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September 27, 1999

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Web Puts A Charge Into Electronics

Electronics

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(InformationWeek)Electronics Procurement

(EETimes)Exports rising, especially in hard-disk drives

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At defense contractor Raytheon Co., VP and CIO James Infinger is focusing on using the Internet to boost sales, rather than for productivity enhancement. "There's a significant move within Raytheon to use the Internet for revenue generation," Infinger says. "To help our senior executives see what could be done in this area, we took them on a tour where they met with leading Internet companies, such as eBay, Amazon.com, and Cisco."

Many leading semiconductor and electronics companies are using new supply-chain software to get a more detailed look at their production inputs. Analog Devices, for example, is using part of PeopleSoft Inc.'s manufacturing suite to provide more reliable and aggressive product availability dates to its customers. When its supply-chain software is fully operational, Analog Devices will be able to model capacity and routing for thousands of individual parts. The model will require 4 Gbytes to 8 Gbytes and must be RAM-resident on a fast server to run within a reasonable time, Analog Devices' Loh says.

Conexant is using Aspen Technology Inc.'s MIMI supply-chain software to do sophisticated supply and demand forecasting, replacing a process that once was done with spreadsheets. AspenTech's software enables Conexant to do what-if scenarios involving future spikes in demand or capacity constraints. This enables the company to evaluate alternative plans and schedules quickly and see the financial and operational impact across the organization.

Several major companies in the electronics and semiconductor industries are evaluating middleware to interconnect disparate systems and draw out information from databases to post on the Web. The middleware market is in its early stages but is expected to mushroom during the next several years. In its annual technology forecast, the consulting arm of PricewaterhouseCoopers says the worldwide market for middleware is expected to increase more than 400% between 1997 and 2002.

"Currently, you have islands of automation that are connected by drawbridges," says Conexant's Rangan. "These connections are based on events or on time. Our hope is that these drawbridges become permanent bridges that are always open for the flow of information and that there are no toll fees."

Companies in the industry are continuing to expand their ERP systems. These projects have been especially challenging for companies that have recently acquired other firms, been spun off from a parent company, or have separate, diverse divisions. Raytheon, for example, is in four lines of business: aircraft, commercial electronics, systems, and engineering and construction. Raytheon's defense electronics business represents the combination of the former defense operations of Hughes Electronics Corp. and the defense assets of Texas Instruments, Raytheon E-Systems, and Raytheon Electronics Systems.

"We have two live instances of SAP running every functionality," says Infinger. "We brought corporate up on financials and procurement and aim to have all the companies implemented over the next three years."

Johnson Controls is using QAD's MFG/Pro-an integrated global supply-chain management product that includes manufacturing, distribution, financial, and service and support management applications-to help manage 58 plants that supply automotive seats to almost every major automaker in the world. There are dozens of configurations for car seats, and Johnson Controls has to deliver finished seats to an automaker's assembly plant within two hours from the time they are ordered. The penalty Johnson Controls has to pay for being late is $9,000 per minute, which gives new meaning to the phrase "just-in-time" delivery. Clearly, operating a large number of plants around the world under such strict time constraints requires reliable ERP software to integrate manufacturing, distribution, and financial management.

Having completed its implementation of an Oracle ERP system in its finance and order management areas about a year ago, Tektronix is implementing front-office applications such as marketing, sales, and customer service. It has installed worldwide customer service automation software from Metrix Inc. The software gives Tektronix a worldwide view of customer calls, returns for repair, and service inventories. The software can be used to value components that are exchanged when a defective part is replaced.

CIO Vance says the Metrix software has been integrated with the company's Oracle applications. The company is now working to make the system accessible via the Web. "Of all of the enterprise applications, service is where it is most important to have a thin, browser-based front end," he says. "It's best to use a browser, as opposed to your own proprietary front end. By providing Web-enabled applications, we support software our customers already have and know how to use."

The net result of expanded ERP implementations at semiconductor and electronics companies has been reduced inventory levels, improved turnaround time, and more accurate customer service. CIOs noted, however, that it's important to change or eliminate inefficient procedures before installing an ERP system, since the failure to do so results in doing a bad process faster.