An article published in CSCMP Quarterly presents the adoption of a multimodal segmented supply chain strategy at Western Digital Corporation (WDC). The company provides storage technologies and solutions such as hard-disk drives, solid-state drives, embedded and removable flash memory, and storage-related systems.
The following figure presents WDC’s silicon supply chain footprint.
The following figure presents WDC’s manufacturing and replenishment approach prior to 2009. In this approach the company built products as per forecast and positioning inventories at the furthest downstream stage. To ensure stability in the production plan (but at the expense of responsiveness to changing customer needs), the demand signals were frozen over a period of four to six weeks.
After the 2008 recession, the company developed postponement capabilities and adopted a multimodal supply chain strategy in which the supply chains were configured as per the needs of the customers and products.
The segmentation was carried out by considering the tradeoffs between service level, replenishment lead time, and cost-to-serve.
In the following figure the top section shows the old practice of marking products to customer specifications in the first step of the product differentiation process, while the bottom section shows the current process, where products are kept in a common pool and configured just before shipment to the customer. This change requires marking individual cards, as opposed to marking the entire strip, which requires expensive equipment. However, the benefits of delayed product differentiation significantly outweigh the incremental equipment cost incurred in this example.
Over time, established processes for collaboratively reviewing segmentation among sales, business units, and operations were expanded to include collaboration with customers and suppliers. The supply chain organization operated in two modes, with one team driving efficiency in execution and the other team driving innovation. Supply chain talent is rotated between these two modes of operation and among different functions within each mode. Additionally, key performance metrics changed from internally focused ones such as on-time delivery to customer-focused metrics such as supplier ranking.
Source: Shaikh, S., Sabri, E. and Esturi, S. 2017. Making the journal to a multimodal, segmented supply chain. CSCMP Supply Chain Quarterly, Quarter 2.