Seagate Case Study Effective Global Strategic Resourcing Analysis The key to a successful supply chain and its integration with customers and supplies lies in its ability to communicate wants, needs, and realities. Seagate has taken communication to its highest level by creating visibility at every level of its supply chain. This visibility is the Holy Grail for Seagate because it is a form of communication that breeds trust and transparency throughout every level of its supply chain.
This visibility has been bred through heavy investments in IT infrastructure, employee, supplier, subcontractor, and customer education, capital expenditures on research and development, and even bucking supply chain trends through vertical integration with subcontractors. Karl Chicca is quoted as saying, “Electronic connectivity gives us the visibility up and down the supply chain, so we don’t have to generate new capacity every time there is a request for more product. (Cohen & Roussel, 2005) This key concept of visibility both up and down the supply chain keeps the manufacturing process and the inventory allocation the flexibility it needs to react quickly to market changes. Seagate has worked to combine legacy systems and multiple ERP’s acquired over the years into just two systems, with a focus on further refinement to one system for all ERP needs. They have made this a core requirement and thus have excelled and created a core competency within the organization.
This visibility and higher form communication is what enables Seagate to achieve real-time demand management, and lower reliance on demand forecasts. As stated by Cohen and Roussel (2005), “Seagate’s ambitious goal is to ship to real-time changes in demand – not to plans or forecasts. This means that the company has to monitor the economy, the high-tech industry, and the information technology subset of the industry to get a sense of which way demand is flowing. Economists, compliance officers, IT professionals, and engineers must be employed to keep the supply chain relevant and are just as important to the process as the manufacturing line. While some suppliers have been resistant to the changes of Seagate they have tried to mitigate risks through investing in what it calls “factory of the future” alliance. (Cohen & Roussel, 2005) This investment has created a fully automated production line(s) that can manufacture any drive at any time on any line.
Visibility backed by technology has helped keep flexibility and absorb some of the risks associated with real-time demand supply pulls. With such a vast network of suppliers, subcontractors, and VMI hubs around the globe, Seagate has many compliance issues to consider and deal with daily. Along with social and governmental compliance comes ethical compliance and considerations. Seagate faces customs duties and must stay abreast of any changes to governing laws of each nation it imports and exports to; this simple requirement could involve an entire department of personnel devoted to research and classification.
In the US alone you have government bodies like the CBP (Customs and Border Patrol), FTC (Federal Trade Commission), FCC (Federal Communications Commission), DHS (Department of Homeland Security), and many others, but this is only the US. Many countries have their own versions of these organizations and Seagate must remain compliant with them all to avoid fines and levies. Seagate could do this for their selves or hire out a third party contractor to handle these requirements.
Customs brokers are common, as are companies like ITS (Intertek Testing Services) who handle material compliance and product testing. ITS also does audits for social compliance; this would help Seagate keep up with changing labor landscapes like China, where major changes to labor laws have taken place over the past 12-18 months. Social compliance brings up ethics questions and staying compliant with emerging regulations like the Foreign Corrupt Practices Act.
The FCP Act tracks corruption and tries to mandate fair trade and ethical business from country to country by reducing bribes and unfair, often illegal forms of payment. (Brannen, 2008) Acts like these can create situations of heavy fines and judgments against an organization if the regulations are not kept up on by the organization. These laws and governing rules evolve daily and the US is not the only nation with such regulations. The EU (European Union) has regulations that are far reaching in Europe and affect every nation that is a member of the EU.
As visibility increases with Seagate and all parties of its supply chain, so regulatory compliance should be easier to manage and maintain between parties. Visibility breeds accountability as actions are seen by all levels of the supply chain process. References Brannen, L. (2008). Steering Clear of Foreign Corruption. Business Finance, 14(1), 7. Retrieved from EBSCOhost. Cohen, S. , & Roussel, J. (2005). Strategic Supply Chain Management: The 5 disciplines for top performance. New York. McGraw-Hill.