One-Touch Supply Chain

Close to its fourth year of operation, Sun Microsystem’s One-Touch Supply Chain program spans all aspects of the fulfilment supply chain, from order entry through to customer acceptance.

By automating supply chain processes, Sun enables suppliers to ship products directly to customers, reducing the need to plan and hold stock in a distribution centre.

According to Eugene McCabe, Sun Microsystems executive VP, Worldwide Operations, who recently visited Australia, the model increases the predictability of shipments, because vendors can build products based on actual customer orders, rather than on sales forecasts.

“Since implementation, Sun has seen excellent savings, particularly in the areas of distribution spend and inventory holding cost,” McCabe says. “Added benefits to customers include predictability, reliability and speed.”

Sun now ships more than 50 per cent of orders directly to customers from suppliers, reducing Logistics costs by 20 per cent and finished goods inventory by as much as 40 per cent.

Sun has also refined its fulfilment architecture to improve customer predictability performance by more than 10 per cent.

McCabe says his primary aim is to take the complexity out of Supply Chain and Logistics management. “Sun outsources its supply chain,” he explains.

“Products ship directly to the end user via partners rather than Sun holding the stock. As a result Sun doesn’t own any warehouses globally.”

“Sun is very transparent with its information,” McCabe says. “We work in partnership with suppliers so they know in real-time when an order has been received. Such sharing of information is vital for the modern supply chain.”

McCabe believes Sun is taking 17th century supply chain theory into the internet age. “It’s about common sense and directness,” he says. “My mantra is ‘No materials should leave a supplier unless there is an end customer’.”

Thirty to forty per cent of Sun’s orders are bespoke. The other 60-70% is standard but Sun’s logistics are configured to make them equally easy to make.

“Within the supply chain it’s easy to work out which product families will sell but difficult to predict the variants,” McCabe says.

“For instance England and Australia have different colour preferences. This is a challenge for any global supply chain.”

Eugene McCabe’s supply chain reforms have resulted in a 40 per cent cut in Sun’s inventory and a cut of a third to Cycletime. In addition Sun’s supply chain misses have been cut by a factor of three.

McCabe says supply chain and logistics is a process of constant improvement and if done correctly should be challenging and highly rewarding from a business perspective. “Predictability is a good place,” he quips.

Sun Microsystems currently sources materials from 20 countries. The company uses Oracle ERP but writes its own code for everything.

Eugene McCabe says this system ensures the fastest route from order to end user is taken. “Orders are not touched by Sun but coordinated so orders arrive independently at the right time,” he says.

“This is a unique Sun innovation, not used anywhere else. Sun considered selling this software but is keeping it as a competitive advantage for now.”

With a likely release of late 2008, Sun is currently working on a project which will allow end users to configure and customise software on online orders at the manufacturing level.

“This will remove the arduous task of uploading specific software on to hardware,” McCabe says. “On multiple orders this will be invaluable.”

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