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Requirement for a mobile and flexible platform for the digital appliance market
Sony is the leading company in digital appliances with Sony Marketing (Japan) Inc. responsible for the marketing and sales of its products in Japan. However, today’s digital appliance market has a number of characteristics never previously encountered by Japanese manufacturers..First there is fierce competition as new competitors can easily enter the market. Inparticular overseas companies and venture companies which excel at special technology or have new innovations are entering the market. Secondly the price of devices fluctuates from technological innovation and competitive change and creates swings in supply and demand. For instance, when HDD or liquid crystal panel prices rise, product profitability is put under pressure and cannot be guaranteed. Thirdly products quickly become obsolete and product life cycles become short.
As a medium size organisation, Sony Marketing Australia is not justified to invest so much on manpower to support the major IT activity. By outsourcing, it could be more flexible and better take advantage of the latest developments in technology.
An outsourcing contract signed between Sony Marketing Australia and Fujitsu in 1997 resulted in 77 Sony Marketing IT staff transferring to Fujitsu as full-time employees. In late 1997, Fujitsu has managed Sony Marketing's mainframe and midrange data centre services, including the operation of a Fujitsu M780/20 mainframe. Sony Marketing moved its legacy applications to a SAP/3 ERP (Enterprise Resource Planning) platform some years ago, and Fujitsu has the service support contract for these SAP operations.
Fujitsu manages Sony Marketing's IBM AS/400 midrange machines, and it also supports the car manufacturer's PAMS (Parts Application Management System) application. Fujitsu is now working with Sony Marketing as IT manager to improve not only IT services, but also to assist Sony Marketing to use IT as the enabler to improve its many business services.
If products in large production runs become stale, the manufacturer may have to hold large volumes of dead inventory.
So far, the key to success for manufacturers was fast large volume production with a quick sales turn around. But in the digital appliance business, carelessly planned large volume production and bad inventory can endanger the life of the company. When a sales downturn is judged production must be stopped immediately with quick action required. Measures to be taken include production stop, transfer of device inventories to other production lines, and the planning of new products. For this to succeed exact demand prediction is essential. And on this basis, a mobile and flexible manufacturing organization is also a necessity.
Mr. Shimada, the General Manager and project leader for business operations planning & management at Sony Marketing (Japan) Inc. says, “Shorter production life cycles are a kind of destiny for the digital appliance business. We must also maintain our profits in this situation. To tackle this Sony (Japan) Marketing is building a new sales platform.”
Fujitsu was selected for the requirement of building a high performance system in the shortest time
The project started in April 2001. For success, Sony Marketing (Japan) needed to work with other Sony group companies. Major groups involved included Sony EMC (EMCS), the division responsible for production and Sony Supply Chain Solutions (SSCS). But it was a big project where the whole Sony group became involved.
The strategic systems at the core of the new platform were the Demand Information Creation system and Delivery Time Forecast system. The Demand Information Creation system predicts sales volumes and adjusts production within EMCS. Now all processes are performed online.
Previously account sales couldn’t provide timely delivery times to their customers, so to improve service levels, a delivery time forecast system was built to answer delivery time questions immediately on order.
“These two systems embody special Sony unique and are the lifeline of the Device Chain Management’s (DCM’s). Sony initially planned to use an ERP package, but this was subsequently rejected. They decided to build their own special system based on ASCA instead” said Mr. Shimada. The ASCA, SCM system was built for sales of VAIO, Sony’s PC and is excellent, being awarded ‘Best Solution in Sony Group’. Fujitsu supported the building of this system and Fujitsu also took part in the systems integration.
Mr. Matsushita, General Manager of the ISS department in Sony Marketing (Japan) Inc.]
“Fujitsu had the experience and the reliability to lead this big project. A high performance system had to be built in a very short time. To accomplish this Fujitsu, as a provider of total solutions from hardware, OS, middleware, to application software, was the best choice.” Said Mr. Matsushita, General Manager of the ISS department in Sony Marketing (Japan) Inc., and also a system project leader on this project.
Sony Marketing (Japan) decided on Fujitsu in April 2002 and construction of the Demand Information Creation System commenced in May 2002 with the system going live in April 2003. The Delivery Time Forecast System followed this in Nov. 2002, which went live in May 2004.
Accurate delivery time forecasting with real-time link to orders system (ERP)
The Demand Information Creation System collects the actual sales data from Sony’s volume resellers. By adding in the inventory and other related information the system predicts demand, for a period of 33 weeks ahead, for each product. These predictions are then transmitted to EMCS who are responsible for manufacture and production adjustments. The delivery time forecast system provides delivery time answers to order requests by collecting production plan and inventory information. If there is no inventory, it confirms the production finish dates by reference to the production plans in the factories. If there are no production plans, it searches for replacement products. When handling mixed orders, for instance PCs and Displays, whichever is the later product delivery time is the delivery time provided. The inventory database holds up to ten million entries and process one hundred thousand orders a day with the system calculating delivery times(including logistics lead times) within 0.1 of a second.
To ensure this level of performance, high performance UNIX servers were used. Each has 32 CPUs and 104 GBs of memory. The high performance however is not just a function of the hardware. Mr. Matsushita states “ In system design, we built a new business model with a total system architecture. Using this as the basis we create the applications. Importantly for future flexibility the application framework we created enables linear performance improvement in proportion to server hardware expansion. ”
The creation of a ubiquitous value chain to maximize synergy across all Sony services
Mr. Matsushita talking about future plans says. “This is a strategic system, so it will need to be improved to meet business environment changes. Evolution is our mandate, so we can’t rest. We cannot underestimate the risk of a hundred thousand orders being stopped.”
Mr. Shimada also says that their goal is a ubiquitous value chain - a grand dream. “This system deals with the hardware product supply chain, but Sony’s products aren’t just limited to hardware products. There are also movies, music and insurance. We will accomplish the basis for Sony’s electrical business support by maximizing the synergistic effects on the whole of Sony’s services. This will be our value chain.”
The delivery time forecast system would be released as a packaged product of GLOVIA/SCP. Sony is pushing to create a new market with this. Fujitsu is supporting Sony with these IT perspectives.
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