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Flextronics: Deciding on a Shop-Floor System for Producing the Microsoft X-Box - Case Analysis


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1. 5 factors that make the decision difficult for McCusker:
- Aggravation of both teams: If he decides to use either Datasweep or Virtual Factory, the other team may feel “lost”, which subsequently affect the harmony between two teams.
- Time pressure of the project: There is not enough time for further analysis on the systems.
- Unusual importance of the project: This is Flextronics’ first global project and its success or failure can affect the company’s reputation and ability to bid for future projects. It is closely observed by internal and external parties. In additional, the relationship with Microsoft is particularly important to Flextronics.
- Pros and Cons of the choices: there is no single alternative that can solve all the problems.
- Overstated infrastructure: during the bid process, Flextronics made Microsoft thought that a single system had existed in both facilities and raised it expectations very high while in fact the system was not already in place. 2. The criteria that McCusker should consider in his decisions:
- Client’s satisfaction: This includes three sub-criteria: meet Microsoft’s tracking system requirements, deliver products on time and ensure product quality.
- Employees’ satisfaction: Regardless which decision he make, McCusker have to ensure that employees at both factories are convinced with his decision and coordinate well with each other.
- Cost-saving: The purpose of implementing the process at two different factories in two countries is to save cost (such as cost of shipping). 3. Analysis of alternatives and the consequences of pursuing them
Choice 1: Datasweep in Mexico and Hungary
- Pros: This choice will meet Microsoft’s expectation of a single system to track production processes. It will eliminate Microsoft’s doubts about the new system because Datasweep has been approved by Microsoft. Moreover, the system will be implemented and maintained by a professional IT company. System quality can be warranted because most software development projects will have a warrantee period ranging from 3 months to a year in which vendor’s experts will help to run and maintain the system. This choice will probably receive CEO Marks’ support as he clearly stated that Flextronics should only focus on its core business. It also served as a part of the plan to introduce the software to all large-scale factories.
- Cons: If McCusker goes for Datasweep, he’ll face opposition from the Hungary team. Also, the cost is high. Lastly, there might be unforeseen challenges implementing Datasweep in Hungary that may affect the delivery schedule.
Choice 2: Virtual Factory in Mexico and Hungary
- Pros: A cost-saving choice which makes the Hungary team happy.
- Cons: As an internally developed project, the system is unproven to function outside of Hungary. It is undocumented and thus very hard for the junior team in Mexico to learn and maintain without on-site support from Hungary team’s experts. It also imposes extra maintenance responsibilities on Hungary team and diverts the team away from focusing on manufacturing the X-box. Most importantly, Microsoft is unaware of Virtual Factory. Flextronics should communicate with Microsoft if Virtual Factory is installed in both facilities. In fact, Microsoft is unlikely to tolerate this change as it has no time to inspect the new system. Furthermore, because Microsoft did not see and approve Virtual Factory during bidding process, if issues happen, Microsoft is unlikely to forgive and that will seriously affect the relationship between Flextronics and Microsoft as well as damage the company’s reputation and ability to bid for future global projects. As such, in my option, the risk involved with this choice is too high for Flextronics to endure.
Choice 3: Datasweep in Mexico and Virtual Factory in Hungary
- Pros: No significant internal change is needed. It could save time and reduce the risks associate with implementing a new system in one facility.
- Cons: Flextronics will not able to meet client’s requirement for a single system. Microsoft is unlikely to accept that. Similar to choice 2, it will also cause Microsoft and other watching parties to be skeptical about Flextronics’ ability to implement large-scale projects. 4. Recommendations for McCusker and Flextronics
As analyzed in section 3, all the alternatives have pros and cons and clearly there is no decision could meet all the criteria identified in section 2. As such, Flextronics needs to prioritize these criteria accordance to the company’s goals for this particular project and identify which criterion is the most important one. This project is not just about making money. It is Flextronics’ first global project and many internal and external parties are watching to evaluate Flextronics ability to implement large-scale global projects. Because this project directly affects the company’s future, I would recommend Flextronics to put client’s satisfaction as number-one priority. In other words, Flextronics have to meet Microsoft’s expectations by all means even with the cost of not getting a profit for this project or changing some internal processes.
With that in mind, I recommend Flextronics to go with choice 1: Datasweep for Mexico and Hungary. Rick Vingerelli (Microsoft) have said “We finally award them the business after Bob Dykes showed us Datasweep and committed to installing it in Guadalajara”. This choice will ensure the system that Microsoft saw during the bidding process is actually implemented in both facilities. In addition, because the Hungary team is by far more experienced and sophisticated in IT than the Mexico team, it’s easier for the Hungary team to adapt to the new system from Mexico than the other way round. Furthermore, this choice will free Flextronics’ employees in both countries from doing IT maintenance works and focus on there core business of manufacturing.
Besides, I have some recommendations for McCusker to minimize the cons of choice 1:
- Hungary’s team opposition: Humphrey Porter said that his team would only switch if it was mandated by Flextronics CEO. So, McCusker can ask CEO Marks for help. I think Mr. Marks will probably happy to help because he himself is opposed to internal developed projects that are not their core business. To reduce Hungary team opposition, McCusker can also transparently communicate with them on why he makes such decision so that they can understand that the decision is fair and will benefit Flextronics in long-term, and appreciate them for their cooperation.
- Operational risks of implementation Datasweep in Hungary: We can reduce these risks by negotiating with Datasweep to make the warrantee period long enough to cover the manufacturing period.
- High cost: Flextronics should consider the high cost associated with implementing Datasweep in both facilities as an investment to get the company a smooth entrance to future large-scale, global projects. 5. Lessons for application
I think we can learn four lessons from this case. The first lesson is: When none of the possible alternatives meet all of your criteria, prioritize the criteria and go with the decision that help you to meet the most important criterion. Secondly, part of the problems is because Flextronics raised Microsoft’s expectations too high during the bidding process (Microsoft thought Datasweep is already implemented in all facilities). So the second lesson is: Do not overpromised or raise clients’ expectations too high if you might not be able to keep your promise or meet their expectations. Thirdly: Approach the issue with a long-term view. If McCusker goes for short term benefits (cutting cost), he might damage the company’s future ability to bid for similar large-scale projects. Lastly: Be assertive in your communication. This lesson is drawn from the fact that the only way for McCusker to overcome Hungary’s team opposition is to assertively elaborate to them the long-term benefits of his decision to the company.

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