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The document discusses the importance of the hybrid engineering supply chain. It distinguishes traditional supply chain management (SCM) from engineering supply chains, noting SCM overlooks engineering activities. There are two important cycles for products - the acquisition lifecycle and product lifecycle management. The hybrid engineering supply chain is important as it provides flexibility to connect facilities globally as needed. It also helps companies maintain innovation capabilities as outsourcing increases complexity. Pioneering companies like Apple are reengineering acquisition lifecycles through their supply networks.

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A Human Centric Laboratory Interview with Dustin Mattison 3rd July, 2012 Timothy P. Tsai Flow Fusion Research. Confidential
A Human Centric Laboratory Engineering Supply Chain(ESC) 1. How do you distinguish between traditional SCM and the engineering supply chain? 2. What are the two important cycles before a finished product appears to the customer? 3. Can you talk about the importance of the hybrid engineering supply chain? Timothy P. Tsai Flow Fusion Research. Confidential
A Human Centric Laboratory 1.How do you distinguish between traditional SCM and the engineering supply chain? 3 Timothy P. Tsai Flow Fusion Research. Confidential
A Human Centric Laboratory Traditional SCM A Demand-Supply process of managing Plan levels of aggregation and information sources Source locations and products Make production sites and methods Deliver channels, inventory deployment and products Return locations and methods Biz transaction (activities) Procurement, Logistics to response to Sale Source: Supply Chain Council Timothy P. Tsai Flow Fusion Research. Confidential
A Human Centric Laboratory Traditional SCM Considers Engineering as Corrective Action of Quality Return Quality Return is only engineering level transaction in SCOR as reversed PO in Biz transaction Product/process integration between buyers and suppliers are off-the-book operation till surface up to return process in SCOR Engineering is buried behind quality, delinquency, cost, capacity etc. Source: Supply Chain Operations Reference (SCOR速) model Overview - Version 10.0 Timothy P. Tsai Flow Fusion Research. Confidential
A Human Centric Laboratory Supply Chain Deep Behind SCOR Sale Product Component Material Design 100% 60% 80% 20% Demand- Assembly 0 80% 20% 10% Supply Process 0 20% 80% 90% | Multiple industries blue-collar manufacturing Asset-heavy supply | Asset-lite | offshore or chain FAE Customer outsourcing | Piecewise organization | Sale /channel outsourcing | Current Supply Chain Management | Figure 1: An illustration of three- phases outsourcing toward distributed organization 6 Timothy P. Tsai Flow Fusion Research. Confidential
A Human Centric Laboratory SCOR Over Simplified Complexity Involved Production Chain A finished goods (Product such as Mobile phone, PC, etc) to customer is root of the chain network covering multiple industries Component and material industries Design, Assembly, Process industries When the supply chain is going more fragmented, process inter- dependence between the nodes is increasing Problem behind Quality, delinquency, cost, and capacity Out of Procurement, Supplier Relationship, IT capability to handle under SCOR assumption Consequence Turn strategic outsourcing a high risk activity due to over estimated the under layer risk of distributed organization when crossing industries Low degree of freedom of strategic outsourcing. It has very few natural partition in supply chain. CEO either keep the entire biz, sell them all off, or move them out to somewhere can justify the cost Timothy P. Tsai Flow Fusion Research. Confidential
A Human Centric Laboratory 2.What are the two important cycles before a finished product appears to the customer? 8 Timothy P. Tsai Flow Fusion Research. Confidential
A Human Centric Laboratory Cycles Before a Product 2 cycles: with technology & product only Acquisition Lifecycle invokes full technology cycle from early research to sustainment Ref to Defense Acquisition System - DoD 5000 Process Life Cycle - DAP Best practice framework: DoD 4245.7-M Product life Cycle Management (PLM) over Matured Technology Platform Wiki: entire lifecycle of a product from its conception, through design and manufacture, to service and disposal Industrial Supply Chain is less complicated to DoD Acquisition lifecycle is rarely done over supply chain, mostly in-house activities Apple is 1st Enterprise executes Acquisition A generic lifecycle of products cycle over supply chain rewriting history All cases are different in activities level 9 Timothy P. Tsai Flow Fusion Research. Confidential
A Human Centric Laboratory Changing Paradigm to Supply Network Traditionally, Acquisition cycle are all in- house activities Last decade, some companies successfully transformed into supply chain: Boeing: 787 TI: CMOS Ford: automotive They all suffers a lot of pain but sure one of the platform pioneers in their industries can hold position in next Apple: i-series decade 10 Timothy P. Tsai Flow Fusion Research. Confidential
A Human Centric Laboratory Example: DoD 5000 Process Life Cycle Framework 11 Timothy P. Tsai Flow Fusion Research. Confidential
A Human Centric Laboratory The 2 cycles: Core Competency of Innovation Digitization is to transform the activities into a new more productive workflow but not drop it From fully in-house to be connection-oriented virtual enterprises Innovation is effective execution to idea. Without that execution, that is creativity makes no value to revenue in product company Dilemma of being failed to transform: cant response to change, finance instability due to asset-heavy TI vs. Motorola in semiconductor Apple vs. HP in connection platform Ford vs. GM in automotive Suggested Engineering SC to keep the capability SCOR vs. ESC coverage Keep strategic core component, the technology enabler(s) 12 Timothy P. Tsai Flow Fusion Research. Confidential
A Human Centric Laboratory SCOR vs. ESC coverage SCOR ESC Short way Finished goods Semi-finished goods Detail definition Biz level, source/Deliver as Operation level, basic unit is integrated Input / Output of Make, apply operation of to all industries Planning/Engineering/Quality Biz Transaction Only Biz Transaction Parallel to Biz Transaction, execute transaction SC inter-dependence Assume NO Yes Quality Lagging as finance Leading to prevent quality event, put performance inter-dependence under control, as part of spec Engineering Assume NO Integration, Failure Analysis, Yield enhancement etc Planning Demand-Supply continuity Demand-Supply continuity plus inventory quality sampling, virtual Mfg management Timothy P. Tsai Flow Fusion Research. Confidential
A Human Centric Laboratory 3.Can you talk about the importance of the hybrid engineering supply chain? 14 Timothy P. Tsai Flow Fusion Research. Confidential
A Human Centric Laboratory IT Evolution Maturity & Globalization Turning Point 1. The world is confirmed to heading next level of outsourcing when Economic Policy Institute (EPI) said statistics confirmed 1.4M jobs were created overseas by U.S. companies, compared to 1M domestically in year Dec, 2010 (Scott, 2010). Majority of employees growing is overseas or virtual. 2. China became worlds top manufacturing nation, ending 110 year US leadership at May, 2011 3. U.S. reaches $14.3 trillion debt limit and his perfect credit rating was being downgraded from AAA to AA+ with a negative outlook by Standard & Poor at Aug 5th, 2011, the first time ever. 4. Apple has surpassed oil group Exxon to become the world's most valuable company by market capitalization at Aug, 2011; 5. e-commerce is confirmed a persistent activities conducting post-Internet economy where Amazon (20.4%) sites visited by 1 in 5 global internet users, about 282 millions in June, 2011 following with eBay (16.2%) and Alibaba(11.3%) in China (comScore, 2011). 6. Facebook value may soar over $100 Billion and Facebook set to reach 1 BILLION users by 2012 15 Timothy P. Tsai Flow Fusion Research. Confidential
A Human Centric Laboratory Challenges in new Game Plan Governor from doing Competing the nothing to do limited raw something to hold job in material US Raw ODM Material (TWN) Bretton Woods system broken at 70s and deficit raised to $800B at 2007, capital bubble broken in 2008 Make Consumer (China) (US) Lock currency rate to Dollar, Create new industry 30% GDP loan to market cycle (energy, genetic, which drive over capacity in bionic,.. ) Make MAKE, export price flat (Engineering) Build share facility to balance from increasing improve cost structure competition and increasing Equal IT and global cost in China* power between enterprise and SME Note(*): Giles Chance, China and the Credit Crisis: The Emergence of a New World Order Timothy P. Tsai Flow Fusion Research. Confidential
A Human Centric Laboratory Jobs Moving Back? Government Jobs & Innovation Accelerator Challenge $26 Million Multi-Agency Advanced Manufacturing Jobs and Innovation Accelerator Challenge The Obama Administration announces a $26 million Advanced Manufacturing Jobs and Innovation Accelerator Challenge, a partnership between the U.S. Department of Commerces Economic Development Administration and National Institute of Standards and Technology, the U.S. Department of Energy, the U.S. Department of Labors Employment and Training Administration, the Small Business Administration, and the National Science Foundation. This initiative will assist the development and implementation of regionally-driven economic development strategies that support advanced manufacturing and cluster development. In addition to the six partnering agencies, the initiative will leverage technical assistance from up to eight other Federal agencies. Enterprises Apple wants to make products in U.S., but that's not so easy Critics want Apple to manufacture more products in the U.S. CEO Tim Cook does, too. But there's a lot in the way. Reality Entire manufacturing ecosystem has been moved out and not easy to come back Global market also needs global manufacturing capability either next to customer or for taxation purpose Conclusion hybrid engineering supply chain to provide enough Degree of Freedom to connect the facilities where it is when it needed 17 Timothy P. Tsai Flow Fusion Research. Confidential
A Human Centric Laboratory Apple Re-engineering Acquisition Lifecycle to Turn Hardware a 58% PFO Biz, HP 2.5% 1.EMS: Foxconn Factory 1.EMS: Foxconn 2.In-house:A6 CPU design Customer Component Fabless; Service demand demand Samsung Channel Employees Assembly 3.Participatory customers Production 1.EMS: Foxconn Application ~7B paid 4.App Store capital in SC << Kill Microsofts value >> Timothy P. Tsai Flow Fusion Research. Confidential
A Human Centric Laboratory Challenges, Apple as Example Kill your patterns in long value chain Apply eliminates Microsofts value in Wintel value chain by creating Apps Store Re-engineering value chain Simplify value chain: ask Foxcon does more Take technology enabler: A6 CPU, Reserve capacity: hold ~7B paid capital in SC Right Human Capital Multiple disciplines expert on complicated engineering SC Cloud services also complicated engineering complex More challenge to SME when reaching oversea resource and hybrid ESC Some players phasing out ODM industry diminishing. Taiwan ODM only 0.5% of Apple cost structure Product company can't have vertical integration capability both in the 2 cycles and services integration 19 Timothy P. Tsai Flow Fusion Research. Confidential
A Human Centric Laboratory Significant Impact Area Rapid Changing Industries like Consumer Market OEM (129$B) IC & EMS (395$B) going to merge due to TSV(Through-Silicon Via) technology Terminal market ranking from Apple, HP, to RIM, Lennova, Acer etc Rapid Changing Market in SC IT Market Cloud computing in SaaS sector like saleforce.com in Biz Transaction level will continue to grow Loser: SAP New market in Hybrid Engineering SC shall grow Social based collaboration tool such as PM, office in the cloud 4PL players to support core Supply Chain Operation 3-15% of revenue vs. 2-3% of revenue in P&L BPO 20 Timothy P. Tsai Flow Fusion Research. Confidential
A Human Centric Laboratory Supporting Infrastructure Academics Supply Chain System Engineering: Framework Transforming Value Chain in Business Domain into Manageable Virtual Enterprise and Participatory Production Not popular, still in single discipline mentality within SCOR scope Enterprises Pioneers such as Foxconn, Apple, Ford, TI, Boeing,.. One-of-a-kind, lagging indicator to Management Science Government Lagging, should have training facility to rebuild broken chain of engineering development ladder due to moving out manufacturing ecosystem Suggests to create Distributed Manufacturing Center which is share facilities to industries to provide molding services, and bridge to oversea resources 21 Timothy P. Tsai Flow Fusion Research. Confidential

More Related Content

Enginerring Sc Interview With Dustin V1

  • 1. A Human Centric Laboratory Interview with Dustin Mattison 3rd July, 2012 Timothy P. Tsai Flow Fusion Research. Confidential
  • 2. A Human Centric Laboratory Engineering Supply Chain(ESC) 1. How do you distinguish between traditional SCM and the engineering supply chain? 2. What are the two important cycles before a finished product appears to the customer? 3. Can you talk about the importance of the hybrid engineering supply chain? Timothy P. Tsai Flow Fusion Research. Confidential
  • 3. A Human Centric Laboratory 1.How do you distinguish between traditional SCM and the engineering supply chain? 3 Timothy P. Tsai Flow Fusion Research. Confidential
  • 4. A Human Centric Laboratory Traditional SCM A Demand-Supply process of managing Plan levels of aggregation and information sources Source locations and products Make production sites and methods Deliver channels, inventory deployment and products Return locations and methods Biz transaction (activities) Procurement, Logistics to response to Sale Source: Supply Chain Council Timothy P. Tsai Flow Fusion Research. Confidential
  • 5. A Human Centric Laboratory Traditional SCM Considers Engineering as Corrective Action of Quality Return Quality Return is only engineering level transaction in SCOR as reversed PO in Biz transaction Product/process integration between buyers and suppliers are off-the-book operation till surface up to return process in SCOR Engineering is buried behind quality, delinquency, cost, capacity etc. Source: Supply Chain Operations Reference (SCOR速) model Overview - Version 10.0 Timothy P. Tsai Flow Fusion Research. Confidential
  • 6. A Human Centric Laboratory Supply Chain Deep Behind SCOR Sale Product Component Material Design 100% 60% 80% 20% Demand- Assembly 0 80% 20% 10% Supply Process 0 20% 80% 90% | Multiple industries blue-collar manufacturing Asset-heavy supply | Asset-lite | offshore or chain FAE Customer outsourcing | Piecewise organization | Sale /channel outsourcing | Current Supply Chain Management | Figure 1: An illustration of three- phases outsourcing toward distributed organization 6 Timothy P. Tsai Flow Fusion Research. Confidential
  • 7. A Human Centric Laboratory SCOR Over Simplified Complexity Involved Production Chain A finished goods (Product such as Mobile phone, PC, etc) to customer is root of the chain network covering multiple industries Component and material industries Design, Assembly, Process industries When the supply chain is going more fragmented, process inter- dependence between the nodes is increasing Problem behind Quality, delinquency, cost, and capacity Out of Procurement, Supplier Relationship, IT capability to handle under SCOR assumption Consequence Turn strategic outsourcing a high risk activity due to over estimated the under layer risk of distributed organization when crossing industries Low degree of freedom of strategic outsourcing. It has very few natural partition in supply chain. CEO either keep the entire biz, sell them all off, or move them out to somewhere can justify the cost Timothy P. Tsai Flow Fusion Research. Confidential
  • 8. A Human Centric Laboratory 2.What are the two important cycles before a finished product appears to the customer? 8 Timothy P. Tsai Flow Fusion Research. Confidential
  • 9. A Human Centric Laboratory Cycles Before a Product 2 cycles: with technology & product only Acquisition Lifecycle invokes full technology cycle from early research to sustainment Ref to Defense Acquisition System - DoD 5000 Process Life Cycle - DAP Best practice framework: DoD 4245.7-M Product life Cycle Management (PLM) over Matured Technology Platform Wiki: entire lifecycle of a product from its conception, through design and manufacture, to service and disposal Industrial Supply Chain is less complicated to DoD Acquisition lifecycle is rarely done over supply chain, mostly in-house activities Apple is 1st Enterprise executes Acquisition A generic lifecycle of products cycle over supply chain rewriting history All cases are different in activities level 9 Timothy P. Tsai Flow Fusion Research. Confidential
  • 10. A Human Centric Laboratory Changing Paradigm to Supply Network Traditionally, Acquisition cycle are all in- house activities Last decade, some companies successfully transformed into supply chain: Boeing: 787 TI: CMOS Ford: automotive They all suffers a lot of pain but sure one of the platform pioneers in their industries can hold position in next Apple: i-series decade 10 Timothy P. Tsai Flow Fusion Research. Confidential
  • 11. A Human Centric Laboratory Example: DoD 5000 Process Life Cycle Framework 11 Timothy P. Tsai Flow Fusion Research. Confidential
  • 12. A Human Centric Laboratory The 2 cycles: Core Competency of Innovation Digitization is to transform the activities into a new more productive workflow but not drop it From fully in-house to be connection-oriented virtual enterprises Innovation is effective execution to idea. Without that execution, that is creativity makes no value to revenue in product company Dilemma of being failed to transform: cant response to change, finance instability due to asset-heavy TI vs. Motorola in semiconductor Apple vs. HP in connection platform Ford vs. GM in automotive Suggested Engineering SC to keep the capability SCOR vs. ESC coverage Keep strategic core component, the technology enabler(s) 12 Timothy P. Tsai Flow Fusion Research. Confidential
  • 13. A Human Centric Laboratory SCOR vs. ESC coverage SCOR ESC Short way Finished goods Semi-finished goods Detail definition Biz level, source/Deliver as Operation level, basic unit is integrated Input / Output of Make, apply operation of to all industries Planning/Engineering/Quality Biz Transaction Only Biz Transaction Parallel to Biz Transaction, execute transaction SC inter-dependence Assume NO Yes Quality Lagging as finance Leading to prevent quality event, put performance inter-dependence under control, as part of spec Engineering Assume NO Integration, Failure Analysis, Yield enhancement etc Planning Demand-Supply continuity Demand-Supply continuity plus inventory quality sampling, virtual Mfg management Timothy P. Tsai Flow Fusion Research. Confidential
  • 14. A Human Centric Laboratory 3.Can you talk about the importance of the hybrid engineering supply chain? 14 Timothy P. Tsai Flow Fusion Research. Confidential
  • 15. A Human Centric Laboratory IT Evolution Maturity & Globalization Turning Point 1. The world is confirmed to heading next level of outsourcing when Economic Policy Institute (EPI) said statistics confirmed 1.4M jobs were created overseas by U.S. companies, compared to 1M domestically in year Dec, 2010 (Scott, 2010). Majority of employees growing is overseas or virtual. 2. China became worlds top manufacturing nation, ending 110 year US leadership at May, 2011 3. U.S. reaches $14.3 trillion debt limit and his perfect credit rating was being downgraded from AAA to AA+ with a negative outlook by Standard & Poor at Aug 5th, 2011, the first time ever. 4. Apple has surpassed oil group Exxon to become the world's most valuable company by market capitalization at Aug, 2011; 5. e-commerce is confirmed a persistent activities conducting post-Internet economy where Amazon (20.4%) sites visited by 1 in 5 global internet users, about 282 millions in June, 2011 following with eBay (16.2%) and Alibaba(11.3%) in China (comScore, 2011). 6. Facebook value may soar over $100 Billion and Facebook set to reach 1 BILLION users by 2012 15 Timothy P. Tsai Flow Fusion Research. Confidential
  • 16. A Human Centric Laboratory Challenges in new Game Plan Governor from doing Competing the nothing to do limited raw something to hold job in material US Raw ODM Material (TWN) Bretton Woods system broken at 70s and deficit raised to $800B at 2007, capital bubble broken in 2008 Make Consumer (China) (US) Lock currency rate to Dollar, Create new industry 30% GDP loan to market cycle (energy, genetic, which drive over capacity in bionic,.. ) Make MAKE, export price flat (Engineering) Build share facility to balance from increasing improve cost structure competition and increasing Equal IT and global cost in China* power between enterprise and SME Note(*): Giles Chance, China and the Credit Crisis: The Emergence of a New World Order Timothy P. Tsai Flow Fusion Research. Confidential
  • 17. A Human Centric Laboratory Jobs Moving Back? Government Jobs & Innovation Accelerator Challenge $26 Million Multi-Agency Advanced Manufacturing Jobs and Innovation Accelerator Challenge The Obama Administration announces a $26 million Advanced Manufacturing Jobs and Innovation Accelerator Challenge, a partnership between the U.S. Department of Commerces Economic Development Administration and National Institute of Standards and Technology, the U.S. Department of Energy, the U.S. Department of Labors Employment and Training Administration, the Small Business Administration, and the National Science Foundation. This initiative will assist the development and implementation of regionally-driven economic development strategies that support advanced manufacturing and cluster development. In addition to the six partnering agencies, the initiative will leverage technical assistance from up to eight other Federal agencies. Enterprises Apple wants to make products in U.S., but that's not so easy Critics want Apple to manufacture more products in the U.S. CEO Tim Cook does, too. But there's a lot in the way. Reality Entire manufacturing ecosystem has been moved out and not easy to come back Global market also needs global manufacturing capability either next to customer or for taxation purpose Conclusion hybrid engineering supply chain to provide enough Degree of Freedom to connect the facilities where it is when it needed 17 Timothy P. Tsai Flow Fusion Research. Confidential
  • 18. A Human Centric Laboratory Apple Re-engineering Acquisition Lifecycle to Turn Hardware a 58% PFO Biz, HP 2.5% 1.EMS: Foxconn Factory 1.EMS: Foxconn 2.In-house:A6 CPU design Customer Component Fabless; Service demand demand Samsung Channel Employees Assembly 3.Participatory customers Production 1.EMS: Foxconn Application ~7B paid 4.App Store capital in SC << Kill Microsofts value >> Timothy P. Tsai Flow Fusion Research. Confidential
  • 19. A Human Centric Laboratory Challenges, Apple as Example Kill your patterns in long value chain Apply eliminates Microsofts value in Wintel value chain by creating Apps Store Re-engineering value chain Simplify value chain: ask Foxcon does more Take technology enabler: A6 CPU, Reserve capacity: hold ~7B paid capital in SC Right Human Capital Multiple disciplines expert on complicated engineering SC Cloud services also complicated engineering complex More challenge to SME when reaching oversea resource and hybrid ESC Some players phasing out ODM industry diminishing. Taiwan ODM only 0.5% of Apple cost structure Product company can't have vertical integration capability both in the 2 cycles and services integration 19 Timothy P. Tsai Flow Fusion Research. Confidential
  • 20. A Human Centric Laboratory Significant Impact Area Rapid Changing Industries like Consumer Market OEM (129$B) IC & EMS (395$B) going to merge due to TSV(Through-Silicon Via) technology Terminal market ranking from Apple, HP, to RIM, Lennova, Acer etc Rapid Changing Market in SC IT Market Cloud computing in SaaS sector like saleforce.com in Biz Transaction level will continue to grow Loser: SAP New market in Hybrid Engineering SC shall grow Social based collaboration tool such as PM, office in the cloud 4PL players to support core Supply Chain Operation 3-15% of revenue vs. 2-3% of revenue in P&L BPO 20 Timothy P. Tsai Flow Fusion Research. Confidential
  • 21. A Human Centric Laboratory Supporting Infrastructure Academics Supply Chain System Engineering: Framework Transforming Value Chain in Business Domain into Manageable Virtual Enterprise and Participatory Production Not popular, still in single discipline mentality within SCOR scope Enterprises Pioneers such as Foxconn, Apple, Ford, TI, Boeing,.. One-of-a-kind, lagging indicator to Management Science Government Lagging, should have training facility to rebuild broken chain of engineering development ladder due to moving out manufacturing ecosystem Suggests to create Distributed Manufacturing Center which is share facilities to industries to provide molding services, and bridge to oversea resources 21 Timothy P. Tsai Flow Fusion Research. Confidential