predominately grown through the acquisition of their smaller peers and OEM facilities. Management priorities had traditionally been on shipping product and capturing market share, not on integrating processes and information systems across an extensive global network.