Conference 7.286::digital

5184.0. "PC MFG Moving? Closing?" by SBUOA::TUCKER () Wed Mar 12 1997 12:38

    Any Commnets, whats your cut on this ??
    
    
           MicroAge and Digital Equipment Corp. Sign Technology Services
    Agreement To Perform Final Assembly of PCs        MicroAge and Digital
    Equipment Corp. Sign Technology Services Agreement To Perform Final
    Assembly of PCs   Wednesday, March 12, 1997 8:03:00 AM EST
    
      
    
     `Seamless Supply Chain' Process to improve delivery time and
    configuration flexibility 
     
    
     TEMPE, Ariz., March 12 /PRNewswire/ -- MicroAge, Inc. (Nasdaq: MICA),
    a global technology services provider, and Digital Equipment Corp.
    (NYSE: DEC), a world leader in delivering high-performance networked
    business solutions, today announced an agreement under which MicroAge
    will perform final assembly of Digital personal computers at its
    Quality Integration Center in Tempe, Ariz. The "Seamless Supply Chain"
    (SSC) Process, often referred to in the industry as channel assembly,
    reduces channel inventory levels and product returns, improves product
    delivery time and provides end-users with greater flexibility in their
    product configuration choices. 
    
     SSC takes effect immediately. Digital will deliver and maintain a
    supply pipeline at the 135,000-square-foot MicroAge Quality Integration
    Center. MicroAge technicians will then complete the units by adding
    hardware and software components to meet the specific customer
    requirements. MicroAge technicians will also test, package and ship the
    final product. This "one- touch" integration approach enables 48-hour
    configure-to-order capability, which increases customer satisfaction by
    shortening delivery times and making product configurations more
    flexible. 
    
     "In this era, the computer is no longer a finished good. Customers are
    increasingly demanding best-of-breed products tailored to individual
    specifications - whether it be added graphics functionality, storage
    capacity from a specific vendor, or simply the minimum needed to run
    rudimentary applications," said Bob O'Malley, president of MicroAge,
    Inc. "Our SSC assembly process with Digital will enable us to address
    this demand and ultimately provide customers with the best combined
    product solutions." 
    
     "Digital sees the tremendous advantages of channel assembly and with
    our groundbreaking SSC Process, we go far beyond the channel assembly
    programs of other PC vendors," said Bruce Claflin, vice president and
    general manager of Digital's Personal Computer Business Unit. "The SSC
    Process greatly enhances the ease of doing business with Digital.
    Because Digital and MicroAge maintain a virtual supply pipeline,
    MicroAge's inventory investments and carrying costs are greatly
    reduced. We fully anticipate the SSC Process will lead to incremental
    growth for Digital." 
    
     Digital selected MicroAge as its first channel assembly partner for
    two reasons. MicroAge offers an industry-leading integration facility
    with proven ability to handle the volume of products and premium
    quality manufacturing Digital desired. Secondly, Digital and MicroAge
    have shared a long-term successful relationship, through which the two
    companies have co-developed a number of innovative distribution and
    reseller programs. 
    
        MicroAge Quality Integration Center
    
     MicroAge's 135,000-square-foot ISO 9001-certified integration center
    ranks as one of the most sophisticated of its kind. The center employs
    hundreds of highly trained professionals who configure and test more
    than 1,000 systems per day. The center has been awarded the following
    certifications: ISO 9001, Federal Drug Administration, A+ service
    authorization, UL and CNA (Canadian standard). An additional quality
    integration center is scheduled to open in Cincinnati, Ohio during
    1997. 
    
        Streamlining the Technology Supply Chain
    
     The SSC assembly process allows MicroAge and Digital to streamline the
    technology supply chain by reducing the amount of finished goods in the
    channel and simultaneously managing competitive market availability. In
    addition, supply chain costs are lowered because the costs for
    maintaining inventories are reduced. 
    
     "The SSC program gives Digital greater flexibility in tackling
    shifting market demands and provides greater precision in predicting
    product supply and availability,- said Claflin. "It's classic
    just-in-time delivery - we have the right products to sell at the right
    time, and customers get the products they want, when they need them." 
    
     MicroAge's O'Malley believes that along with electronic commerce, the
    concept of channel assembly will be the most influential element to
    affect the industry in years. "Channel assembly is re-engineering the
    computer distribution model by bringing the choice closer to the
    end-user." 
    
        Digital Equipment Corporation
    
     Digital Equipment Corporation is a world leader in open client/server
    solutions from personal computing to integrated worldwide information
    systems. Digital's scalable Alpha and Intel platforms, storage,
    networking, software and services, together with industry-focused
    solutions from business partners, help organizations compete and win in
    today's global marketplace. More information about Digital's personal
    computers is available on the World Wide Web at
    www.windows.digital.com. 
    
        MicroAge, Inc.
    
     MicroAge, Inc., a Fortune 500 company, is a global technology services
    company, providing distributed computing solutions and
    ISO-9001-certified multivendor integration services to large
    organizations and computer resellers worldwide. The company serves
    corporations and government agencies through its MicroAge Infosystems
    Services network of branches and alliance partners spanning 29
    countries, and offers computer resellers over 20,000 products from more
    than 500 suppliers backed by a suite of technical, financial,
    distribution and account management services. ECadvantage, MicroAge's
    new electronic commerce architecture, is utilizing the Internet to
    streamline the delivery of services to its customers. Headquartered in
    Tempe, Ariz., the company's 1996 revenues exceeded $3.5 billion.
    Information about MicroAge is available on the World Wide Web at
    www.microage.com. SOURCE MicroAge Inc. 
    
    � PR Newswire. All rights reserved.  
    
    Additional sources of information
     Company Profile - From E*TRADE: MICA, DEC
     Stock Charts - From Quote.Com: MICA, DEC
     SEC Filings - From EDGAR Online: MICA, DEC
     Tell Me More - From Infoseek 
    
      

    This announcement reflects a growing trend in the channels/distribution
    marketplace which allows manufacturers (IBM, HP, Compaq, DEC, etc.) to
    ship chasses and components to its distribution components.  The
    distributor is then free to do custom final assembly based on the mix
    of product that it is actually selling.
    
    This allows the manufacturer to get more generic product (less custom
    preconfigured systems) out the door to its customers while allowing the
    distribution channel to streamline its inventory of systems (more
    generic parts used in a wide variety of configurations) while
    simultaneously meeting a wide range of market demand.
    
    Look at the Personal Workstation as a good example of this strategy --
    common carcass, cpu board of choice, storage of choice, adapters of
    choice.  All relatively commodity-level components delivered via a
    single product family.
    
    The goal here is to get to EASY VOLUME with the distribution partner.
    
    We will have to wait and see how well DEC executes (always the REAL
    issue).
    
    
    Randy
    

    Lots of ex-DECcies are at MicroAge's Tempe facilities.  Most of them
    victims of the old PNO manufacturing plant closure.

    What effect does this have on Kanata?
    
    .mike.

    The cover story in (the latest?) Computer Reseller News is about how
    IBM has gotten a jump on the PC competition by being the first to
    either sign an agreement or implement this channel assembly strategy.
    
    I'd like to know if we've been planning this and the rest of the
    industry is about in synch or if we're ahead or behind.
    
    Or did we make a quick announcement as a "me too?"
    
    Bruce Langston

At the risk of sounding dumb....

What does this Quality Integration Center provide that our (former) plants 
could not do?

Larry

    It does the work with no headcount........
    
    Jean

    This announcemnet has next to little impact on Kanata, this from Bruce
    Claflin.
    
    At one point last year, many analysts were touting how good it would be
    for Digital to have all their PC's built somewhere else like Intel.
    Bruce highlighted in his recent speech that the press and so-called
    analysts have been pretty quiet on this the past few months, just to
    show you that the analysts always jump to what sells news, not what's
    really good for business.
    
    MicroAge is a secondary manufacturing arm if you will and by using
    their capabilities we can substantialy reduce the amount of physical
    inventory (DIGITAL DOLLARS) that we have tied up in the supply chain.
    Trust me, if we do this right you will see sales increase and you will
    see the order rate in Kanata go up as well.

    Re: .7
    
    And, accounting wise, isn't inventory shipped to MicroAge "SHIPPED" and
    therefore NOT inventory in our warehouses.   Thie shipped inventory
    becomes receivables, and from there "profit"?  Saves last years fiasco
    of having too many PCs in inventory with nowhere to go.
    
    Hmmmm?
     

    That's a tough one to call. You and I might expect it to become
    receivable, but the deal could well include a DIGITAL stockroom on
    their site. To them we would be the ultimate JustInTime source by being
    under their roof. Real sweetner for the deal. They only pay for what
    they pull. Hey, we could even be renting space from them?!?!?!
    
    This does, I hope, give them some incentive to push our systems.
    
    r
    

    About 6+ years ago, before DIGITAL started to manufacture its own
    PC's, a similar scenario was done with Tandy Corporation. They made
    PC's for Digital and were configured in a warehouse in Fort Worth and
    shipped to Digital Customers. There were Digital employees doing the
    Order Administration stuff and Tandy technicians building and testing
    the configurations.
    
    Seems like we are in a similar cycle now.
    
    

    -1 Exactly. It also follows the Configure To Order (CTO) scenario
       targeted for systems. However, they have given that program a
       different name (which escapes me at the moment).
    
       One might be left woth the impression that we are heading more
       toward development/solutions v. manufacturing. Stay tuned...
    
       Chip

    
    
    RE: -2
    
    I was gonna say the same... but didn't thing anyone still here
    would remember.  We built the systems to customer order at
    Tandy within 24 hours of receipt of order in Texas.  A very 
    lean operation with only "ONE" Digital employee on site.
    How did this business ever get so complex? 8*(
    
    gb