Customer Solution Case Study
/ Electronics Manufacturing Service Provider Integrates Supply Line on a Single Platform
Overview
Country:Singapore
Industry:Electronics
Customer Profile
Singapore-based Flextronics is a leading electronics manufacturing service provider focused on delivering operational services to technology companies around the world.
Business Situation
Flextronics needed a single communications platform that supports EDI, RosettaNet, and standard XML to integrate with its customers and suppliers.
Solution
Flextronics implemented Microsoft® BizTalk® Server, Covast EDI Accelerator for BizTalk® Server and BizTalk Accelerator for RosettaNet in 60 days
.
Benefits
Accelerated integration
200 percent reduction indocumentprocessing time
30 percent decrease inelectronic communications costs
Increased IT productivity / “With BizTalk Server, we can...exchange any kind of file format that we need to, which simplifies our communications process and lowers IT costs.”
James Simpson, Senior Director, Flextronics
With support for EDI, RosettaNet, and standard XML, Microsoft® BizTalk® Server, BizTalk Accelerator for RosettaNet, and EDI Accelerator for BizTalk Server from Covast are enabling Flextronics to integrate with its customers and suppliers on a single communications platform. This makes it easy to add new customers and makes it more cost-effective to work with existing customers who are using a range of document formats. Flextronics projects that having a single communications platform will accelerate integration with customers, reduce processing time by 200 percent, and reduce electronic communications costs by 30 percent, giving it a significant competitive advantage.
Situation
Flextronics is a leading electronics manufacturing service (EMS) provider that focuses on delivering supply chain services to technology companies. Flextronics provides design, engineering, manufacturing, and logistics operations in 29 countries and five continents. It produces thousands of high-technology products—including cellular telephones, computers, routers, and medical instruments—for organizations ranging from startups to global enterprises such as Xerox and Ericsson. With more than 90,000 employees in 29 countries on four continents, the company generated annual revenues of more than U.S.$13 billion in fiscal year 2002. Its global network of facilities situated in key markets provides customers with the resources, technology, and capacity to optimize their operations.
Flextronics has integrated its customers’ sales order process seamlessly into its own sales order creation. As a result, Flextronics is able to build and ship products to its customer’s end customers without the appearance of third-party involvement. The success of this business model results from Flextronics’ ability to rapidly communicate information with customers and suppliers.
In the initial project, Flextronics implemented electronic data interchange (EDI), Extensible Markup Language (XML), RosettaNet, and File Transfer Protocol (FTP) applications to support rapid communications along the supply chain.
Until early 2002, the company was using one platform for EDI and another platform for RosettaNet. Those systems met the needs of various customers and suppliers, but Flextronics wanted a solution that would support the needs of all customers and suppliers globally on a single platform yet have minimal support costs.
The RosettaNet platform that Flextronics was using couldn’t process high-volume EDI translations. In fact, the RosettaNet platform could take up to eight hours to process a document that took only about 20 minutes to process on the legacy EDI platform. As the company looked at ways to streamline processes and reduce costs, Flextronics decided that it was time to implement a new communications platform that could handle both X12 and EDIFACT EDI and XML, and that supported all RosettaNet standards. The key requirements for the new system included:
Scalability
Reliability
Support for a wide range of formatsincluding EDI, XML, RosettaNet, andFTP
Easy implementation and management
“Our intent was to have one platform and one mailbox for all electronic communications worldwide,” says Flextronics Senior Director James Simpson. “This will allow us to have one process and one integration point to communicate with our suppliers and our customers. And that reduction in complexity saves management costs, allows us to be more responsive to our customers, and increases our agility within our supply chain.”
Flextronics evaluated other solutions but found that Microsoft® BizTalk® Server, BizTalk Accelerator for RosettaNet, and EDI Accelerator from Covast combined to meet all its requirements for scalability, reliability, support for a wide range of formats, and easy implementation and management. In addition, Flextronics chose BizTalk Server because of its tight integration with the rest of the Microsoft server products, its support for industry standards, and the availability of worldwide support from Microsoft.
Solution
Working with Microsoft Consulting Services (MCS) and Vertigo Software, Flextronics began its move to BizTalk Server in February 2002. MCS helped to build a flexible solution based on BizTalk Server to meet Flextronics’ specific needs, which included customizing the management of batching and debatching documents for EDI to save significantly on EDI charges. MCS designed the mapping and orchestration schemas using BizTalk Orchestration Designer to set up the automated workflow logic based on Flextronics business design.
The project also included EDI Accelerator for BizTalk Server from Covast. EDI Accelerator is tightly integrated into BizTalk Server and is built on the latest Microsoft .NET technology, which is software that connects information, people, systems, and devices. EDI Accelerator adds comprehensive EDI functionality to the XML-based BizTalk Server environment so that customers can obtain a unified view of the monitoring, management, and configuration for all their XML and EDI transactions. Additionally, this extended functionality enables companies to standardize on one platform so that they can leverage current EDI trading partner relationships and move to newer technology such as XML at their own pace as financial conditions permit.
Project development and preliminary testing and validation took about a month. In March 2002, Flextronics launched a pilot in its San Jose, California, facility, which ran for about a month. At the end of that pilot, Flextronics went live with BizTalk Server, transparently migrating nearly 100 trading partners to the new solution and eliminating its old EDI X12 infrastructure. This enabled Flextronics to implement EDI X12 and XML document processing on the same BizTalk Server configuration, which ran on one dual-processor server with 2 gigabytes of RAM. The company is in the process of creating new RosettaNet integrations on BizTalk Server to replace those already in place, in addition to building RosettaNet integrations for new projects. Flextronics has clustered this environment for complete high availability.
Within the Flextronics supply chain, some organizations use EDI, some use RosettaNet, and some use standard XML document exchange. “With BizTalk Server, we can do RosettaNet, EDI, and standard XML all on the same platform,” Simpson says. “We can exchange any kind of file format that we need to, which simplifies our communications process and lowers IT costs.”
The BizTalk Server solution integrates the entire group of applications that Flextronics uses in the manufacturing and distribution process, including:
Advanced planning systems
Enterprise resource planning (ERP)
Shop-floor systems
Logistics systems
Central data warehouse
Flextronics services range from building just component assemblies, to designing, taking orders, building the entire product, and managing outbound logistics. In the latter case, where Flextronics handles the end-to-end process, the company first receives a forecast from the customer, which typically comes in through BizTalk Server and goes into Flextronics’ advanced planning system. In that system, Flextronics collaborates with its customer, factory personnel, and suppliers to establish a manufacturing plan that then is routed through BizTalk Server to the ERP system. From there, work orders are issued to the shop-floor systems, and instructions are sent to the logistics systems. All the data ultimately resides in Flextronics’ central data warehouse.
“A typical customer will send over anywhere from a handful to maybe 5,000 purchase orders a day,” Simpson explains. “Those purchase orders go automatically into our ERP system, and the customers get confirmations that the POs were accepted. BizTalk Server helps us manage exceptions. The PO is transformed into a work order from our ERP system, which is then transferred to our shop-floor systems. When the assembly process is complete, the products are shipped out and advanced ship notifications are then routed back through BizTalk Server.
“In the past,” he continues, “if we received 1,000 orders at 8 A.M., it would be the end of the day before we keyed all of those orders in manually. Now we can make shipments within hours after receiving the orders.”
Benefits
Accelerated Integration Drives Growth
Microsoft BizTalk Server supports virtually any format that a customer may have, making it easy for customers to integrate their systems with Flextronics to get the maximum benefit from its services. The integration process itself is much easier for customers because of the broad support for EDI, RosettaNet, and other XML standards within BizTalk Server and BizTalk Accelerator for RosettaNet.
“BizTalk Server didn’t change any of our processes, but it’s certainly making it easier for us to accelerate the number of suppliers and customers that we integrate with because it drastically reduces the time that it takes to connect with our trading partners,” Simpson notes.
BizTalk Server also makes that integration appear seamless. “When our customers take an order, it appears that Flextronics is taking an order, and when Flextronics ships an order, it appears that the customer shipped it,” Simpson says. “We can become invisible in that automation process if our customer so chooses.” A return-on-investment (ROI) study conducted by Nucleus Research estimates that BizTalk Server is helping to reduce the time it takes to process documents by 200 percent.
Having a single integration platform is also expected to pay off as businesses become increasingly global. As companies compete globally, they want to deal with EMS providers that can handle their business globally with a single process. “A big reason for our going to BizTalk Server was to answer our customers’ needs for global standardization,” Simpson says.
Increased Cost Efficiency Builds Competitive Advantage
By making it easier for Flextronics to integrate with customers and suppliers on a variety of platforms, BizTalk Server is helping to make it more cost-effective to do business with Flextronics. “The increased ease of integration makes it more practical for our customers to outsource manufacturing and helps to reduce the costs of doing business in their own environment,” Simpson says. As of July 2002, Flextronics had connected several of its suppliers on the BizTalk Server–based platform and had automated three business processes, including forecasting, order management, and invoicing. The Nucleus Research ROI study projects that this will reduce electronic communications costs by 30 percent and reduce errors by virtually 100 percent.
Because EDI is still the major integration standard for manufacturing, it is critical that Flextronics choose a platform that supports EDI in all its various forms, as well as RosettaNet and standard XML. “It’s no small thing to be flexible enough to do any type of EDI standard,” Simpson says. “EDI standards are very complex, and there are various specifications within each standard. The backward compatibility of BizTalk Server and its ability to integrate legacy interfaces as well as new systems, along with the functionality of EDI Accelerator, aresignficant for us.”
Daan Scheer, Chief Executive Officer (CEO) and founder of Covast, says that with this solution, Flextronics not only saves time and money, but also has much greater visibility into all of the information about incoming orders, inventory levels, and the business activity monitoring provided by BizTalk Server.
“They can see when orders come in that exceed current capacity or inventory, and get real-time messages back to the supply chain notifying them of issues,” Scheer says. “Before, all of that was handled in batches or manually—not in real time.”
Increased IT Productivity Helps Reduce Costs
An ROI study indicates that, by enabling Flextronics to administer and maintain a single communications platform globally rather than multiple systems around the world, BizTalk Server can reduce the company’s electronic communications management costs by 30 percent. In addition, the ROI study estimates that the integration functionality provided within BizTalk Server saved the company approximately 1,000 hours of development time in implementing BizTalk Server to consolidate its three systems into one.
Future Plans
“Our ultimate intent is to have one platform and one global address for all electronic communications globally,” Simpson says. Flextronics is transitioning all of its customers to the new system, and all new customers are added immediately to the BizTalk Server–based solution. The company expects to have all of its largest customers and suppliers on the BizTalk Server solution by mid-2004.
Microsoft Windows Server System
Microsoft Windows Server SystemTM is a comprehensive, integrated, and interoperable server infrastructure that helps reduce the complexity and costs of building, deploying, connecting, and operating agile business solutions. Windows Server System helps customers create new value for their business through the strategic use of their IT assets. With the Windows ServerTM operating system as its foundation, Windows Server System delivers dependable infrastructure for data management and analysis; enterprise integration; customer, partner, and employee portals; business process automation; communications and collaboration; and core IT operations including security, deployment, and systems management. For more information about Windows Server System, go to: