Rockwell Samsung Automation

Industry	Industrial automation company
Objective	Improve Inventory management and purchase management efficiency
Adopted Solution	Arrow In-Plant-Store / eCompass
Implementation Period	3 months(including one month of customization)
Adoption Benefits	Reduce inventory carrying cost, risk and suppliers management cost, improve inventory turns and operational efficiency, faster replenishment time and provide consistent supply and inventory flexibility

In May 2002, Rockwell Samsung Automation took over Samsung Electronics' mechatronics business division. Rockwell Samsung Automation is a global leader in the complete automation sector, and has realized the country's needs for high level of industrial automation. To have the ability to compete aggressively, much more advanced products, supply chain efficiency and quality services are needed. With facing fierce competition to drive for supply chain efficiency, this creates a unique opportunity for Arrow to collaborate closely and assist our customer, Rockwell Samsung, to achieve the much needed efficiency and effectiveness in Supply Chain.

Below are the most common problems that faced by our customers

Customers are also looking for solutions to provide faster replenishment time, consistent supply and better inventory visibility, provide flexibility to meet market demand and forecast volatility, reduce inventory risk and supplier management costs.

For manufacturers, like Rockwell Samsung are deemed crucial functions since they are directly affect manufacturing / production lead time, corporate profit margin, on time delivery and be able to compete aggressively. If poorly managed, inventory problems could disrupt production schedules and, more important, undercut production efficiency. In addition, purchase management, which inevitably involves numerous suppliers, is equally tricky since a small hike in purchase prices could drive up the entire production cost. Rockwell Samsung Automation faces more challenges to grow business and operate more efficiently to reduce cost, especially in electronic manufacturing industry. As a result, Enterprises like RockwellSamSung, needs to employ new technologies and design a responsive supply chain to extend beyond companies' boundaries.

Rockwell Samsung Automation sought breakthroughs to resolve the purchase and inventory problems, implementing a variety of internal programs and getting advice from outside organizations and experts. Unfortunately, it failed to garner desirable results. Meanwhile, Rockwell Samsung Automation received an offer from U.S.-based Rockwell Automation headquarter about Arrow's IPS (In-Plant Store). It turned out that the U.S.-based Rockwell Automation already achieved dramatic results thanks to the adoption of Arrow's solutions and therefore it strongly recommended the solution to its Korean affiliate.

IPS is Arrow's value added service, with its employees dispatched to client companies and their facilities in order to support various activities such as inventory planning, management, and storage. It also offers help when need arises in connection with daily engineering and production. In other words, Arrow's IPS functions as if an Arrow store exists inside company's warehouse. The storage operated by Arrow employees are managed as if they are actual stores. Clients simply use necessary parts and supplies as if they purchase products and goods at stores. Management tasks are taken care of by logistics system and Arrow employees, which can ensure lower management cost and better inventory control. Besides, components and materials stored in the warehouse belong to Arrow until they are purchased by client companies and used, a system that can lower inventory risks significantly. Overall costs and maintenance fees can be saved, and companies also can better handle their inventory regarding new product development and phased-out products.

Yoon Yeo-seop, Deputy Manager of the Purchase Department at Rockwell Samsung Automation who was in charge of introducing IPS, said, "By using Arrow's IPS supply chain solutions, we could analyze estimated demand, inventory, consumption in real time, and, in addition to that, we could systematically manage semiconductor, connector and other related parts provided by dozens of suppliers. All of this means inventory is managed in an efficient manner and risks are minimized. For these reasons, we have adopted IPS solutions."

Korea's first, Asia's second reference case

The decision to adopt IPS from Arrow was made in April 2004. The first thing Rockwell Samsung Automation did was to find similar reference cases. Unmanned inventory management solutions are not new, but manned IPS would be the first case in South Korea. Arrow Korea, a unit of U.S.-based Arrow Electronics Inc., and Rockwell Samsung Automation jointly collected various information and reference cases, using Arrow's global network in the United States and Hong Kong. As a result, Arrow was able to offer comprehensive customization to Rockwell Samsung Automation, meeting specific demands on the Korean market. This customization was possible chiefly because Arrow runs a global network.

Actual buildup time was set at three months, including the testing period. This schedule was fairly tight considering that the project involves the renovation of the client's entire inventory management system. In adopting Arrow's solutions, the focus was placed on material planning. MRP, or material requirement planning, provides the estimates for demand, which could improve material management data's accuracy created inside Rockwell Samsung Automation. To that end, Arrow applied its material planning system eCompass, thereby providing optimized inventory procurement and perfect material purchase planning.

"At first, we had some doubts as well as expectations about how much the solutions would improve performances. We never thought it would be possible for outside staff and a new program to bring in real changes. But Arrow's estimate about inventory was quite precise. It was linked to the existing office material requirement planning data in an EDI(Electronic Data Interchange) way, showcasing a flexible inventory and purchase management - from inventory planning to procurement. At the same time, Arrow IPS system offers accurate estimate that helps us to have better capability to respond and optimize inventory management," said Yoon, expressing satisfaction about the adoption of IPS.

Real-time monitoring of inventory pipelines

Yoon Yeo-seop, Deputy Manager of the Purchase Department at Rockwell Samsung Automation, said, "The most impressive thing about Arrow's IPS solutions is that it allows for monitoring inventory pipelines in real time. The system shows material management situations as well as past trend analysis, while providing real-time alarm services about products whose shelf cycle has been terminated or items that cannot be returned to manufacturers. Because of these benefits, internal staff members can focus on more value-added tasks, maximizing productivity."

In addition, Rockwell Samsung Automation was able to rationalize purchase prices by adopting IPS solutions. Arrow's unique pricing system called "Global Contract Price" makes it possible for suppliers, Arrow and client companies to jointly set prices. This is a method that is based on mass purchases by Arrow, which has a global network. Arrow has 40 franchise lines(supply lines) in South Korea, 60 in Asia and 200 in the United States. This franchise network means Arrow does not have problems in securing materials and it is easy to get certain materials that are hard to obtain by companies, if they rely on Arrow's global network.

The implementation of IPS at Rockwell Samsung Automation does not stop there. It is not only the first reference case in South Korea but the third case throughout Asiapacific. All eyes are on whether the adoption will lead to greater success in the future. Yang Yoon-bok, President of Arrow Korea, said, "In the states, about 70 percent of companies adopt IPS. When it comes to corporate competitiveness, IPS is now regarded as an essential factor. But it is true that IPS is being adopted slowly in the Asia-Pacific region. In this regard, the adoption by Rockwell Samsung Automation of IPS is expected to pave the way for expanding IPS market share in the Asia-Pacific region."

Rockwell Samsung Automation said it has been able to cut inventory maintenance cost by 20 percent by adopting the IPS solutions. If other benefits like lower inventory risks and improve supply chain efficiency are included, the adoption has brought more value than expected. Moreover, Rockwell Samsung Automation has recommended IPS solutions to two OEM(original equipment manufacturing) partners, which are known to be considering adopting IPS.

Rockwell Samsung Automation

Rockwell Samsung Automation is the acknowledged leader in complete automation industry. It took over Samsung Electronics' mechatronics control division in order to better serve customers and provide a wider variety of solutions in May 2002. The take-over has allowed for providing better automation products and services. Its industrial automation boasts the highest level in South Korea. Besides, Samsung's powerful development ability and Rockwell Automation's world-renowned quality plus its global network have been combined to provide more advanced products and supports to Korean clients. Rockwell Samsung Automation has four subsidiaries in Seoul, Gwangju, Busan and Daegu, while running more than 50 distribution channels. The number of employees is currently 270.

www.rockwellsamsung.co.kr

Arrow Asia Pac Ltd.

A subsidiary of Arrow Electronics, Inc., Arrow Asia Pac is one of the leading electronic component distributors in the Asia Pacific region. In addition to its regional headquarters in Hong Kong, Arrow Asia Pac operates 40 sales offices, 2 primary distribution centers and 4 local warehouses in 11 countries/territories across Asia. Providing a full range of semiconductors, passive, electromechanical and connectors products from over 60 leading international suppliers, Arrow Asia Pac serves more than 10,000 original equipment and contract manufacturers and commercial customers in Asia Pacific.

www.arrowasia.com