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Kellogg Implements Global Information System

With products like Corn Flakes, Eggos, Pop-Tarts, and Rice Krispies, the Kellogg Co. controls more than 40 percent of the breakfast food industry. Revenue has doubled in the past ten years from $3.3 billion in 1987 to $6.8 billion in 1997. However, Kellogg is feeling pressure from customers such as Wal-Mart to continue to provide them the same service as they go global. Kellogg must be able to provide seamless integmtion so data can be entered in one location and flow to another.
The plan is to implement Oracle Corporations Consumer Packaged Goods (CPG) software—a mix of financial and manufacturing management software applications from Oracle and other vendors including Manugistics, Industri-Matematik International Corp.. Indus International, and Information Resources. Currently these multiple packages are not as tightly integrated as Kellogg would like. Version 3.0 of CPG is scheduled for release in 1999 and promises tighter integration.
Kellogg plans to roll out the package in North America, Latin America, Europe, and the Asia-Pacific region. Each region will implement the same software but be able to determine which modules will be implemented first based on local needs. Implementation is scheduled to be complete sometime in 2001, with ke) benefits being improved inventory management. absorption of acquisitions in a common information s stem. and support for multiple product launches. The goal is to be able to take an order anywhere, make it anywhere. stock it anywhere, and ship it from anywhere.

Jay Shreiner. chief information officer at Kellogg in Battle Creek, Michigan, believes that there is a big difference between global and central systems. Global systems means giving people in the various areas the tools to make the right decisions for Kellogg. Headquarters needs access to certain information, but does not believe in running the worldwide supply chain explicitly from Battle Creek.

Discussion Questions:
1. What risks do you see with the course of action on which Kellogg has embarked? What could be done to reduce some of these risks?
2. Why does the C1O of Kellogg draw a distinction betx\een global and central systems? Which do you think this new s stem will be? Why?.


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Chip Maker Reengineers Procurement Process

Advanced Micro Devices, Inc. (AMD) was founded in 1969 and today is a global supplier of integrated circuits for personal and network computers and communications markets. AMD manufactures processors for Microsoft Windows-compatible PCs, flash memories, products for communications and networking applications, and programmable logic devices. AMD has nearly 13,000 employees, with manufacturing facilities in the United States, Asia, and Japan, and sales offices throughout the world. Recent annual revenues were $2.4 billion. AMD conducts microchip technology research and development at its Submicron Development Center (SDC) in Sunnyvale, California. This advanced wafer fabrication facility is also used for new product prototyping and production testing. There are three additional fabrication facilities in Austin, Texas, including the state-of-the-art Fab 25 facility, which cost $1.5 billion. These fabrication sites perform high-volume manufacturing of many kinds of logic integrated circuits, such as the AMD-K6 processor, programmable logic devices (PLDs). subscriber line interface circuits (SLICs), and the SLACTM family of subscriber line audio-processing circuits. The AMD-K6 processor is an advanced Windows-compatible processor that competes with the Pentium II processor. AMD also manufactures flash memory for control storage applications ranging from wireless communications to consumer products. Production capacity for flash memory is provided by the AMD-Fujitsu joint venture in Aizu-Wakamatsu, Japan. The AMD Dresden Microelectronics Center. including AIvID’s first European manufacturing facility, Fab 30, is currently under construction in Dresden, Germany. The facility will include a design center and an 85,000-square- foot wafer fabrication area for AMD’s next-generation processors and other advanced logic products. Production is expected to commence in 1999. AMD desigus, tests, analyzes and or assembles products in Penang, Malaysia. Bangkok. Thailand, and Singapore. An additional test and assembly facility, now under construction in Suzhou, China, is planned to begin production in early 1999. Quality control organizations are located in Sunnyvale. California. and in Frimley, England.
In an effort to reduce costs, AMD began using the Internet to reengineer its entire purchasing function in May 1 997. In a pilot project. AMD moved onto the Web its procurement of photo masks used in chip making. (A photo mask is a glass plate inserted into a machine that lets semiconductor engineers imprint an image of a circuit onto a silicon wafer). The new purchasing process is based on operating resource management (ORM) software from start-up software vendor Ariba Technologies. Under previous procurement procedures. engineers had to e-mail an AMD buyer and then the buyer wrote a purchase order that was sent to the supplier. Not only was the old approach time consuming. it resulted in lots of invoice discrepancies that took even more time to resolve. Using the Ariba soft\ are. authorized engineers are able to order photo masks directly from DuPont and Photronics. The streamlined purchasing process is intended to dramatically reduce processing and transaction costs. as well as free purchasing managers to allow them to negotiate betier deals vith suppliers. The corporate director of supply management was not concerned about reengineering the procurement process based on software that was not yet proven in the marketplace. Ariba did not officially launch its product until tv.o months after AMD began its pilot. As one of Ariba Technologies’ first customers. AMD gets a generous discount from the $750,000 to $4 million price tag. AMD believes that the Ariba solution is the procurement method in the twenty-first century. It allovs AMD to focus more resources on supply management and strategic alignment with key suppliers. AMD expects to generate at least a 3 percent savings on several hundred million dollars in expenditures as a result of the Ariba implementation.
Discussion Questions:

1. Can ou identif potential issues that might arise as AMD expands use of the Internet
procurement process from its corporate offices io \orldwide? What actions would you take to
avoid these potential problems?
2. Why has AMD built fab facilities and research centers \\orldv.ide? Wouldn’t it be easier to manage the business if all facilities ere located in the United Stales?

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CD-ROM Titles
Truck and auto repair shops can devote more space to manuals than parts. These large and sometimes confusing manuals can be as thick as large phone books and difficult to use. When needed, a repairman can spend hours searching for the correct manual and the part information. If a page is ripped out or missing, it can be very frustrating. In addition, it can be very expensive to buy new manuals. With new car and truck models coming out every year. the cost can add up quickly. As a result, many auto and truck companies are starting to print their repair manuals on CD-ROMs instead of using traditional paper manuals.
The CD-ROM manuals offer a number of advantages. They are much cheaper to produce and send through the mail. In addition, easy- to-use search routines can make it a snap for repairmen to find the information they need. Each year, the auto company can send a CD containing repair manuals for multiple car and truck models. Yet although the CD-ROM repair manuals offer numerous advantages over printed manuals. there are still problems and hassles. This was the case with car mechanic Charles Schultz.
Schultz specializes in foreign cars, such as BMWs. It was a blessing when BMW started to convert more of its shop repair manuals to CD-ROM. Using a laptop computer. Schultz could quickly find the information he needed by inserting the CD into the drive in his laptop and using the built-in search routines. Schultz also quickly realized that his gi-owing library of CD repair manuals did have their own problems. Often Schultz would have to scrub his hands and arms of woi-k-related grease and grime before he inserted a new, clean CD into his laptop. Getting dirt and grime on a printed repair manual was no problem, but dirt and grime on a CD could destroy the CD and the CD drive in his laptop.
To solve this problem, Schultz found an inexpensive software solution. For $35. Schultz purchased Virtual Drive 2000, which simplified the task of downloading portions of a CD-ROM to a hard disk. Now Schultz can load only the information he needs from multiple CD-ROMs onto his hard disk. In addition to the advantage of not having to wash his hands ever’ few minutes to load another CD-ROM into his laptop, Schultz also found that he could retrieve the needed information must faster from his hard disk than from the CD-ROM drive.

Discussion Questions
1. How was Charles Schultz able to take ad\antage of the con\enience of repair manuals on CDROM while eliminating some of the problems?
2. With what other applications could this approach be used?
3. What other features ould Schultz likely find useful with the soft are solution described in this case?
4. Could Schultis solution be used in other applications?

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