The Challenge of Lean
Collaboration for OEMs,
Robert J. Bowman
A conversation with Jay Hollenbeck, director of business solutions with
The push to outsource high-tech manufacturing has
given rise to a number of electronics manufacturing
service (EMS) providers, which make everything
from cell phones to video games to key components
for networking and critical business systems.
Among the major players in that space is Milpitas,
Calif.-based Flextronics. Like most of its biggest competitors, the company has long since evolved from a
pure manufacturer of components to a provider of
such value-added services as product design, fabrication, assembly, testing and contract logistics.
Operating on a global scale, Flextronics is constantly challenged by the need to rein in costs while
adhering to high standards of product quality and
customer service. It has pushed hard to implement
quality-control efforts such as Lean and Six Sigma
throughout its operation. At the same time, with so
much production taking place in low-cost regions
such as China, Flextronics has sought to offset the
drawbacks that come from being so far from the customer. In this interview, conducted in San Francisco
at the “Best Practices” Conference of the Institute of
Business Forecasting and Planning, Jay Hollenbeck, Flextronics’ director of business solutions,
offers his opinion as to what’s missing in the relationship between many original equipment manufacturers and their contract manufacturers. He also
discusses how the two parties can enable the real-time exchange of data in order to drive day-to-day
Q: What is the biggest challenge facing supply-chain collaboration today?
Hollenbeck: I’d say it’s the following of
decision-making and information across supply
chains. Unfortunately, the outsourcing trend has
negatively impacted some of the great efforts that
have been made in developing lean supply chains.
Companies need to be able to view information
outside their four walls; the information that was
once part of their infrastructure is now viewed at a
distance. The delay in understanding the impact of
decisions is caused by that fragmentation of the
Q: Outsourcing is not a new phenomenon by
any means—it’s been going on for decades. But is
it getting harder and harder to enact true collaboration among these multi-partner supply chains?
And if so, why?
Hollenbeck: It’s not [necessarily] getting
harder. Some of our best customers still do an
excellent job of it. They’re able to understand what
the impact of their decisions are on the supply
chain. Rather than view supply-chain collaboration
as micro-managing the execution of purchase
orders and production schedules, they understand
the need to measure what’s going on at a macro
level. They have to know how their decision-making is influencing the supply chain, and make
strategic decisions that impact it—rather than rely
on their contract manufacturing partners to make
those strategic decisions for them.
Q: Is that the key to how companies differentiate
themselves in supply-chain collaboration—getting
this macro view of things?
Hollenbeck: Yes. Specifically, some of the
companies that truly differentiate themselves will
take ownership for inventory turns at their manufacturing services provider. They’ll also try to measure the volatility in the operational plan that they
send out. And they’ll aggressively drive down component lead times, rather than just making sourcing
decisions based on cost. They truly have a strategic
view of the supply chain, and they take ownership
for making those decisions.
Q: How do they achieve that level of visibility? I
take it that means you have to be collaborating
with customers from your end in a very strong,
Hollenbeck: Right. They build the information that we share from the ground up. And they