Electronics industry brief

Electronics Industry Brief
September 2002
© 2002 IBM Corporation Electronics Industry Brief

Executive Summary
Definition
There are subsegments of electrical and electronic manufacturing companies that provide a variety of
products and services:
w Microelectronics
w Technology Systems
w Telecommunication Systems
w Hi-Tech Equipment
w Electrical
w Consumer Electronics
w Home Appliances
w Industrial Equipment
w Energy Equipment and Machinery
w Contract Electronic Manufacturing
Industry Description
The electric and electronics manufacturing industries have several business drivers that need to be
considered:
w Customer demand for choices is increasing. Electronics manufacturers must shift to a
consumer-driven model.
w Mergers and acquisitions are increasing to address diverse markets and reduce costs.
w Divestitures are on the rise. Many companies are selling portions of their business to focus on
core competencies.
w Global supply chains are commonplace in the industry. This has increased the scope of
competition and emphasized focus on reducing production costs and increase efficiencies.
w Time to market is imperative to electronics manufacturers. The commercialization of research
and outsourcing of pieces of the production are increasing manufacturing efficiencies for electric
and electronic industries.
Industry Trends
The electronics industry has seen similar trends in the Americas, Europe/Middle East/Africa and Asia
Pacific :
w The largest growth region in the world is the Americas region. The industry in North America is $11.9
billion in 1998, growing to $16.3 billion in 2001 (11.1% CGR). Deregulation is complete. $21.5B is the IT
opportunity for 2002.
w Europe is a diverse market with diverse issues causing variation in pricing, warranty, and language
issues. The industry in Europe is $8.7 billion in 1998, growing to $10.9 billion in 2001 (7.8% CGR).
There has also been market consolidation around large players. Deregulation has been completed in
Europe, increasing competition.
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w Similar to Europe, Asia Pacific is composed of a diverse market causing pricing, warranty, and
language issues. The industry is $7.8 billion in 1998, growing to $9.4 billion in 2001 (6.4% CGR). Asia
has also seen market consolidation around large players.
Solutions
Electronics manufacturers need to leverage technology to provide better service to their customers.
w e-business solutions integrate knowledge across the supply chain. Easy access to information
on customers, products and trends can be a competitive advantage by offering better customer
service, accurate product data and up to date forecasts.
w e-Procurement solutions provide electronics companies with access to parts catalogs and to
place orders at anytime with contracted distributors. With the information collected from these
systems, companies can provide the value-added services of manufacturer negotiation, rebate
management, inventory planning and reporting. Purchasing volume can be leveraged and more
emphasis can be placed on product negotiation and selection.
w Product Lifecycle Management (PLM): end to end services from strategy to integration which
enables manufacturers to consider the entire lifecycle of product during design phase, and allows
for planning of post sale maintenance and telematics enabled problem diagnosis all of which
increase after sales revenue.
w Warehouse Management Systems are software packages that help distributors optimize their
use of warehouse space and warehouse labor. In addition, warehouse systems dramatically
reduce mispicks.
w Wireless computing is evolving in the electric and electronics industry. Radio Frequency (RF)
systems and UPC barcoding allow for non-contact reading and are effective in manufacturing.
w Contract Outsourcing is slated to grow from 23% today to 40% by 2004 in the electronics
industry according to IBM. Companies are interested in creating efficiencies in their processes,
and outsourcing processes where they lack expertise.
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Key Themes in Electronics and Electrical Manufacturing
w Customer service is evolving to a new level of responsiveness. Manufacturers need to react
quickly to customers’ wants and needs. A sales force in the field needs to have quick and easy
access to ordering data and inventory levels via wireless hand-helds. At the warehouse, these
devices can be used to supplement Warehouse Management Systems’ inventory functions and
picking capabilities.
w Time to market is extremely important to electronics manufacturers. Better management of the
engineering and supply chains assure less time for product development and reduced costs.
w A global supply chain is necessary to remain competitive. Through mergers and acquisitions,
competition has no borders. Creating efficiencies in the supply chain is critical to an electronic or
electronics manufacturer’s success.
w Use of design resources to effectively minimize redundancy and maximize productivity and
collaboration with business partners to resolve design issues quickly improves the product life
cycle.
w In order to reduce operation costs, electronic and electrical manufacturers are looking to
optimize warehouse operations. Installing a Warehouse Management System (WMS) would
reduce mispicks and improve warehouse operations through space and labor efficiencies.
w Outsourcing pieces of the manufacturing process increases efficiencies and reduces costs.
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TABLE OF CONTENTS
6912.0 Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6811.0 Associations and Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6710.0 White Papers for Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
569.0 Vendors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
518.0 Recent Initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.0 IT Spending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
366.0 e-business in Electronics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
275.0 Business Drivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
264.0 Suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
253.0 Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
202.0 Electronics Manufacturers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
61.0 An Introduction to Electronics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4Key Themes in Electronics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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1.0 An Introduction to Electronics Manufacturing
1.1 Value Statement for Electronics Manufacturing
Bringing the right products to market at the right time and price requires the enterprise to have an intimate
relationship with its customers, supplies, and partners. Electronics manufacturing companies are respond-
ing to the business drivers with the following strategies:
Ÿ Better understand customers and their wants and needs
Ÿ Offer more configurable product platforms to increase design and manufacturing commonality
Ÿ Execute end-to-end supply chain management to effectively manage supply and demand
Ÿ Drive component parts reuse in product design
Ÿ Use design resources effectively to minimize redundancy and maximize productivity
Ÿ Collaborate with business partners to resolve design issues quickly
Ÿ Evaluate manufacturing outsourcing options to reduce costs
Ÿ Resolve manufacturability issues quickly
Electronics manufacturing companies deal with many issues. Business problems that CEOs and senior
management are concerned with include:
Ÿ Speed to market
Ÿ Market share
Ÿ Product innovation
Ÿ Cost and quality
Ÿ Competitive position and industry leadership
Ÿ Emerging technologies that may render obsolete significant parts of existing product portfolios
Ÿ Services which complement products to provide total solutions Shareholder value
Ÿ Customer satisfaction, customer service, and customer loyalty
Ÿ Internet influences on current business model
Ÿ New and emerging competitors
The functional executives and managers of electronics manufacturers are concerned with:
Ÿ Providing competitive products continuously
Ÿ Integrating hardware and software product components
Ÿ Reducing complexity in product design and manufacturing
Ÿ Controlling yields and costs
Ÿ Understanding customer wants and needs, and consumer wants and needs
Ÿ Keeping pace with technological changes
Ÿ Coping with business model complexity and change
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1.2 Types of Electronics Manufacturing Companies
There are sub segments of electrical and electronic manufacturing companies that provide a variety of
products and services.
Companies that perform manufacturing or assembly of electronics products for
other electronic companies
Contract Electronic
Manufacturing
Power generation and distribution, high- and low-voltage equipment, and
transportation
Energy Equipment and
Machinery
Detection, navigation, measurement, and medical systemsIndustrial Equipment
“White products” such as refrigerators, washing machines and other home
appliances
Home Appliances
"Brown products:" home entertainment components and gadgetsConsumer Electronics
Lamps, circuit breakers, etc.
Electrical
PCs, semiconductors, disk drives, etc.
Hi-Tech Equipment
PABX, mobiles, and switches
Telecommunication
Systems
CPU, DASD, and peripheralsTechnology Systems
Chips, microprocessors, electronic, and optical componentsMicroelectronics
Major ProductsSegments
The subcategories can be further divided according to the established SIC codes. IBM uses industry codes
LA for electrical manufacturing companies and LB for electronic manufacturing companies. Some
companies in this industry may be code MC (Fabrication and Assembly) based on other products and
services provided by the company. Some examples are:
Electronic computers3571
LBResidential lighting fixtures3645
LAElectric lamps3641
LAHousehold appliances3630
LAMotors and generators3621
LAOffice, computing and accounting3500
IBM
Industry
Code
DescriptionSIC Code
The growth rate in this industry is not consistent from one segment to the next, and, even within a segment,
there can be variations in growth rates across different types of products. These market segments do not
exist in isolation from one another. The price of semiconductors obviously has a significant effect across all
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segments. Moreover, companies have more than one kind of relationship to each other. One technology
systems company can be both a competitor and a business partner with another company, while both are
customers of a company producing microprocessors. IBM is one of the best examples of this kind of dual or
triple role within the industry.
Microelectronics
The microelectronics segment is divided into semiconductors (chips and microprocessors), passive devices
(capacitors, resistors, and inductors), electromechanical devices (electronic and optical components), and
packaging (laminates and wire boards). Typically, customers of microelectronics companies are other
manufacturers.
Included in the microelectronics segment is the semiconductor industry, which is composed of the manufac-
turers of a variety of semiconductors including microprocessors; programmable logic devices (PLDs);
application-specific integrated circuits (ASIC); memory products such as static random access memory
(SRAM), dynamic random access memory (DRAM), and flash memory; digital signal processors (DSP);
chip sets; and semiconductor equipment manufacturers.
Companies in the microelectronics segment are asset intensive, which requires expensive capacity to
manufacture their products. Typically, they manufacture value-added products that have long production
cycle times, requiring complex manufacturing.
Industry composition
The following table from IBM illustrates the major application areas that use semiconductors and their
percentage of the segment.
3%Aerospace
5%Transportation
9%Industrial
17%Communications
18%Consumer electronics
48%Data processing
PercentageIndustry Composition
Key Players
Typical players and accounts in the microelectronics segment are:
• NA: Motorola, Intel, IBM, AMD, Micron, National Semiconductor, and TI
• EMEA: Siemens, SGS Thomson, and Philips
• AP: Fujitsu, Hitachi, Matsushita, Mitsubishi, NEC, Sharp, Toshiba, Sony, Hyundai & LG, and
Samsung
Moore's Law
The microelectronics industry is driven by what is now known as Moore's Law. Intel's founder and chairman,
Gordon Moore, made a prediction that the number of transistors on a chip would double every 18 months.
This prediction has held true since 1965, and according to IBM Research, should continue to hold true for
the next five years. .
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In a related prediction in 1997, Andy Grove, Intel's CEO, predicted that by the year 2011 clock speeds
would increase by 50 fold from the current 200 Mhz to 10,000 MHz. Already in 2002, 2,000 MHz (2 Ghz)
microprocessor chips are common in new desktops.
As a result, the product life cycle is becoming shorter due to newer and better technology available.
Consumers want the best available product at the beginning of a life cycle.
Fabless
Companies in the fabless segment, which is composed of companies that do not fabricate their own
products, have a high growth rate. It is more cost-effective for these companies to rely on outside foundries
to fabricate their products so that they can concentrate on developing new ideas and new products. The
fabless semiconductor industry had sales of $11 billion in 1998 and is expected to grow to $80 billion in
2003, an average annual growth rate of 30%. The average fabless company's gross margin is 50%. It is
expected that 150 new fabless companies will open for business in the next five years. In the fabless
segment, the primary competency is R&D. Some fabless companies spend 20% of revenue on R&D.
Although the fabless companies have a high growth rate, there are drawbacks to being a fabless company.
A fabless company can have a difficult time getting capacity because there are so many other fabless
companies trying to get their products manufactured. Because fabless companies do not control the
manufacturing process, they run the risk of marketing inferior products.
The microprocessor industry operates within a predictable process cycle that follows these steps:
ŸMicroprocessor manufacturers anticipate these new requirements, and they develop faster and more power-
ful chips.
ŸUsing state-of-the-art processing facilities, chip makers that are first to the market can earn huge profits.
These profits are then used to build new manufacturing plants (fabs), which can cost in excess of $2 billion
each.
In today's semiconductor manufacturing environment, manufacturers must perform under intense competitive
pressures, while achieving higher productivity levels, better quality, lower cost, faster response to market
dynamics, and better integration of advanced technologies for the plant floor.
The microelectronics industry has been experiencing continuous price decreases. The consumer is
demanding cheaper prices, smaller products, and lighter products. Supporting these demands is important
or the industry loses business.
Challenges require more sophisticated tools, processes, and standards for the design and manufacture of
electronic products. Business challenges and opportunities in the microelectronics segment include the
following points:
• Integrated Product Development (IPD), Enterprise Resource Planning (ERP) and Supply Chain
Management (SCM) solutions are common.
• Fabless companies are primarily concerned with time to market issues and foundries are concerned
with cost issues. For fabless companies, the primary e-business opportunities are IPD
e-collaboration, hosted systems, and data storage and mining while for foundries the primary oppor-
tunities are establishing trading communities, e-procurement, and manufacturing equipment
integration.
• Challenges include satisfying new business management processes, such as foundry business
operations, intercompany operations, fabless business operations, and manufacturing relations
around the world.
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• There has been a need to upgrade fabrication facilities and equipment to new technologies faster,
such as submicron technology, 300 mm wafer fabrication, and automated material handling
systems.
• It is more challenging to sell supply chain solutions to an engineering-oriented firm. The senior
management of a microelectronics company is engineering oriented because of their product devel-
opment background. Their major concern is to develop advanced technology, such as being the first
to market with a 2.5 micron DRAM chip that supports 500 MB.
• The need for higher performance, lower power, pocket-sized designs is being driven primarily by the
PC and communications industries.
• The semiconductor manufacturing community is focusing on the ability to manufacture new
products more cost-effectively and with higher degrees of product mix. Manufacturers that leverage
new, higher revenue process technologies (SOC, SOI, SiGe, copper interconnect, and deep submi-
cron) to maximize production profits must be willing to improve levels of automation and yield
management techniques to ensure rapid yield and production ramp up.
“Time to market has been a big issue throughout the electronics industry. One of the challenges that the
industry has is deciding which products should be manufactured on a continuous basis and which on a
discrete scheduled basis to handle market changes and shortened product life cycles. The ability to tie
customer point of sale data, via a company's advanced planning and scheduling system and ERP system to
the plant floor, is providing significant competitive advantage to leading-edge companies.”
Don Ponge, Solutions Manager, IBM Electronics Competency Center
Technology Segment
Companies in the technology systems segment manufacture CPUs, DASD, and peripherals. Their custom-
ers are both businesses and consumers. These companies deal with complex supply channels, including
suppliers, manufacturers, distributors, and retailers, as well as direct channels, such as consumers.
Decreasing the time for receiving parts from other manufacturers becomes a challenging issue in response
to time to market.
Technology systems companies use two manufacturing processes: assemble-to-order and assemble-to-
stock. Assemble-to-order is a manufacturing approach that emphasizes final assembly of products only for
immediate delivery. Inventory consists of parts, not products. Assemble-to-stock is a manufacturing
approach that completes the assembly of products and holds them as inventory until they are needed to
fulfill orders. The components, or parts, are assembled in fairly simple manufacturing processes. Raw
materials, component parts, and even subassemblies are often outsourced to contract equipment
manufacturers.
Key Players
Typical players and accounts in the technology systems segment are:
• NA: HP, Dell, Compaq, and IBM
• EMEA: Siemens, Bull, and Olivetti
• AP: Sony and Samsung
Challenges and Opportunities
Many companies in the technology systems segment are facing a transition to mass customization. The
term mass customization was first coined by Stan Davis in his book Future Perfect. It is the production,
marketing, and delivery of goods and services according to customer specifications. Consumers' require-
ments will increase, as will the available options and functions to satisfy those requirements. Yet the prices
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of computers and peripherals will likely continue to decrease while the product life cycle is getting shorter
because of Moore’s Law, rapid technological change and rising customer demands. Challenges and oppor-
tunities in the technology systems segment include:
• Use of market-based innovations (platform, portfolio, pipeline, project management) is common. IPD
solutions are driven by market-based innovations. The primary business drivers in technology
systems companies are to minimize inventory on the one hand, while maintaining sufficient inven-
tory of the "right" product to maximize market share.
• Anticipating levels of inventory is challenging because of the difficulty of balancing inventory with
unpredictable product life cycle and distributor demand.
Telecommunications Systems Segment
Companies in the telecommunication systems segment manufacture telecommunication equipment; mobile
equipment, including cell phones; new media equipment, including broadcasting equipment, CATV, radio
wave, scale, and measure equipment; telecommunication switching units; and telecommunication wiring.
Their customers are both businesses and consumers.
The industry is segmented into infrastructure and hand-held devices. Proprietary equipment has allowed
telecommunication infrastructure manufacturers to have high market power over the carriers. Carriers have
historically exerted market power over the hand-held manufacturers by controlling access to the market.
The telecommunication systems industry is driven by deregulation. The telecommunication industry in the
U.S. has been fully deregulated for years, but other countries are only beginning to deregulate their national-
ized monopolies. For example, in 1999, French telecommunications users became able to buy from other
carriers as well as from Alcatel, previously the only legal source. This allowed companies to participate in
the domestic market and increased the power of consumers. The wireless industry in Europe and Asia is
more advanced than in the United States. Markets such as Japan and Finland are leaders in the wireless
industry.
Key Players
Typical players and accounts are:
• NA: Motorola
• EMEA: Nokia, Philips, Alcatel, Ericsson and Bosch
• AP: Sony and Samsung
The telecommunication systems segment is in a dramatic transition, facing major challenges: deregulation,
technology advances, increased user demand for mobile telephony, and new services mainly based on the
Internet. As of 2001-2002, the segment is in a major slump due to overcapacity, lower consumer demand,
corporate malfeasance, and uncertain technology directions. Companies are also facing cost pressures and
fierce competition in home markets as well as in emerging markets. Challenges and opportunities in the
telecommunication systems segment include:
• Primary market entry through e-business uses of CRM, ERP, and SCM solutions.
• The business issue for telecommunication infrastructure manufacturers is the ability to produce
what the market demands at the right time and at the right cost. Typically, they don't fully under-
stand their cost of production.
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• Hand-held wireless device manufacturers are making e-commerce moves to capture more contol of
the market.
• Both infrastructure and handheld device businesses are candidates for consulting services on
continuous flow manufacturing.
• Carriers who provide services are now experiencing a significant shift in strategy, evolving from
handling a physical network to delivering a wide range of technically and financially attractive
services to build new revenue streams.
• This shift from network issues to business issues has a significant impact on the role of telecom-
munication equipment manufacturers (TEM) suppliers such as Lucent, Nortel, Alcatel, Ericsson,
Nokia, and others. Operators and their customers are increasingly requesting advanced technology
systems, of which software is now the most significant element, as part of cost-effective end-to-end
business solutions.
• TEMs must increase their technology leadership, but also they must focus attention on their
business processes. Information technology must be considered not only as support but also as
strategic leverage for business transformation and competitive advantage. The mobile phone
divisions are key for their growth in a global market (including emerging countries) and are sensitive
to time to market and to the supply chain performance issues.
• Demand for mobile and wireless solutions and communications with Internet access is growing at
50% per year.
• TEMs have to move from traditional technologies and offerings to Internet and high-speed wireless
technologies mostly by developing their own solutions or by working with the new Internet Solution
Providers (ISPs).
Hi-Tech Equipment Segment
The Electronics Hi Tech Industry includes manufacturers of products such as PCs, disk drives and routers.
Hi Tech is the fastest growth sub segment industry within the industrial sector with worldwide IT spending
projected to grow from $22.1B in 2000 to $34.6B by 2004 representing a compound annual growth rate of
12%.
Electronics Hi Tech Industry IT Spending
12.5%11.7%11.7%% Growth
27.8B24.8B22.1BIndustry
200220012000Year
Stock Price Decline - According to IBM experts, most Electronics Hi Tech companies have seen a signifi-
cant erosion in stock prices over the past 9 months. This has been driven by weakened forward earnings
outlooks, adjustments of industry PE ratios, and slowing economic forecasts. Capital spending within the
industry is down >25%. All key electronics segments growth forecasts have trended significantly down for
the past 6 months. IBM estimates 2001 growth ranges for Semiconductors +7-9%, Communications +7-9%,
Consumer +6-8%, Manufacturing services +20-25%. Most companies are forecasting their IT budgets flat to
slightly down but increasing e-business/solutions specific spending.
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Semiconductors are growing at a constant rate. In 1999, there was $149 B revenue for the segment. In
2004, revenue is predicted to be $355 B. That is a growth rate of 20%.
The High-Tech segment is focused on cost savings, increasing productivity and efficiency and improving
forecasting, inventory levels and reducing lead times.
Electrical Segment
The electrical segment includes companies that manufacture such electrical equipment as electric relays
and control devices, generators, commercial and specialty batteries, power supplies, and other electrical
products. Customers are typically other companies, who utilize these components in their products.
Key Players
Key players in this area include:
Ÿ Square D
Ÿ Emerson Electric
Ÿ GE
Ÿ AMP
Ÿ Exide
Ÿ Schneider Electric
Ÿ Siemens
Ÿ Hitachi
Ÿ Sanyo
This segment is dominated by companies and products which have been in the market for long periods of
time. However, product innovation is a constant challenge for these companies to enable their products to
be more efficient, smaller, less expensive and more profitable. IT support for order management, customer
service and product development are typical requirements.
Consumer Electronics Segment
Companies in the consumer electronics segment manufacture audio-visual equipment and game and hobby
equipment. Customers of the companies in the consumer electronics segment are retailers and consumers.
These companies also deal with complex supply channels, including suppliers, manufacturers, distributors,
and retailers, as well as direct channels, such as consumers. Distribution and transportation are also
challenging issues. Brand management becomes an issue too, because these companies sell directly to
retailers and consumers.
As consumers have more choices available to them, they demand better quality and more features and
functions. They also demand fast delivery of low-cost products. Companies in the segment are faced with
high volumes, low profit margins, seasonal demand, and changing buying patterns.
Consumers are looking for ways to purchase products from a wider set of choices at more competitive
pricing. The consumer is more educated and is more astute about available choices. Balanced with
decreasing time to shop, consumers still have a desire for a certain level of entertainment and hands-on
interaction. Consumers demand shorter time frames and differentiated identity as they shop. They don't
want to be considered as part of the masses, but as individuals.
Technology is used by younger generations to both educate and entertain. The Internet tools are not foreign
to the young, and e-commerce is a perceived requirement of many stores to keep up with the changing
times. They expect gratification to be convenient and immediate. Convenience is a key. Consumers are
looking for anytime and anywhere shopping.
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Another key element for consumer electronics is the evolution of standards. Video casettes are becoming
outdated as more and more consumers use DVDs for their main media. The market needs to be aware of
these changing trends and keep up with them. The industry also needs to be aware of standards and
changes to these standards. According to Joe Wilcox of c/Net news, this is a similar battle to VHS versus
Beta. The players are even similar. Philips and Sony support the DVD+RW and Hitachi, Panasonic and
Toshiba support DVD-RAM. “DVD+RW writes disks that most DVD drives and players can read. DVD-RAM
stores optical disks in caddies that won't work in older DVD devices. Neither standard has achieved that
capacity, stuck in the 3GB range. Both camps pledge support for 4.7GB by next year. “ according to the
web site. Only time will tell how this battle will be settled.
Key Players
Key players in this segment are:
• NA: Bose, GE,and Kodak
• EMEA: Thomson and Philips
• AP: Sony, Sharp, Toshiba, Matsushita, Panasonic, Canon and Samsung
Major issues for Consumer Electronics:
Ÿ Sales and distribution sub-optimization is causing retailer compliance chargebacks and inventory
misallocations
Ÿ Communication/information flows, both intra-and inter-enterprise, need improvement to keep pace with
rapid shifts in the Consumer Electronics landscape
The consumer electronics industry is facing a dramatic evolution: After several years of flat growth, the
market is now moving again as a consequence of the advent of digital technologies. The consumer electron-
ics industry is gaining ground in emerging countries, such as those in Asia. Challenges and opportunities in
the consumer electronics segment include:
• This industry is further along the adoption path for e-business. They are familiar with CRM, ERP and
SCM solutions.
• Although Integrated Product Development (IPD) has not typically been an effective entry point for
this segment, industry players in this segment are considering adopting IPD solutions as a way to
innovate their product development processes and introduce new products faster.
• Channel conflict is a major issue slowing e-business deployment.
• Only Sony is ready to make a direct e-commerce move because of its strong brand identity;
however, others are expected to follow.
• Solutions strategy needs to move from point solutions to life cycle management. For example, the
Asian market would like to develop remote diagnostics capability to support products, such as
copiers and printers, after they are installed.
• This industry has to deal with large volumes and low margins; therefore, it focuses on drastic cost
reductions. Significant business process reengineering efforts are engaged to improve the fabrica-
tion and assembly processes, especially for supply chain optimization.
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• Electronics systems, such as monitors, set-top boxes, and tuners, and the Application Specific
Integrated Circuits (ASICs) that are at the heart of many of these devices are key to maintaining and
consolidating leadership, and they have a fundamental influence on time-to-market performance.
• The growth area with high added value is in multimedia applications with Internet access and related
services (for example, pay TV, program navigators, Internet applications, and satellite TV). This new
business is a strategy area for this segment.
• Major players are investing significantly in research and development and are seeking technological
and industrial alliances. One example is Thomson Multimedia, which is developing the new genera-
tion of interactive Internet TV though alliances with Microsoft, NEC (ASICs and flat panels), Direct
TV (satellites), and Alcatel (TEM).
Home Appliances Segment
Companies in the home electronics segment manufacture home appliances and related equipment. They
not only have electrical components, but have mechanical components as well. These products are also
known as “white products”. Similar to the consumer electronics segment, customers of the companies in
the consumer electronics segment are retailers and consumers. These companies also deal with complex
supply channels, including suppliers, manufacturers, distributors, and retailers, as well as direct channels,
such as consumers. Distribution and transportation are also challenging issues. Brand management
becomes an issue too, because these companies sell directly to retailers and consumers.
As consumers have more choices available to them, they demand a better ratio of quality. They also
demand fast delivery of high-quality and low-cost products. Companies in the segment are faced with high
volumes, low profit margins, seasonal demand, and changing buying patterns.
Key Players
• NA: Whirlpool and GE
• EMEA: Thomson and Philips
• AP: Toshiba and Samsung
Major issues for Home Electronics:
Ÿ Sales and Distribution sub-optimization is causing retailer compliance charge backs and inventory
misallocations
Ÿ Communication/information flows, both intra and inter enterprise, need improvement to keep pace with
rapid shifts in the marketplace
Challenges and opportunities are similar in home electronics, as in consumer electronics:
• Solutions strategy needs to move from point solutions to life cycle management. For example, the
Asian market would like to develop remote diagnostics capability to support products, such as
copiers and printers, after they are installed.
• This industry has to deal with large volumes and low margins; therefore, it focuses on drastic cost
reductions. Significant business process reengineering efforts are engaged to improve the fabrica-
tion and assembly processes, especially for supply chain optimization.
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Industrial Equipment Segment
Companies in the industrial equipment segment manufacture electrical office equipment (copy and fax);
communication equipment; medical equipment; and related electrical equipment; and electrical parts,
including amps, condensers, coils, switch heads, and connectors. They also manufacture micro and
regular-sized motors, magnetic media (such as tapes and disks), electrical tubes, and dry cell batteries.
Their customers are businesses and other manufacturers.
This segment is significantly material intensive and requires high mix, low to medium volumes. They
manufacture highly customized products that requires a complex network of machinery and routings.
Companies in this industry have to determine quickly the building capacities that they can apply and the
specifications that they can change to meet the customer's requirements. For example, if a customer wants
to buy a particular type of motor that must be customized to meet specifications (engineering to order), the
company must provide the customer with a rough estimate of cost, schedule the engineering, and estimate
the recurring cost of manufacturing for the particular component.
Key Players
• NA: Xerox, Black & Decker, and GE
• EMEA: Thomson, Philips, Matra, Sagem, Cie des Signaux, and Dassault Electronique
Challenges and opportunities in the industrial equipment segment are in the following areas:
• Reducing costs
• Managing supply chain
• Enabling e-business
• Reengineering business processes
Energy Equipment and Machinery
Companies in the energy equipment and machinery segment manufacture heavy industrial electric equip-
ment, elevators and escalators, nuclear energy and power systems, transportation equipment, and
satellites. It also includes power plants' low-voltage equipment, lighting, cables, and wires. Customers of the
companies in the energy equipment and machinery industry are businesses.
This segment is significantly capital intensive and requires longer lead times. Privatization of utility compa-
nies is driving competition in the segment.
Key Players
• NA: GE
• EMEA: ABB, Schneider Electronic, Siemens, and Legrand
• AP: Mitsubishi and Zenith
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Challenges and opportunities in the energy equipment and machinery segment are in the following areas:
• Reducing costs
• Enabling e-business
• Reengineering business processes
Contract Electronic Manufacturers
Many electronic companies have outsourced elements of their manufacturing in order to cut costs. These
manufacturers are an extension of the electric manufacturer supply chains. Companies are looking for
economies of scale and sharing R&D efforts across product lines. This enables electronics companies to
focus on its core competencies, and allows the contractor to keep up with engineering challenges and
maintain skilled workforce. For example, IBM has outsourced part of its manufacturing to Selectron and
Sanmina-SCI. IBM was able to cut costs by having fewer employees and reducing manufacturing space.
Key Players
• NA: Solectron, Celestica, Flextronics, Jabil Circuits and Sanmina-SCI
Challenges and opportunities in the contract electronic segment are in the following areas:
• Reducing costs
• Maintaining a skilled workforce.
1.3 Roles in the Electronics Manufacturing Industry
The electronics industry has a variety of roles. These roles vary across the supply chain starting with
material suppliers and ending with the customer. Roles for the consumer electronics sub-industry are very
distinct because of the interaction with retailers. Most consumer electronics manufacturing companies go
to market through large retailers; the retailers then sell directly to consumers. These retailers have tremen-
dous influence on manufacturers, and retailers use it to improve their own bottom line. Look at the following
roles and perspectives of the participants involved in the electronics business:
The consumer: This is the ultimate customer for all consumer electronics products.
Retailers: These are the businesses that sell to consumers. Retailers want inventory levels to be as low as
possible but still be able to guarantee product availability on the shelves.
Retail distribution network: This network is the heart of the retailer's ability to keep supplied with
products. In the future, the pressure will be on manufacturers to deliver small numbers of items directly to
the stores.
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Wholesale distributors: These businesses are between the retailer and the manufacturer. They provide
sales and merchandising services to the large number of small retailers.
Manufacturer distribution network: This network can be as simple as a single shipping warehouse or as
complex as a multilevel international network.
Manufacturing final assembly: A manufacturer's final assembly operation must become highly flexible to
support distribution challenges. Many manufacturers purchase products from the Far East that require only
minor assembly and packaging. Manufacturers also purchase major subassemblies from the Far East, such
as compressor units for refrigerators.
Manufacturer subassembly: Flexibility is the key to managing the inventory costs while replenishing final
assembly requirements.
Manufacturer fabrication (foundry): Foundries specialize in manufacture and assembly; their focus is on
producing a component or product as quickly and as cheaply as possible. Fabrication processes are totally
dependent on product design to minimize the expense of flexible tooling. It is possible to tightly tie fabrica-
tion processes to subassembly and final assembly processes when the products are properly designed.
Material suppliers (tier 1, tier 2, . . .): Material suppliers provide raw materials to other suppliers (tier 2) or
to manufacturers. The relationship between the manufacturer and its suppliers, and between the supplier
and its suppliers, must be properly functioning for the total supply chain to properly function.
Fabless: Fabless companies do not fabricate their products; their focus is on component or product design.
They outsource the manufacture and assembly to a foundry.
Transportation providers (carriers): Viewed by mode of transportation, goods transported between each
of the players in the supply chain are moved by one of these carriers: motor freight, rail, air, and maritime. In
recent years, these companies have additional responsibility in the supply chain by providing other logistics,
distribution, and some product assembly functions on an outsourced basis.
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1.4 Types of Manufacturing
Discrete Manufacturingis used by electrical and electronics companies. This manufacturing has the
following characteristics:
• Manufacturing processes are repetitive or job shop (built-to-order per customer specifications, configura-
tions or requirements)
• Products are fabricated and assembled and may have many intermediate subassemblies
• Products are defined by bills of material
• Product differentiation is typically by function and features, name (brand) recognition, packaging or price
- sometimes by quality
• There are three types of discrete manufacturing: Job Shop, Batch and Flow. All of these types are used
in electronics manufacturing.
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Characteristic Job Shop Batch/Repetitive Flow
Example
Special Purpose
Motors
Motherboards
Major Appliances
Semiconductor
Manufacture
Customer Order Make to Order Assemble to Order Make to Stock
Product
Low Volume
High Variety
Mass Customization
High Volume
Low Variety
Plant
Layout
Functional Mixture Product Layout
Cycle Time Long Demand for shorter Very Short
Unique
Functions
Project Costing
Estimating & Quoting
Available to Promise Rate Scheduling

2.0 Electronics Manufacturers
Top 20 IBM Customers - Electronics Industry
$17,580Sharp$37,580Motorola
$54,493Toshiba$71,118
Matsushita/
Panasonic
$13,532Electrolux$22,967ABB
$14,400Ricoh$31,748Philips
$30,275Nortel Networks$63,082Sony
$16,7243M$78,396Siemens
$24,185Canon$33,726Intel
$5,657Omron$129,953GE
$28,369Ericsson$13,994Eastman Kodak
$28,304Nokia$33,813Lucent
2000 Company
Revenue ($M)
Company Name
2000 Company
Revenue ($M)
Company Name
Source: Fortune, IBM Market Intelligence. Red-highlighted accounts have integrated coverage
Motorola
Motorola's cell phone line of business is a main competitor to Nokia. Motorola is the #2 global manufacturer
of mobile handsets and it gets about a third of sales from personal communications products such as cell
phones, pagers, two-way radios, as well as network products like servers and software. The company is a
leading supplier of communications infrastructure equipment including cellular transmission base stations,
amplifiers, and switching equipment. Motorola is also a top maker of embedded microprocessors. Motorola
generates 16% of sales through its semiconductor operations. Their largest customers include Nextel
Communications and Japan-based KDDI. The company continues to expand its broadband and cable
product lines. For additional information, please review: http://www.motorola.com
Nokia
Nokia is the world's #1 maker of mobile phones. It is also aiming for the top of the mobile Internet market.
Nokia's products are divided mainly between two divisions: mobile phones, which makes up about three-
quarters of sales and networks (wireless and Internet protocol infrastructure equipment); other products
include set-top boxes, software, and mobile displays. Nokia is one of Europe's largest companies by market
capitalization, Nokia is focusing on high-speed data networks through 3G wireless, DSL, and interactive TV.
For more information, please visit http://www.nokia.com
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Siemens
Siemens has operations worldwide in the automation and control, information and communications, lighting,
medical, power, and transportation sectors. It is also active in the semiconductor sector through a minority
stake in chip maker Infineon Technologies. Siemens is Europe's largest electronics and electrical engineer-
ing firm and one of the world's leading mobile phone handset makers. For more information, please visit:
http://www.siemens.de
Matsushita
Matsushita Electric Industrial is the world's #1 consumer electronics maker and sells under brand names
such as Panasonic, Quasar, Technics and JVC. Matsushita sells consumer products (which account for
40% of sales) such as VCRs, CD and DVD players, TVs, and home appliances. It also sells computers,
telephones, industrial equipment (welding and vending machines, medical equipment, car navigation equip-
ment), and components such as batteries, semiconductors, and electric motors. The Matsushita group
includes about 320 operating units in more than 45 countries. Its products are sold worldwide; Asia
accounts for more than 70% of sales. For more information, please review: http://www.mei.co.jp
LG Electronics
LG Electronics (LGE) owns 70-plus subsidiaries that design and manufacture display products (TVs,
monitors), home appliances (refrigerators, microwaves, air conditioners), and multimedia devices (VCRs,
DVD players, CD-ROM drives, MP3 players). LGE also owns Zenith Electronics and has a flat-panel display
joint venture with Philips Electronics (LG.Philips LCD). LGE has been increasing its sales to North America
and Europe; Asia provides 38% of sales. For additional information, please review: http://www.lge.co.kr
Lucent
Lucent Technologies, a global leader in telecom equipment, provides products used to build communica-
tions network infrastructure. Its core transmission and switching, wireless, and optical gear is used world-
wide. The company also makes software and provides a wide range of services; many of its products are
developed by Bell Laboratories. Most of Lucent's customers are telecom service carriers such as AT&T and
the local telephone companies, such as the “Baby Bells”. The company, itself a spin-off from AT&T, has
spun off non-core businesses to raise funds. Please review: http://www.lucent.com
Alcatel
Alcatel is one of France's largest industrial companies and a leading global supplier of high-tech equipment
for telecommunications. Core network switching and transmission systems for wireline and wireless
networks for carriers and enterprises account for most of its sales. The company also manufactures cell
phones, communications cable, and satellite equipment and provides network services including consulting,
integration, design, planning, operation, and maintenance. Clients include Orange and Deutsche Telekom.
Half of Alcatel's sales are made in Europe; the company continues to seek a larger share of the equipment
markets in North America and China. For more additional information, please visit:
http://www.alcatel.com
General Electric
General Electric (GE) is positioned as #1 or #2 in a variety of industries. The company produces aircraft
engines, locomotives and other transportation equipment, appliances (kitchen and laundry equipment), light-
ing, electric distribution and control equipment, generators and turbines, nuclear reactors, medical imaging
equipment, and plastics. Its financial arm, GE Capital Services, accounts for nearly half of the company's
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sales and is one of the largest financial services companies in the US. Other operations include the NBC
television network. For more information, visit: http://www.ge.com
Xerox
Xerox is known for its copiers, but it also makes printers, scanners, fax machines, software, and supplies,
and provides consulting and outsourcing services. The company designs its products for home users,
businesses, and high-volume publishers such as newspapers. Customers include Kinko’s and Southern
Company. The company generates most of its revenue from black-and-white products, although it is
continuing to develop its color products. Customers outside the US account for 40% of sales. Please check
http://www.xerox.com for more information.
Philips
Philips is the US arm of Dutch Koninklijke ("Royal") Philips Electronics, the company oversees Philips
operations in the US, Canada, and Mexico. Its products include TVs, CD/DVD/MP3 players/recorders,
VCRs, shavers, broadcast television systems, broadband network systems, medical imaging equipment,
and semiconductors. Its brands include Philips, Philips Magnavox, Norelco, and Marantz. Philips also
makes lighting products -- its parent is the world's largest lightbulb maker. For more information, visit
http://www.philips.com
Whirlpool
Whirlpool is the #1 US home appliance maker. It makes washers, dryers, dishwashers, microwave ovens,
ranges, refrigerators, and air conditioners and other appliances. In addition to Whirlpool, the company sells
its products under brand names such as Sears' Kenmore label, KitchenAid, Roper, Inglis, and Speed
Queen. Sears accounts for about 20% of the firm's sales. Whirlpool makes products in 13 countries and
sells them in more than 170. It gets nearly 65% of sales from North America. Please review
http://www.whirlpool.com for more information.
Sony
Sony, the world's #2 consumer electronics firm, also makes semiconductors, DVD players, batteries,
cameras, MiniDisc and Walkman stereo systems, computer monitors, and flat-screen TVs. Video games
systems account for 10% of sales. The company's TVs, VCRs, stereos, and other consumer electronics
account for about 70% of sales. Sony's entertainment assets include Columbia TriStar (movies and TV
shows) and record labels Columbia and Epic. The company also operates insurance and finance
businesses. Please visit http://www.sony.com for more information.
Ericsson
Ericsson has a way without wires. The company is the world's leading maker of wireless telecom infrastruc-
ture equipment. Network operators and service providers use Ericsson's antennas, transmitters, and other
wireless and optical infrastructure gear (nearly three-quarters of sales) to build and expand networks. The
company, which trails rivals Nokia, Motorola, and Siemens in mobile handset sales, has teamed up with
Sony in a cell phone joint venture. Ericsson's other products include corporate networking gear, cable,
defense electronics, and software for mobile messaging and commerce. The Wallenberg family and holding
company Industrivarden each control about 42% of Ericsson's voting power. http://www.ericsson.com
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Fujitsu
Don't judge Fujitsu Limited by its name -- with operations worldwide and products ranging from air condition-
ers to telephony, its reach seems almost limitless. Its computer products include PCs (it competes with
NEC for #1 in Japan), servers, peripherals, and software. Computer operations and information technology
services (consulting, systems integration, and support) account for more than 70% of sales. The company's
other lines include telecommunications network equipment, consumer electronics such as televisions and
car audio components, and semiconductors. Fujitsu also owns Japan's top Internet services provider, Nifty.
http://www.fujitsu.com
IBM
International Business Machines (IBM) is the world's top provider of computer hardware. The company
makes a broad range of computers and peripherals, including desktop and notebook PCs, servers,
mainframes, printing systems, and storage devices. Accounting for about 40% of IBM's sales, the
company's service arm is the largest in the world. IBM is also one of the largest providers of both software
(ranking #2, behind Microsoft) and semiconductors. The company continues to use acquisitions to augment
its software and service businesses, while streamlining its hardware operations with divestitures and organ-
izational shifts. About 60% of IBM's sales are to customers outside the US. http://www.ibm.com
HP
Hewlett-Packard, meet Compaq. Compaq, this is Hewlett-Packard. Now rivaling longtime market ruler IBM
in size, Hewlett-Packard (HP) provides computers, imaging and printing peripherals, software, and
computer-related services. The company has seen extensive restructuring under the leadership of CEO
Carly Fiorina, who spearheaded the largest deal in tech sector history: the acquisition of Compaq Computer
in a stock transaction valued at approximately $19 billion. The combined company boasts greatly improved
market share across a number of hardware lines, including UNIX and Windows-based servers, enterprise
storage, and personal computers. Its services unit, which has doubled in size, may help it weather a
flagging computer hardware market. http://www.hp.com
Lucent
It's tough at the top. Lucent Technologies, a global leader in telecom equipment, provides products used to
build communications network infrastructure. Its core transmission and switching, wireless, and optical gear
is used worldwide. The company also makes software and provides a wide range of services; many of its
products are developed by its Bell Laboratories unit. Most of Lucent's customers are telecom service carri-
ers such as AT&T. The company, itself a spinoff from AT&T, has spun off noncore businesses to raise
funds. Lucent has also cut costs through massive layoffs and restructured its sprawling organization around
two main segments, wireline and wireless, to focus on serving the largest service providers.
http://www.lucent.com
Bosch
Cooking and cleaning can be a big chore, but BSH Bosch und Siemens Hausgeräte is there to help. The
50-50 joint venture is one of Europe's largest appliance manufacturers. BSH's major appliances include
dishwashers, ovens, microwaves, washing machines, air conditioners, refrigerators, and vacuum cleaners. It
also makes small appliances such as coffee makers and hair dryers. The company's primary brands are
Bosch and Siemens, but it also produces a dozen regional brands, including Balay, Constructa, Gaggenau,
Neff, Thermador, and Coldex. BSH's appliances are sold in more than 30 countries; Germany accounts for
almost a third of sales. BSH has about 40 factories throughout Europe, North and South America, and Asia.
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http://www.bsh-group.com
NEC
NEC has three arms and plenty of muscle. The company's NEC Solutions group makes high-end computers
(servers and supercomputers) and peripherals (monitors and projectors), and it wrestles with Fujitsu for the
top spot among Japanese PC makers. Its NEC Electron Devices division makes electronics ranging from
transistors to display modules, and competes with Toshiba for the second spot among semiconductor
makers (both companies trail Intel). The company also sells broadband and wireless networking equipment
through its NEC Networks group. NEC, which has made the Internet the focus of each of its groups, runs
one of Japan's largest Internet service providers (BIGLOBE). The company generates about 15% of its sales
outside Japan. http://www.nec.com
Marconi
Marconi is a faint image of its former self. Once a military industrial conglomerate, the company now
provides telecom equipment. Its communications products (67% of sales) include wireless and broadband
transmission, network infrastructure, and enterprise networking equipment. It also makes network testing
products and industrial power equipment and provides application hosting and managed network services.
The company sells to communications service providers worldwide. Faced with mounting losses, Marconi
sold non-core businesses to focus on the telecom market. As part of a restructuring plan intended to relieve
massive debts, the company will liquidate its assets and reincorporate as Marconi Corp. by early 2003.
http://www.marconi.com
Growth Trends in the Industry
Americas Consumer Trends
The largest growth region in the world is the Americas region. The industry in North America is $11.9 billion
in 1998, growing to $16.3 billion in 2001 (11.1% CGR). There has been market consolidation around large
players. The electrical industry is completely deregulated.
European Consumer Trends
Europe is a diverse market with diverse issues causing variation in pricing, warranty, and language issues.
The industry in Europe is $8.7 billion in 1998, growing to $10.9 billion in 2001 (7.8% CGR). There has also
been market consolidation around large players. Deregulation has been completed in Europe, increasing
competition. The industry is more driven by technology than the bottom line. Sales tend to be driven by
product value rather than vendor relationship.
Asia Pacific Consumer Trends
Similar to Europe, Asia Pacific is composed of a diverse market causing pricing, warranty, and language
issues. The industry is $7.8 billion in 1998, growing to $9.4 billion in 2001 (6.4% CGR). Asia has also seen
market consolidation around large players. Asian electronic companies have felt the negative impact of a
slow economy. The industry has built long-term and close relationships between suppliers and companies.
There are stiffer requirements for channel support compared to Europe and the Americas.
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3.0 Customers
Customers vary across a wide variety of formats. Typical customers of electronics companies include:
w PC Manufacturers
w Appliance Manufacturers
w Warehouse stores - A store with more than 1,500 items, primarily dry grocery, with some
perishables. Characteristics include, small gross margin and workforce, limited service, most
have scanner checkouts, and tend to eliminate frills and concentrate on price appeal.
w Retail chains - An operator of 11 or more retail stores.
w Independent - An operator of up to 10 retail stores.
w Wholesalers - Acts as an agent between the manufacturer and the retailers.
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4.0 Suppliers
Suppliers to electronics equipment manufacturers range from very small to very large companies, providing
basic raw materials to a variety of components to sub-assemblies to complete products. Many supplier
parts are seen as commodities by their customers. Electrical manufacturers use a small number of
specialty suppliers that build parts directly for customer specifications. Many of the second and third tier
electronics industry suppliers are midsize manufacturers whose margins are more critical than volume.
Many suppliers have begun to use portals for placing orders. Many of these products can be reviewed on
http://www.globalspec.com
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5.0 Business Drivers
Electronics companies face changing consumer demands, retailer consolidation, increased alternative
channel competition and geographic expansion, in addition to the always present cost cutting pressures.
5.1 Meeting New Customer Demands
Changes in consumer demographics and lifestyles are driving an ongoing evolution in the electronics
industry. A retailer’s survival depends on meeting the needs of its customers. As a result, manufacturers
have increased their product offerings to meet retailers’ needs and will have to continue to do so.
It is becoming a matter of survival that electronics companies shift to a consumer-driven model. Consumers
are smarter and more demanding than ever. They spend less than 1% of their time shopping and plan to
spend even less in the future. They express frustration because retailers do not provide the products or
services desired.
Globalization and the proliferation of multiple supply channels have created an economy without borders and
have altered the way companies do business. Retailers recognize that they could no longer rely only on
price and merchandising to retain market share but that they must adopt a customer focus to succeed in
the next millennium.
Electronics companies must follow a consumer-driven model to retain their market share. In a recent market
perception survey of the global electronics industries conducted by IBM, raising customer satisfaction was
the most important business issue among managers in the electronics industry.
As a result, electronics companies are transforming from the merchandise-centric model of the 1980s and
1990s to a consumer-centric model where customers buy products anytime and anywhere they desire.
Value will migrate to high-performance business designs that enable intimate customer knowledge,
supported by flexible high-velocity supply chains.
Companies in the electronics industry are trying to use the Internet to better understand customer
requirements. In some cases, these requirements are filtered through retail channels. Whether or not a
company's customers are end-user consumers, becoming faster in customer response time is critical to
maintaining market share.
A Demand for More Choices
The movement from analog to digital technology in the electronics industry is substantially complete, result-
ing in less differentiation between products and brands. At the same time, the needs of consumers are
becoming more diverse. Customers want to individualize what they buy, without a difference in price. They
can select from a greater range of choices than ever before. Whether they are considering a VCR, a
computer, or a personal digital assistant (PDA), consumers are primarily interested in what value a product
can deliver and how well it meets their preferences. As a result, electronics companies are under pressure
to reduce time to market and increase options to meet their customers' requirements.
Demand from New Markets or Groups
The electronics industry must also find ways to respond to market demand from new markets and new
customer groups. New potential customers emerge as underdeveloped or economically depressed countries
or regions recover their prosperity or build up their economies. China and former Soviet-controlled countries,
such as Hungary, are good examples. Within existing markets, new subgroups also become potential
customers, as the Hispanic community in the United States has shown. To benefit from these new markets,
companies must manufacture the kinds of products these customers want and distribute the products
efficiently.
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A new challenge for product development is that electronics customers are changing their requirements
much faster than the normal life cycle for electronics products. This increased rate of customer change, in
turn, is driving electronics companies to form partnerships and alliances with their customers and with their
suppliers, so that rarely is one company responsible for designing and manufacturing all components of a
product. Concurrent design and manufacturing reduces product life cycles by extending the supply chain.
5.2 Mergers and Acquisitions
As in other industries, electronics companies are complementing their strengths and reducing their
weaknesses by acquiring other companies or by merging with other companies. Strategically, the consoli-
dated company is stronger. It can use its increased strength to:
• Address several diverse markets, often using technologies previously not available to it or available
only by paying royalties
• Extend its existing markets
• Increase public awareness and mind share
• Achieve cost reductions by reducing redundant facilities and staff.
Acquisition of new businesses can also help regulate economic fluctuations tied to single markets and
provide new sources of income. Acquiring new manufacturing or distribution facilities is not usually a priority
in mergers and acquisitions. When two companies combine their processes, they frequently find redundant
applications and systems. They must decide not only which applications, products, and projects will survive,
but also whether new systems and applications will be needed to meet the combined demands of the larger
company.
An example of a recent merger that increased mindshare and could offer economies of scale is the joining of
Hyundai Electronics and LG Semiconductor. The combined sales of DRAM chips at Hyundai and LG
outstripped sales at Samsung Electronics, making the new company the world's largest DRAM maker.
Recent acquisitions for entry into new markets include:
• Ericsson's purchase of U.S. firms Torrent Networking Technologies and TouchWave. Torrent
Networking Technologies specializes in high-capacity routing solutions for operators and service-
provider networks; Touchwave specializes in IP-based telephony. Together, they prepare Ericsson
to begin competing in data networking.
• Alcatel's purchase of Xylon Corporation and Internet Devices, Incorporated. Xylon Corporation adds
LAN network switching technology to Alcatel's networking portfolio, especially for voice products.
Internet Devices, Incorporated brings IP-based virtual private network (VPN) solutions that will
strengthen Alcatel's ability to offer a full range of secure network solutions to service providers and
enterprises.
5.3 Divestitures
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Competition has forced many electronics companies, such as Westinghouse, to sell off major portions of
their enterprises. Companies are seeking a more vertically integrated structure aligned with their core
competence areas and are spinning off secondary businesses to improve financial performance.
A significant recent divestiture is Motorola's sale of its chip unit to an investment group led by Texas Pacific
Group. This sale of a group that employs about 10,000 people and represents 25% of the company's
semiconductor revenues is one of the largest divestitures to date in the electronics industry. Motorola has
already eliminated a number of other operations related to electronics, including the production of DRAM
chips, optoelectronics, hybrid power modules, and smart card microcontrollers. This divestiture allows
Motorola to concentrate on increasing its sales in areas of strong demand, such as parts for cellular phone
handsets.
5.4 Global Expansion
The globalization of the electronics industry increases the level and scope of competition for electronics
manufacturers. More companies are going global to reduce production costs, especially by shifting product
manufacturing to developing nations. This trend can be intensified by currency fluctuations, which can make
remote manufacturing attractive in spite of increased delivery costs. As a result, companies potentially
increase their competitiveness by offering lower prices and by making their products available in emerging
markets that are stimulated in part by the presence of the new production facilities.
In addition, ongoing business consolidations promote global competition by creating corporations with facili-
ties around the world. As a result, manufacturers can take advantage of their worldwide presence to design
and manufacture around the clock, using design and production centers in different time zones.
Local companies can quickly become global competitors. A company in Southeast Asia that would not
seem to be a competitor when operating only in its own country can now use the Internet or a business
partnership to compete with more established companies. Each company tries to find a different way of
going to market that emphasizes its expertise and increases its apparent value to prospective customers.
Global Supply Chains
With the goal of reducing cost, most electronics companies are establishing their manufacturing facilities in
Asia to take advantage of lower labor rates, lower import and export taxes, and lower duties. This trend
creates for the electronics companies the challenge of procuring materials from geographically dispersed
suppliers and delivering their assembled products as quickly as possible to their customers, mainly
retailers. These customers might also be widely dispersed.
The need to lower inventory costs is also causing many companies to rethink their logistics pipelines, evalu-
ate their supply chains, and use demographic data to better understand their target customer segments.
Frequently, one-third of total product sales can be trapped in the logistics pipeline instead of being readily
available for purchase. With product life cycles as short as three to nine months in the electronics industry,
the cost burden for obsolete products can become quite high.
The power of retailers in relation to manufacturers is rising. Today, there are fewer and fewer retailers in the
marketplace; as a result, each retail customer is more important to a manufacturer. Further, some retailers
have also been able to block manufacturers from going directly to the consumer through the Internet by
threatening to change to other suppliers if the manufacturer uses the competing channel. At the same time,
manufacturers risk losing the business of these powerful customers unless they become faster and more
flexible in meeting the retailers' demands.
Accordingly, the manufacturers must shorten their product delivery cycle times to better manage their inven-
tory system while becoming more efficient in terms of forecasting demands and replenishing orders. These
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changes require attention to supply chains on a global scale, in addition to developing a relationship with
their business customers to maintain their loyalty.
Impact of Globalization
Globalization affects every aspect of an electronics company's ability to compete in the marketplace. From
product development, to supply chain, to operations, to sales and support, the enterprise now extends
beyond its physical boundaries.
Traditional, vertically integrated enterprises that do all of their own manufacturing and assembly are rare as
outsourcing to geographic areas with lower cost structures has become prevalent, particularly in the
electronics industry. A typical PC manufacturer, for example, might design the product in the U.S., obtain
motherboards and enclosures from Taiwan, develop value-added software applications in India, and integrate
the final system in Scotland. A wireless handset manufacturer will develop the product in Europe, source
handsets from Korea, develop localized software in China, and then partner with the Chinese government to
gain access to the Chinese market.
The successful electronics enterprise must adapt to the global model to turn these challenges into opportu-
nities by transforming its business model in ways that optimize the supply chain and integrate all elements
of the enterprise. The successful company must also take advantage of global labor and production costs,
which can vary widely because of varying regulatory enforcement policies for environmental and worker
safety standards.
Small companies that are the tier 1 and tier 2 suppliers to big companies are also facing globalization and
competition. They are part of the supply chain. As big companies go global, small supplier companies are
obliged to become global to retain their customers.
Exports to Mexican and Latin American markets
With the inception of the North American Free Trade Agreement, exports from the United States to Mexico
and Latin America have increased. According to U.S. Customs, the North American Free Trade Agreement
(NAFTA) is a comprehensive agreement that came into effect on January 1, 1994, creating the world's
largest free trade area. Among its main objectives is the liberalization of trade between Canada, Mexico and
the United States to stimulate economic growth and give the NAFTA countries equal access to each other’s
markets. For additional information on this agreement, please refer to: www.iafis.org
5.5 Time to Market
In the electronics industry, market value is awarded to those companies that continually offer the right
product, at the right time, and at the right price. Technological innovation puts increasing pressure on the life
cycle of products. As the life cycle of a product shortens, the need to respond quickly to market demands
increases. A company's agility and speed in getting to market are critical success factors in the electronics
industry, regardless of segment. Time to market as an industry measurement involves each of the three
business processes in the industry: design, build, and sell and support.
In the design phase, time to market pressure focuses on how efficiently a company creates its products.
Does the company have the technical skills in place to respond to market demands? Is it using the most
efficient processes in managing design? Can the company meet new challenges to its engineering
capabilities quickly?
In the build phase, time to market pressure focuses on how efficiently a company develops its products. For
a company whose core business is design, the most efficient solution might be to outsource some or all of
the product assembly to a foundry. Management of the enterprise's resources and supply chain becomes a
major focus.
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In the sell and support phase, time to market pressure focuses on how efficiently a company fosters
demand for its products. This includes how the company markets to and services its customers and how it
manages the distribution of its products.
Rapid Commercialization of New Technologies
The commercialization of research has become a high-leverage area for many companies. The new
technologies from laboratories offer the benefits of high-margin new products, differentiation from
competitors, and possible growth in market share. To achieve those benefits, electronics companies must
evolve to a market-driven research and development (R&D) structure, with an aggressive focus on time to
market.
In the past, U.S. firms have often failed to benefit from their own innovations. Although U.S. firms are
frequently first to introduce new product concepts, Japan and other countries have become proficient at refin-
ing processes and manufacturing large quantities of products at low cost. Decreasing the time to market
and to full production of new products is a continuing challenge for every company.
Reducing time to market is critical for electronics companies; and for most companies, the most important
business area affecting time to market is the product development cycle. This cycle includes not only
designing and manufacturing the product but also getting legal approvals and testing, packaging, and distrib-
uting the new offering. Key decisions, such as whether to build or to buy components, must be made early
in the cycle and communicated to all participants as quickly as possible.
The pace of technology innovation in the electronics industry is forcing the electronics industry to shorten
the life cycles of its products. Companies must introduce new products faster to survive in the competitive
marketplace. They must achieve that speed while still delivering their products on time and improving
product and price performance.
New customer demands for products that are tailored to each customer's preferences are creating new
challenges for production processes. In addition to reduced production time, the supply chain, design
system, and manufacturing procedures for electronics manufacturers must support more variations, deliv-
ered in smaller and smaller quantities. Integrated product development is essential in achieving these goals
because it brings efficient product improvement into daily business processes, closely linking business and
engineering processes.
5.6 Innovation
Given the compressed product life cycles for present and future electronics products, an enterprise needs to
constantly refresh its product lines in a cost-effective manner to remain competitive in the marketplace.
Innovation requires a combination of real-time supply chain collaboration, efficient product development, and
virtual product development management (VPDM) techniques, including such features as digital mockup,
product synthesis, and supply chain management.
The increased turns in new products is leading to increased R&D outlays. The constant flow of new products
and new product options forces electronics companies to find manufacturing processes that can be changed
frequently and quickly. The shorter life cycles create pressure from two directions:
• Introducing new products as previous products become outmoded
• Avoiding the accumulation of inventory that has become unsellable because of the new products.
Competition is heightened in the market right now because of the innovations. Time available to recover
their investments in new products before the products become outmoded has been decreased dramatically.
Also stimulated by globalization, this trend emphasizes each company's need to reduce the time required to
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get new products into production, to use the shortest possible time for production, and to avoid accumulat-
ing inventory in the supply chain or in warehouses.
5.7 Cost Reduction
To respond to a dynamic business environment, leading electronics companies are driving toward major
structural and process changes to reduce cost. Information technology (IT) is an instrumental part of that
strategy, but the real focus has been on the business problems of streamlining production, reducing
administrative overhead, and removing inefficiencies. The structural changes occurring in the electronics
industry have taken a variety of forms. These include outsourcing, mergers and acquisitions, alliances,
downsizing, and divestitures.
These structural changes have several goals. Companies are focusing in on their core businesses and trying
to enhance their key competencies. This could involve a shift from product production to providing systems
and value-added services. Companies are looking for economies of scale, sometimes by sharing R&D efforts
across a product line. In some cases, a company restructures to broaden its product range or expand its
market reach.
The process changes occurring in the electronics industry are designed to improve efficiency and
effectiveness of specific processes and linkages within the firm. Examples stated are concurrent
engineering, optimization of supply chain, quality management, and product portfolio rationalization (model
reuse or the use of standard parts). The goals are to increase internal efficiencies, reduce errors and rework,
and become more adaptive to the volatile marketplace.
5.8 Outsourcing and Partnering - Microelectronics Segment
Microelectronics companies are moving toward contract manufacturing and becoming design and assembly
companies. According to the IBM web site, “ten years ago, there were probably 25 to 30 semiconductor
giants that constituted 99% of the semiconductor production in the world. Today, many of those dominant
companies have disappeared; probably 10 to 15 companies dominate the market, constituting approxi-
mately 70% of the world market.” Therefore, a significant amount of the market is now being supported by
small, fast, flexible, technology-oriented companies.
These companies, in general, do not do their own manufacturing. Instead, they outsource some or all of their
manufacturing. This arrangement, called contract manufacturing or foundry manufacturing, gives them flexi-
bility to move production wherever they need it, such as to locations that can give them the lowest costs or
locations that can give them faster delivery of parts. The contract manufacturers or foundries are almost all
in Asia, and most of them are based in Taiwan. However, the labor costs in Taiwan, Malaysia, and other
previous foundry countries in Asia have been increasing. As a result, more and more foundry businesses are
based in China.
The benefits of contract manufacturing include lowered manufacturing costs and greater focus on design and
product innovation in the parent company. For example, for IBM ThinkPads, IBM sets the specifications for
each model and sends them to Mexico. There the new ThinkPads are assembled according to the specifica-
tions, packaged, and distributed to customers throughout the Western hemisphere.
Many electronics companies are also using contract manufacturing to reduce overall manufacturing time by
methods such as assigning components to a variety of specialized manufacturers for concurrent production.
Thus, the time to actually perform the manufacturing becomes very competitive because the shorter the
manufacturing time, the more responsive the company can be to customers' needs, the less subject they
are to market fluctuations, and the better competitive position they are in for increasing their market share.
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Joint ventures, such as contracting and outsourcing, are another common way to improve financial stability
and focus efforts. This transition is prompting strategic alliances with companies within and outside of the
industry. Benchmarking based on companies beyond the boundaries of traditional competitors has also
become commonplace as new companies set standards for customer expectations and satisfaction and
companies suddenly enter new markets as new competitors. For example, Kodak, HP, and Canon all
currently sell digital cameras and must compare themselves to each other, although Kodak's core business
previously seemed to have little overlap with HP and Canon.
Recent consolidations through joint ventures include Kodak and Intel®, which are collaborating on new
processors for advanced digital cameras.
5.9 Regulatory Issues
Deregulation is another factor that increases competition in the electronics industry, especially within the
telecommunications systems segment. The telecommunication market in the U.S. has been fully deregu-
lated for years, but other countries are only beginning to deregulate their nationalized monopolies.
For example, in 1999, French telecommunications users became able to buy from other carriers as well as
from Alcatel, previously the only legal source. This freedom enables other companies to enter the French
domestic market to win market share, providing competition to Alcatel and giving new power to French
consumers.
Similar developments are occurring in the Asia Pacific area. In Hong Kong, the telecommunications industry
is changing from one that used to be tightly regulated to one where competition is, as far as possible,
encouraged in all aspects of the market. For example, the local monopoly of Hong Kong Telephone (HKT)
ended in 1995, when three more fixed-line telecom network service (FTNS) operators were licensed and
began operating. Then, early in 1998, the Hong Kong government reached an agreement with HKT's interna-
tional subsidiary, Hong Kong Telecom International (HKTI), to end its exclusive franchise for international
services on 31 December 1998 and for international facilities on 31 December 1999. Both franchises origi-
nally extended until 2005. With the expiration of HKTI's exclusive facilities franchise in 1999, all segments of
Hong Kong's telecom industry will be open to some form of competition.
The electronics industry is regulated by different groups in the United States and Europe. Several
organizations establish and monitor the rules and regulations across the industry:
w OSHA
w U.S. Department of Transportation
w U.S. Customs Service
w U.S. International Trade Commission
w European Comisssion
w Asia Pacific Occupational Safety and Health Administration
w US - AEP Partnership
w Copyright Law
Occupational Safety and Health Administration (OSHA)
OSHA’s main mission is to ensure safe and healthful workplaces in America. According to their internet
site, since the agency was created in 1971, workplace fatalities have been cut in half and occupational
injury and illness rates have declined 40 percent. At the same time, U.S. employment has doubled from 56
million workers at 3.5 million work sites to 111 million workers at 7 million sites.
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United States Department of Transportation (DOT)
The DOT states in its mission that it is to “Serve the United States by ensuring a fast, safe, efficient,
accessible and convenient transportation system that meets our vital national interests and enhances the
quality of life of the American people, today and into the future.” The Office of the Secretary (OST) oversees
the creation of national transportation policy and promotes intermodal transportation. Other responsibilities
range from negotiation and implementation of international transportation agreements, assuring the fitness of
transportation systems, issuing regulations to prevent alcohol and illegal drug use in transportation systems
and preparing transportation legislation.
United States Customs Service
U.S. Customs is the primary enforcement agency patrolling the nation’s borders. To the importer, the
Customs Service provides advice, protection and control of products entering the United States. Their labs
continually check imports to ensure they comply with the laws involving public safety, health and intellectual
capital.
United States International Trade Commission (USITC)
The USITC regulates tariffs on imports by SIC code. The USITC is also responsible for maintaining normal
trade relations with foreign countries.
European Commission
The European Commission operates at the very heart of the European Union. The Commission proposes
new laws, represents the EU members and acts as the EU guardian of Treaties. Its main concern is to
defend the interests of Europe's citizens. The 20 members of the Commission are drawn from the 15 EU
countries, but they each swear an oath of independence, distancing themselves from partisan influence from
any source.
The Commission's job is to ensure that the European Union can attain its goal of an ever-closer union of its
members. One of its main goals is to secure the free movement of goods, services, capital and persons
throughout the territory of the Union. The Commission also regulates that the benefits of integration are
balanced between countries and regions, between business and consumers and between
different categories of citizens.
Asia Pacific Occupational Safety and Health Organization (APOSHO)
The objective of APOSHO is to promote mutual understanding and cooperation among the communities in
the Asia-Pacific region as well as to contribute to the enhancement of occupational safety and health in
these communities through the exchange of information and views. For a full list of its members and their
policies, please review:
http://www.aposho.org/about/about03.htm
United States - Asia Environmental Partnership
The U.S. has partnered with Asian organizations and agencies to identify areas for improved policies, laws
and enforcement through collaboration of ideas regarding the environment through reviewing policies and
organizing teleconferences.
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For additional information regarding Asian countries and their financial regulations, please review:
http://www.financewise.com/public/edit/asia/links/as-govt.htm
Copyright Laws
A growing concern in the electronics industry is copyright laws. According the the United States Copyright
Office, “Copyright is a form of protection provided by the laws of the United States (title 17, U.S. Code) to
the authors of “original works of authorship,” including literary, dramatic, musical, artistic, and certain other
intellectual works. This protection is available to both published and unpublished works. Section 106 of the
1976 Copyright Act generally gives the owner of copyright the exclusive right to do and to authorize others to
do the following:
• To reproduce the work in copies or phonorecords;
• To prepare derivative works based upon the work;
• To distribute copies or phonorecords of the work to the public by sale or other transfer of
ownership, or by rental, lease, or lending;
• To perform the work publicly, in the case of literary, musical, dramatic, and choreographic works,
pantomimes, and motion pictures and other audiovisual works;
• To display the copyrighted work publicly, in the case of literary, musical, dramatic, and choreo-
graphic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual
images of a motion picture or other audiovisual work; and
• In the case of sound recordings, to perform the work publicly by means of a digital audio
transmission.
Intellectual property owners have lobbied for laws requiring manufacturers to incorporate anti copying protec-
tion in their products. For more information, please visit: http://www.loc.gov/copyright/
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6.0 e-business in Electronics Manufacturing
For many electronics companies the pressure for reengineering is also an opportunity to transform
themselves into e-businesses. This change from a traditional business to an e-business can impact multiple
key business processes within the company.
Electronic business is the secure and timely communication of business transactions and documents such
as purchase orders, invoices, advanced shipping notices and acknowledgments across trading partner
relationships. Most manufacturers equate electronic business applications with Electronic Data Interchange
(EDI), a standards-based mechanism for trading partners to electronically communicate with each other
despite disparate systems, software and architectures installed. In the past, EDI was considered expensive
and difficult to implement. Much of the expense was attributed directly to transaction fees charged by value
added networks (VANs). Today, EDI is growing in popularity because transaction fees can be avoided by
leveraging the Internet as the communications transport mechanism.
Additionally, the growth of the Internet has spawned a number of new application software solutions that are
designed to reduce transaction costs and increase communications efficiency. These new solutions can
connect trading partners through the Internet so companies can collaborate on design issues, provide
customer service in innovative ways, and communicate more effectively both up and down the supply chain.
Many of these new solutions simplify and insulate most, if not all, of the technical implementation
requirements from users.
Business to Business sites have been developed for the Electronics industry. Among them, e2Open has
been quite successful. It is an electronics component exchange made up of 10 founders and 300 buyers
Their first live auction was in September 2000. The solution is composed of i2, Ariba, Partminer and
MatrixOne. It offers: Open Markets - Auctions, Design Collaboration, Supply Chain and B2B Integration and
Infrastructure.
Three Logical Transaction Types of Electronic Commerce
Regardless of whether an organization elects to use EDI or XML, a VAN or the Internet, electronic
commerce has three logical aspects:
Ÿ Database Synchronization - the pre-sale transmission of item, price and promotion information,
i.e. from a manufacturer to a distributor or from a distributor to a customer. The goal of database
synchronization is to develop a common understanding about a given product. For example, the
product item number, item description and pack size can be electronically transmitted across the
supply chain to facilitate communications and downstream revenue cycle transactions. Without
database synchronization, most e-business and supply chain efforts will be significantly
hindered.
Ÿ Revenue Cycle Transactions - a set of transactions that take place during the sale or fulfillment
process. These transactions leverage standardized data from the database synchronization
transactions. Revenue cycle transactions usually include the transmission of purchase orders,
invoices, statements, advanced shipment notices and other transmission types.
Ÿ Electronic Funds Transfer (EFT) – the electronic acceptance of and payment of an electronic
invoice. This payment takes place via an EFT wire transfer, instead of paper-based checks.
Simple Questions, Complex Processes
A familiar e-commerce transaction suggests the potential impact of operating an e-business. For a
customer to buy a computer over the Internet, the transaction includes some simple questions that results
in complex business processes:
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• Configuration question: "What are the features that I can get and combine in the same computer?"
The answer requires a business process called configuration.
• Price question: "What is the price of the set of features?" The business process to determine the
price must include considerations like corporate agreements and special combinations of features,
in addition to per-feature pricing.
• Manufacturing and supply chain question: "Where can I get this configuration, and when can I get
it?" The business process for this question requires real-time access to up-to-date information from
manufacturing and supply chain activities.
The role of reengineering is to enable companies to work effectively in a new environment. Typically,
business processes have not been oriented toward the rapid pace of the sales processes that can occur on
the Internet. Reengineering one or more processes will probably be necessary for companies to compete in
the e-business environment.
e-business in Microelectronics
The microelectronics sub-segment has very specific considerations for e-business:
• Engineering to order
• Build to order
• Sell the stock
These three capabilities exist simultaneously. To be responsive to its customer, an electronics company
must determine quickly the building capacities that it can apply and the specifications that it can change to
meet the customer's requirements.
For example, if a customer wants to buy a particular type of chip that must be customized to meet specifi-
cations (engineering to order), the company must provide the customer with rough estimates both for the
cost and schedule for initial engineering and for the recurring cost of manufacturing the particular semicon-
ductor component. Therefore, reengineering those estimating processes is central for reducing the cycle
time or response time to meet the customer requirements. The ability of a company to respond more
quickly and to be more precise about the cost and the schedule when responding to a potential customer
can make the difference between a win and a loss in the competitive electronics marketplace.
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IBM has created this e-business roadmap for the Electronics segment. There are many potential
opportunities for Electronics companies to use in their organization. IBM’s goal is to help our customers
become e-businesses by implementing solutions that span across multiple business processes (Design,
Manufacturing, Marketing/Sales, and Customer Support). Our value proposition is to position IBM and IBM
Business Partners as the preferred partner for companies seeking to transform themselves into an
e-business, benefiting from IBM's e-business thought leadership, industry skills and expertise, and solution
offerings.
IBM and IBM Business Partners have a unique opportunity to establish leadership in this marketplace
because:
1. IBM has repositioned itself as a R&D and technology leader
2. The Internet is transforming this industry and creates opportunities for new partnerships.
3. IBM is a Global Electronics company which has successfully transformed itself and can be used as a
reference.
Major areas of e-business are: Product Design Management, Global Production, Supply Chain Management
and Customer Value Management. Many of these items are discussed in Section 8.0 Recent Initiatives.
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37
The Electronics e-BusinessThe Electronics e-Business
Design Manufacturing Customer SupportMarketing/Sales
Customer Value Management
Market Analysis
Channel Management
Sales Force Automation
Customer Care
Call Center
Spareparts Mangement
Warranty Management
Product Design Management
Intellectual Property Mgmt
PC Board Design
Integrated Curcuit Design
Application Specific Design
Innovation
Engineering Document Mgnt
Design Collabolation
Analysis and Simulation
Product Design Management
Global Production &
Supply Chain Mangement
Production Planning
Manufacturing Execution
Plant Operations
Procurement management
Supply Chain Optimization
Order- to - Delivery Management
Enterprise Resource Planning
Yield Management
Business Mangement & Support
Finance and Accounting
Human Resource
Legal
Decision Support
IT Infrastructure Web Technology & Common
Desktop
e-business framework
Security & Access Control
System Outsourcing

IGS consulting & SI
services, e-business
framework, RSD,PSG,
middleware(MQSeries),
Notes, Domino,DB2.
e-business,
e-commerce,
SCM,CRM
IBM can provide the
entire IT infrastructure
for our solutions from
Servers, Storage,
Network Management,
Database and Middle-
ware to help our
customers develop and
run their e-business in a
scalable, available, and
safe environment.
e-business enablement
- e-business
assessments
- SurfAid( Web stats)
RSD, BT Consulting,
services, Catia, Enovia
PDM, BISolutions, Consulting
and Services to improve
product design, innova-
tion and time to market.
Product Design
Management
Net.Commerce, IGS
services and consulting,
RSD,PSG,
middleware(MQSeries)
ERP, e-business appli-
cation framework,
e-commerce
ERP is now being
extended by web
enabling of the ERP
environment. Business
transformation services
web enables these
processes.
ERP Bolt On’s
Own and run by IBM.
Use IBM e-business
infrastructure. IGS
hosting support,
consulting and SI
services.
CRM, BIVCMS is an e-business
platform for Virtual
Communities which will
enable trusted business
to business
transactions.
Community Enablement
E-business portfolio;
RSD, PSG, middleware
(Tivoli, MQ Series), DB2
and Siebel SW.
CRM, BISolutions, Consulting
and Services. IBM’s key
offering provides CRM
functionality via hosting.
Move towards Siebel as
offerings emerge.
CRM
- CRM Assessment
- e-Care
RSD, PSG, i2, IGS,
Aspect
SCM, ERP,
e-commerce
Consulting designed to
streamline the supply
chain. IBM’s software
partners include i2, IMI
& Aspect. IBM will
provide implementation
services and
technology.
SCM Enablement
- Planning
- Scheduling
- Parts Management
- Warehousing
- Plan Automation
IBM Product
Conent
Multi-Industry
Linkages
Solution FocusSolution
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