Qumtum Corporation Esupplychain Case Analysis

Executive Summary

April 21st 2007

To

The Board of Directors

Quantum Corporation, CA, USA

From

Mike Wais

Director, eSupplyChain Group

Quantum Corporation, CA, USA

SUB: Redesigning of Supply Chain initiatives taken by eSupplyChain Group to include

eHITEX

Quantum Corporation had formed the eSupplyChain Group in April 2000 with the aim of restructuring it's, then inefficient, supply chain and take the advantage of new emerging e-technologies to improve efficiencies across the chain. The company has recently entered into a new strategic alliance with eleven other top computers makers and suppliers. This alliance, known as eHITEX would build a new B2B online exchange protocol for supply chain management and will act as a platform for buyers and sellers to exchange exclusively via the internet.

Having just started with the initiatives to design new processes, develop new strategies, improve supply channels efficiency, and force an impact on the bottom lines, the eSupplyChain Group suddenly faces a new challenge. Now, eHITEX needs to be incorporated while designing these new methods and processes for supply chain of Quantum Corporation. Its impact needs to be considered in every decision making process.

This report will discuss the existing operations of Quantum Corporation and try to analyze the various approaches and initiatives that need to be taken in order to have higher efficiencies and reap maximum benefits from the newly formed web exchange eHITEX. Although this new development seems very attractive, there are several factors one needs to consider before committing. Instead of trying to align and redesign existing or envisioned supply chains to eHITEX, Quantum should focus on extracting what it needs in order to achieve its long term goals, from eHITEX. An approach of partial commitment without much redesign of the envisioned supply channels is suggested.

Main Report

Background

Quantum Corporation has seen a rapid early growth, mainly due to its dedication to product innovation, high quality, ability to meet customer demands consistently and thus achieving very high customer satisfaction levels. It had endured this rapid growth and was the market leader for seven consecutive years till 2000, with a market share of about 25%. They owed, in part, their success to their supplier Matsushita-Kotobuki Electronics Industries Ltd., Japan (MKE). The company had sustained the phenomenal growth rate and market capitalization of Quantum Corporation. However, this sustained growth in sales did not result in profit growth; instead the company experienced financial net loss during last four fiscal years. [See APPENDIX (Fig.1)]

In response to the changing market scenario, the company adopted several measures to reduce cost across the supply chain and improve order fulfillment efficiency in order to improve profit margins and sustain growth. The growing Internet-based collaboration within the industry had lead Quantum Corporation to form a separate group to be known as eSupplyChain Group to investigate new trends and technologies that could significantly affect their overall operations. eHITEX [7] was formed by 12 top computer manufacturers and component suppliers along with Quantum Corporation. It was envisioned to act as a platform that will allow cross company, vertical and horizontal integration and allow companies to take advantage of the latest technologies and use them as tools to leverage their overall operation of supply chains.

Problem Statement

"Quantum Corporation has joined the eHITEX, along with eleven other top computer makers and component suppliers. The eSupplyChain Group needs to formulate a strategy and a system of integrating their own vision and the possibilities offered by formation of eHITEX. Successful integration would eventually improve operational efficiencies and increase customer fulfillment."

Some Significant Existing and Potential Problems:

* Will there be a smooth integration between eSupplyChain Group and eHITEX?

The single most important performance parameter of interest for the company is Time of Ownership (TOO); It is aimed to bring TOO down to 5 days from existing 30 (approx.) days. The group needs to identify how this measurable will be affected by eHITEX, and judge the impact of this online exchange on TOO. [Also See APPENDIX Fig.2].The group needs to integrate this vision with the new scopes created due to eHITEX or modify their vision to suit the needs of eHITEX.

* Special relationship with MKE, long perceived as the key to Quantum's success may be destroyed.

eHITEX appears to be a hub that contains elements of two classic categories of an eHub i.e. Catalog, and Exchange [7]. Such a hub will give the buyers access to multiple sellers and allow sellers to reach multiple buyers, which ultimately results in short term profit oriented relations between suppliers and buyers. The group needs to asses the impact of joining such a hub as the move may mitigate the successful partnership Quantum has been sharing with MKE.

* The responsibility to integrate eHITEX with the IT initiatives taken by Quantum is solely handed to the eSupplyChain Group.

The eSupplyChain Group consist of members with a primary background in Business Processes. [See APPENDIX Fig.3]. The team lacks diversity in terms of functionality. This may hamper the correct understand of long term consequences across various departments and ultimately lead to a narrowed perspective on the whole concept.

* Internet platforms like eHITEX act as great equalizers of competitive advantages

Joining an eHub or any other internet platform gives your competitors the same tools as you. It provides a common field for everyone to compete and most of the conventional competitive advantages are neutralized. This has a double effect of exposing your weakness as well as making your strengths available to others.

* No