Future Electronics is a world leader and innovator in distributing and marketing semiconductors and passive, interconnect and electro-mechanical components. Future is a private company, headquartered in Montreal, Canada. The company differentiates itself by providing an exemplary standard of customer service through product marketing, technical solution support, in-depth inventory, professional selling procedures, and highly-reliable distribution systems.
For the company’s supply chain group, this means it must hold a relatively large available-to-sell inventory. Future supports this with a high-velocity supply chain and bonded inventory management and e-commerce programs. This allows customers to practice lean and just-in-time (JIT) manufacturing. According to Bernard Betts, Vice President of Worldwide Operations, “Being private is an advantage for us. For our main competitors, who are public, inventory is a liability; for us, it is an asset.”
Most of the company’s shipments go parcel, although it also does less-than-truckload shipments. Future offers customers a variety of transit times, including next-day deliveries using overnight air. To deliver efficiently to customers with JIT programs, the company has highly-automated distribution centers (DCs) near the leading air carrier hubs. It has a DC near Memphis, Tennessee in the US, so it can do next-day deliveries using FedEx. A second DC in Leipzig, Germany is close to DHL’s air hub. The company’s third DC is in Singapore.
To support the velocity, Future has negotiated late-as-possible airport delivery cutoff times with its air carriers. In North America, this means that even if orders come in at 11:45 pm, the company can still commit to next day delivery. To support this high-velocity supply chain, Future propagates orders backwards from these airport deliveries. If the airport delivery is at midnight, Future determines how long it takes the FedEx trucks to get from its Memphis DC to the airport, how long it takes to load the trucks, and what time the DC pick wave should start to support staging these orders on the dock to meet the truck’s arrival.
In any intelligent supply chain, buffers help ensure that even if something goes wrong, goods will still arrive when and where they’re supposed to. For Future, this means that the warehouse waves start a bit earlier than if everything ran smoothly. The company also provides more buffer at times of the day when multiple trucks are scheduled to arrive at its DC. However, Future Electronics’ extraordinary level of DC automation allows for much tighter buffers than you would see in a manual warehouse.
To support such tight buffers, the company’s new transportation management system (TMS) and global trade management (GTM) solutions had to be smoothly integrated with its Witron Warehouse Management System (WMS). The TMS would be integrated upstream to help with an efficient wave creation process. The GTM would perform denied party screenings and create the proper export documentation once goods were staged on the dock. These systems also needed to be scalable (to support very high volumes); bulletproof (system downtime would be totally unacceptable); and quick (parcel print labels had to print very quickly to support the company’s volumes and velocity).
This led to a rather unique business case. Usually companies implement a TMS to save money in transportation. In Future Electronics’ case, however, the business case was all about DC throughput. If its TMS and GTM solutions were not reliable, order fulfillment would be affected adversely. The two key metrics in the vendor contract were guarantees associated with label print speed and system uptime. Success in meeting those metrics would determine the ultimate success of the implementation. Future also wanted a global solution, a single system that it could use in Singapore, Leipzig, and Memphis, but host at its worldwide corporate headquarters in Montreal. If possible, the company also wanted to obtain both the TMS and GTM from the same vendor.
Future Electronics began the selection process in 2007 and completed it in 2008. The supply chain team spent six months looking at vendors followed by one month negotiating with the preferred supplier.
Future’s selection process included some interesting wrinkles. Once the team narrowed down the final four vendors, it took the obvious step of visiting all four vendors to see the product. But the team also took a very close look at the support capability of each of the shortlisted vendors. It looked at how many people were on the support teams, whether the vendors could provide global 24/7 support, and the support processes.
The selection team also visited two users of each finalist’s solution where team members were careful to speak with actual power users, as well as with the top supply chain executives.
And once again, the team focused on vendor support. Team members asked the users about any issues they may have had with the system and how well the vendor responded. Future expected problems. In fact, it would have been suspicious if users didn’t mention any problems. However, the team was more concerned with how the vendor responded to issues, the path forward, and if it provided a permanent or temporary solution.
So, what was the result of this process? Ultimately, Future Electronics selected Precision Software, a division of publicly-traded QAD, Inc. (and a Logistics Viewpoints sponsor). Precision offers best-of-breed transportation and global trade software, with proven ability to support the product globally. It also provided Future Electronics with an impressive industry reference: Apple.
To date, Future Electronics has expressed satisfaction with Precision. The implementation went fairly smoothly despite some unanticipated requirements for the Memphis DC. The Memphis implementation took longer because while the standard process is to clear customs in the air and then land at a particular airport, Future wanted to be able to clear customs in the air but then have that plane land at as many as eight different airports. While the other two sites were implemented in three or four weeks, Memphis took seven weeks because of these more complex workflows and configuration complexities.
Significantly, Precision was able to meet Future Electronics’ core metrics related to system uptime and speed of printing. This supports Future’s desire to create a high-velocity supply chain with minimal buffers.
Often, when implementing systems, the goal is to get to a standard operating procedure and then leave the system alone. In contrast, Future continues to improve its system. It has a process in which it gets its three DCs to agree on priorities. Then it asks Precision what the enhancements would cost. Some enhancements involve minimal cost, since Precision includes the new functionality in its next release. Some enhancements will cost more because they will not be applicable to the installed base. Mr. Betts told ARC that Precision has been very reasonable in this area. This continuous improvement process benefits not just Future, but also helps Precision improve its offering as well.