Supply Chain World - Fall 2017 - 52

manufacturing & energy seagate technology

Seagate says a strong supply
chain helps it to improve its
responsiveness and flexibility.

enterprise applications. Instead
of building millions of small,
inexpensive hard drives for notebooks, the company now ships
higher quantities of high-capacity
HDDs for data centers. It has also
entered some markets it was not in
before, such as surveillance, which
requires large storage capacity to
keep video records.
That's not to say the company
has completely left the consumer
market. Seagate's presence in the
video game market has grown as
players demand larger hard drives
on which to store their software.

Evolving Supply Chain
Making that shift required Seagate
to reorient its supply chain around
the cloud storage market. Less
demand for consumer HDDs led
the vertically integrated company to close its factory in Suzhou,
China, earlier this year, creating a
ripple effect throughout the supply
chain. "There are parts of the supply base that are really driven by
unit volume," Meirelles says.
Previously, Seagate's strategy
was to have a wide supplier base to
create redundancy and upside flexibility. But with fewer HDDs in production it made sense to switch to
a smaller supply base centered on
risk mitigation and supply continuity. "What we had to do was really
understand how we could consolidate the supply base and still make
it attractive and profitable for the
suppliers," Meirelles says.
Efficiency and costs savings are
key parts of the new approach. Instead of trying to pay more to keep
struggling suppliers afloat, Seagate
identified vendors with which it
could have an open relationship.
52

Supply Chain World FALL 2017

It sent its own teams to those
suppliers to review their finances,
determine problem points and
eliminate cost drivers.
"We have created a process that
monitors our suppliers," Meirelles explains. "It's not only the
financials, but we also look into
other aspects of the relationship
with the suppliers, ranging from
location to how much they rely on
Seagate for the business."
With Seagate's help, some
companies were able to reduce
headcount, improve their cash
conversion cycle or eliminate
unnecessary quality requirements. Meirelles says that strategy
allowed the suppliers to become
more profitable even at a lower
volume of work.

Digitizing Visibility
Seagate's close relationships with
suppliers is built on a foundation of
openness. To operate more effectively, suppliers and Seagate needed
better visibility into the company's
demand forecast. "Being vertically
integrated, a lot of our processes
are fairly complicated," Meirelles

says. "There are a lot of different
ways to get the product."
Seagate realized it needed to
digitize and connect the various
nodes of its supply chain. It used
E2open's cloud-based supply
chain software to share demand
and supply commitments between
its factories and vendors, resulting
in faster delivery of materials and
more efficient inventory management. The company is now
working with Adexa to develop a
complex model that will automate
the planning of the entire supply
chain and demand propagation.
Other technologies Seagate
has brought into its supply chain
include e-sourcing and cloud B2B.
The company was also an early
adopted of certified lean master
practices and going forward it is
exploring blockchain databases.
"Our customers' demand is
fairly unpredictable and our lead
times are long," Meirelles notes.
"Supply chain helps improve our
responsiveness by creating component supply flexibility, including
for components that we also build
in-house."



Table of Contents for the Digital Edition of Supply Chain World - Fall 2017

Contents
Supply Chain World - Fall 2017 - Cover1
Supply Chain World - Fall 2017 - Cover2
Supply Chain World - Fall 2017 - 1
Supply Chain World - Fall 2017 - Contents
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