Gaining Competitive Advantage through Improved Management of Information and Material Flows A Case Study at Flextronics Network Services

Abstract

The future competitive advantage of a company will come from responding to customers needs at the end of the supply chain in a better way than competitors. Logistics plays a key role in this process. The underlying philosophy behind the logistics concept is planning and co-ordinating the material flows from source to user as an integrated system rather than managing the goods flow as a series of independent activities. The cost of purchased materials and supplies is a significant part of a total costs in most organisations, but there is also a major opportunity for leveraging the capabilities and competencies of suppliers through closer integration of the buyers’ and suppliers’ logistics processes. The purpose of this study is to investigate for Flextronics Network Services the current situation regarding tied up capital in the inventory and to formulate proposals that will reduce the tied up capital. Flextronics Network Services requested also a proposal of how the company could gain a competitive advantage with their project logistics in the future. In order to solve the problem, a case study was conducted with one business process in focus. To investigate the tied up capital in inventory, a mapping of material and information flows of one of Flextronics’ business processes was carried out. To identify where in process information is generated and how the information could be used. The mapping was the tool for finding where information was occurred. When information flow was identified the articles were traced and by this mapping the tied up capital in inventory was calculated. A proposal for how reduce the tied up capital in inventory has been given. It consists of reducing or, if possible, eliminating demand and suppliers’ uncertainties. For a company to gain a competitive advantage with its supply chain, it has to be co-ordinated together with other members of supply chain. This implies that there is a need for companies to integrate business processes across the supply chain, both internally and externally. Since the future competition will be between supply chains, the main pathway for FNS should be the integration of its supply chain by optimising it, first internally and then externally.