Solectron

Supply Chain Management Best Practice

Background

Solectron was founded in 1977 as the as the “Solar Energy Company”, and originally produced solar energy products. Today it is a worldwide provider of electronics manufacturing services to original equipment manufacturers (OEM’s). The company provides customized, integrated manufacturing services that span all three stages of the product life cycle, including pre-manufacturing, manufacturing, and post-manufacturing (see Table 1). These servies are now integrated to the point where Solectron is now responsible for all supply chain processes associated with sourcing parts, building, and distribution of electronics and systems for almost every major OEM customer in the industry. A list of primary OEM customers is shown in Table 2, which spans the telecommunication, networking, computer systems, peripherals, semiconductors, consumer electronics, industrial equipment, medical electronics, avionics, and automotive electronics industries. These industries are in different stages of maturity, with network manufacturers fairly new, and computer systems fairly mature. The diversity of major customers in this list is testimony to their success.

In 1991, Solectron won the Malcolm Baldrige National Quality Award, reflecting the high level of performance achieved within this company. The company has also been honored with more than 100 recognition awards, 25 of which were received this year (see Table 3).

The financial growth of Solectron in recent years has been incredible by any standards (see Table 4). Most recently, Profit Before Taxes exceeded 6%, with gross margins increasing to 12%. Compounded annual sales growth rates have exceeded 60% over the last 5 years, and 66% over 18 years. Sales in 1996 exceeded $2.8 billion. The company employs more than 14,500 people worldwide.

The reason for