PRAXIS BUSINESS SCHOOL
Case Study On Centex
Submitted to Prof. Charanpreet Singh
AS part of fulfillment of Curriculum
Of
Information Technology & Management
Submitted By: Team Phoenix
Abinas Mishra-B11002
Ankita Singhh- B11007
Basukinath Dubey-B11013
Hemangi Pakeria-B11022
Rohit Khattar-B11036
CENTEX-A CONTRACT MANUFACTURER
OVERVIEW
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Centex is an EMS contract manufacturer for OEMs like IBM,Cisco,HP & DELL
Formed in year 1988 with the sale of Cisco’s PC board manufacturing facility in Toronto.
Owned 22 manufacturing facilities across the world.
Primary revenue source was from printed circuit board assembly.
The case is about Centex’s Boston facility which was underperforming. Stratlink Inc. was
appointed as consultant to study its supply chain.
CRITICAL SUCCESS FACTOR
The critical success factor (CSF) for Centex can be categorized into two broad categories:Industry CSF’s
 Deployment of product lifecycle management, so as to respond to frequent engineering
changes and to keep the product fresh at all time. This also helps the contract manufacturer
in design wins, thereby helping the OEMs a first-to-market position.
 Development of sustainable cost controls methods by being vigilant to the costs of R&D,
manufacturing and inventory.
 Manage trust level with the OEMs so that it is confident about your capabilities to execute
the order in time.
Strategy CSF’s
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Acquire less profitable but newer facilities from the OEM’s at a discount.
Acquire facilities nearer to several electronic manufacturers and aggressively pursue
opportunities to diversify client base.
Provide a array of services for its client such as designing, prototyping, assembling, quality
assurance, packaging and distribution.
KEY PROBLEMS IN ITS SUPPLY CHAIN AND BUSINESS PROCESSES
Centex had major problems with regards to its supply chain and business processes. These are: It had a high lead time as it had to wait for 40 days to start executing the order.
 It had a poor supplier on-time delivery performance of 46% as against the industry average
of 90% as it had very little leverage over its supplier.
 It had a poor material requirement planning as HP which is its major client couldn’t forecast
demand properly, as a result of which other OEM’s were also affected as production lines
were shared.
 It had high levels of inventory which lead into high inventory carrying cost as planning is
done on the rated capacity of the manufacturing lines and not on the effective capacity.
 The system is not integrated properly. As a result there are redundant transactions taking
place and this leads to delay of 3-7 days in receiving materials.
 Lack of material discipline on the shop floor and the inability of the ERP system to track
inventory has created a high work-in-progress inventory (90% of total material loss) and
material wastage (10% of total material loss).
 It doesn’t have any supply chain software package like i2 or supply chain simulation software
like SimFlex which could help in optimizing, designing, testing and implementing efficient
value chain solutions.
 Its ERP software package BPCS is unable to address the primary issues of inventory
management and materials receipt. This could be due to faulty implementation.
 Its trust level with HP is low due to non fulfillment of its order at time.
PROCESS IMPROVEMENTS AND IT SYSTEM RECOMMENDATIONS
 It should implement a supply chain management package like i2 to improve its lead time and
optimize its value chain.
 It should introduce/improve its just-in-time and vendor managed inventory so that there is
no excess inventory of raw materials.
 It should introduce quality control standards and shop floor best practices to decrease
wastage and loss due to work-in-progress.
 It should check the loop holes in its existing ERP implementation and try to plug them so as
to make it more efficient.
IT recommendation: If we were the consultant we would have looked between the two options
1) Plug the loopholes in the existing ERP package.
2) Go for a fresh implementation of ERP
Plug the loopholes in existing package
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If the BPCS package has only integration problems then we would try to re-engineer the
processes to simulate the actual workflow.
This would help in saving cost and time required in installing a completely new package.
We would go for bolt-on by integrating the supply chain package i2 to the ERP package if it is
supported.
We would use web-methods as the middleware to integrate the supply chain package.
We would use Matrixone for product lifecycle management so as to bring in continuous
improvement to the products.
Fresh implementation
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If the BPCS package has some intrinsic problems with regard to the available scope in various
modules then we would go for this option.
We would go for the SAP R/3 ERP package with its SCM, PLM and BI suite as its practices
have completely evolved with the large number of implementation done across the world.
The BI suite will help in managerial decision making & forecasting
This will help in easy integration.
To help in simulation, optimization of the supply chain we would use SimFlex which is
specially designed to cater to the EMS companies.