SINGAPORE, 25 April 2000 - Contract manufacturers are often small, and serve large manufacturers' needs by maintaining low overheads. But as they grow - like Omni Industries Ltd - into a global player, sound and farsighted strategies have to be put in place to ensure continued viability.
Taking the leap
Which is why the Singapore-listed contract manufacturer decided to make a S$10 million strategic investment over the next five years into e-enabling its global operations, instead of primarily focussing on tactical issues such as cost-savings and productivity per se.
Global IT leaders SAP, Deloitte Consulting, Hewlett-Packard and Cisco Systems are helping Omni Industries to put in place an e-supply chain management solution that will use the Internet to optimize and create a responsive supply chain. The first phase of the implementation will bring the system 'live' across four business units in Singapore and Malaysia by September 2000.
The next phase will see its roll-out to other manufacturing sites in China, Thailand and Mexico. This is expected to be completed in 12 to 18 months' time.
Based on mySAP.com, SAP's e-business solution, Omni Industries will be able to fulfil delivery and satisfy individual customer needs accurately and efficiently. Deloitte Consulting is implementing the Supply Chain Management solution, to be delivered on nine Internet-ready HP 9000 Enterprise Unix-based servers and four NT-based HP NetServers running on a mission-critical wide-area network backbone from Cisco Systems.
This enterprise solution will be extended to support Omni Industries' global thrust. By the end of 2000, Omni Industries would have some 20 plants around the world - 5 of which are being established this year.
The e-enablement effort aims to capitalize on the Internet to enhance shareholder value by increasing efficiencies, reducing costs and developing new business opportunities. Together with the new plant in Austin, Texas, two in Mexico and one each in Batam, Indonesia and Xiamen, China, the company hopes to achieve revenues of S$1 billion this year. Cost-efficiencies are expected to lead to savings of an estimated S$100 million over five years.
Said Mr Koh Boon Hwee, Chairman of Omni Industries: "Our expenditure on this is large, especially for a small company like ours. But we firmly believe that the investment is absolutely essential if we are to survive and thrive in the ultra-competitive environment being wrought by the Internet revolution."
He added: "In today's competitive global marketplace, creating synergy with our business partners through total supply chain optimization is a must if we want to tap new market opportunities. With the rapid growth of the Internet, Omni Industries can only remain competitive and successful if we can effectively leverage Web technology to ensure our group's capacity to grow and to create a better value proposition for our shareholders."
Virtual extended enterprise
The Supply Chain Management with mySAP.com solution will enable the group to extend its business through the Internet to embrace the ecosystem of customers, partners and suppliers.
Through the Internet, Omni Industries will be able to deploy collaborative business scenarios to enable real-time collaboration with value chain partners for greater transparency, efficienvy and productivity. The group will be able to gain greater visibility across its supply chain, enhance its responsiveness to changing customer demands, and enable faster time-to-market and delivery via the mySAP.com infrastructure.
"Our operations and business have grown significantly over the last two years. To support this growth, we need a robust IT infrastructure that can help us manage the complexities of our business and deliver the best value to our global customers," said Mr Lee Kim Bock, CEO of Omni Industries. "Through this implementation, we will introduce commercial best practices, making the business more cost-effective while improving operations and services across the extended enterprise."
A 'cascading' effect is expected from this implementation. Omni Industries' suppliers will have to come on board to transact over the Net, according to Mr Koh Boon Hwee. Otherwise, they would be encroaching on the group's efficiencies, and Omni Industries will have to seriously consider - over the next 12 to 24 months - whether they can remain as suppliers to the group.