GBE LSC 2 001 00 Lean Supply Chain Overview

Lean Supply Chain Overview
Document Number : GBE-LSC-2-001-00

CONFIDENTIAL Revision Number : 05
Effective Date : 28 March 2013
Document Title : Document # : Revision
GBE-LSC-2-001-00 05
Lean Supply Chain Overview Document Owner :
Rajesh Nair
REVISION HISTORY
Revision Description of Change Writer/Reviser Effective Date
Marvin Yeap
01 Initial Release May 25, 2009
02 Remove attachment & convert to PDF Marvin Yeap July 27, 2009
Include “Double The Kaizen Speed” and “DIPLESS” in Lean Supply Ong
03 February 23, 2011
Chain Kaizen Workshop Goals Seng Hock
04 Added BPs for each of the elements Ching Pooi Pooi March 08, 2012
Revised the diagrams in Pg 17, 18 and 26. Removed outdated BPs

05 Ooi Pu Jieh March 28, 2013
and replaced with latest BPs.
COMPANY CONFIDENTIAL Printed copies are uncontrolled copies.

2 Best
Verify Practice
revision Yokoten
and approvals in the FMS Release 19
Document Management System on ShareNet.
Table of Contents
Contents Slide(s) Contents Slide(s)
 Lean Supply Chain Focus 5  Engagement in Lean Supply Chain Initiatives 31
 Lean Supply Chain Kaizen Workshop Goals 6
 Overview 7  Best Practice – Integrated Demand
 LSC Initiatives – Integrated Demand Management (IDM) 32
Management (IDM) 8
 Levers For Managing Inventory 10  Best Practice – Excess and Obsolete (E & O) 38
 IDM Business Processes –
 Best Practice – E Commerce & Automation 44
Load Vs Commit (L v C) 11
 IDM Business Processes – E & O 14  Best Practice – Component Lead Time Reduction 48
 IDM Business Processes – E Commerce
& Automation 16  Best Practice – Supplier Managed Inventory (SMI) 53
 IDM Business Processes – PO Action  Best Practice – Dock To Stock (DTS) 58
Notices (POAN) 19
 LSC Initiatives – Component Lead Time
Reduction Plan 24
 LSC Initiatives – Supplier Managed
Inventory (SMI) 26
 LSC Initiatives – Dock To Stock (DTS) 28

3 GBE-LSC-2-001-00 Rev.05
Lean Supply Chain Focus
Lean Supply Chain A3 Strategy Deployment Focused on
Inventory ($) Vs ITO

400 8.5
350
ITO
8.0
300
With Action
250
Plan using
7.5
Inventory (US$Mil)
INV $
ITO
200
7.0
150
100
6.5
50
0 6.0
Q1 Q2 Q3 Q4
RM (US$mil) WIP (US$mil) FG (US$mil) ITO (# of turns)

4 GBE-LSC-2-001-00 Rev.05
Lean Supply Chain Kaizen Workshop Goal
 Double the  ETE (End-to-End) Productivity  Defect : X 1/10

Good Improvement
 Inventory :X½
 ETE Zero Defect (Quality, TPM,
 Productivity : X 2
 Halve the OEE& etc)
 Inventory Reduction  Lead Time : X ½
Bad
 Lead Time Reduction  Energy : X 9/10
 Crew Size Optimization  Scrap : X 1/10
 Triple the
Speed  Space Reduction  Space : X 1/2
Goal : Add Value & Eliminate Waste … Relentlessly for Our Customers
No Money … No Space … No Manpower

5 GBE-LSC-2-001-00 Rev.05
Overview
LEADERSHIP
• Leadership engagement in
area of Integrated Demand
Management (IDM)
TRANSPORTATION INVENTORY
INITIATIVES
• Integrated Demand Management (IDM) Through Leadership &
• Supplier Managed Inventory (SMI) Business Processes…
Program Drive Supply Chain MOTION WAITING
• Component Lead Time reduction plan Initiatives To
• Improve Supplier Quality to improve Reduce 8 Wastes
Via Lean Tools
Dock To Stock (DTS) %
OVER PRODUCTION OVER PROCESSING

BUSINESS PROCESSES
• Load Vs Commit Review
• Reduction in E&O inventory
• POAN execution review
• % E-Commerce transaction with supplier
• System automation in area of Supply
Chain DEFECTS SKILL (UNUTILIZED)

6 GBE-LSC-2-001-00 Rev.05
LSC Initiatives
Integrated Demand Management (IDM)
Integrated Demand Management is a Holistic, End-to-End approach used across
Functions within a FACTORY operating as an Interdependent Ecosystem and applies the following:
GOVERNANCE
Using Management Review Council
APPROACH “BALANCED”
13 KEY BUSINESS PROCESSES SCORECARD
Tops – Down:
- Process Compliance
- Effective Practices
- Target Setting &  Customer
Entitlements • •
Satisfaction
Management Review Council POAN Execution Status Review
- Consultation & Guidance
- Exceptions Management
• Inventory Review • CTB & Build Plan Analysis  Revenue
• Pre-Management Review Council • Production Plan Status Review
• Capacity Management Review • Revenue Review  P&L
Bottoms – Up: • MRP Checklist Adherence • On Time Delivery to Customer Review
- Validation • MRP Parameter Review • E&O Status Review
 Asset Management
- Commitment • Demand Vs. Supply Gap Analysis
- Execution
 Predictable
- Sensitivity to Customer Performance
Nuances Leads to Predictable Customer Fulfillment &
- Responsiveness to
Dynamics
Internal Financial Management
* Refer to GBE-LSC-2-003-00

7 GBE-LSC-2-001-00 Rev.05
LSC Initiatives
Integrated Demand Management (IDM)
FACTORY ECO-SYSTEM
Leads, Balances across Functions, GM
Guides and Arbitrates
Customer interface and Primary
PM owner for Demand, Load and
Revenue Commits
PROCUREMENT Timely arrival of Materials to

complete Square sets / Full Kits
Orchestrates Load, CTB (“Clear to
Build” materials in square sets),
Capacity and Direct Labor, Build PLANNING Capacity installation, balancing and
Plans vs. FG Availability schedules management based on OEE and LU
INDUSTRIAL ENG
PRODUCTION
Ensures process capabilities, product Executes Build plans in a
ENGINEERING
yields, timely resolution to technical predictable manner
issues
Planning and
LOGISTICS coordination of
physical goods/
materials
Revenue and Cash-flow
projections based on FINANCE
Plan of Record

8 GBE-LSC-2-001-00 Rev.05
LEVERS for Managing Inventory
30
25
20
% contribution
15
10
0
Load vs Commit Customer Pulls POANs E &O Supplier Others (execution,
Management Replenishment / CTB to Pack plan,
Component LT Scrap/Bonepile,
Reduction MLT,etc..)
Functional Owners : Program Program Materials Materials Materials Operations

Management Management / Planning
/ Planning
Site MRC (Management Review Council) - Integrated Approach
Site GM leads the MRC : makes the Judgment calls, Trade-offs, Arbitrates and break Deadlocks
9 GBE-LSC-2-001-00 Rev.05
IDM – Business Processes
Load vs. Commit (LvC)
• Load versus Commit (LvC) is the delta between what is loaded in MRP (to purchase new material
after netting off On Hand material – FG, WIP, RM / Open PO) versus what is committed for shipment
(to ship out the purchased material).
• Zero to negative delta is ideal. Constant reduction of LvC gap ensures what comes in goes out,
therefore reducing the On Hand inventory.
Kaizen effort focused on balancing

Load Vs Commit
LOAD (MRP) COMMIT (Shipment)

10 GBE-LSC-2-001-00 Rev.05
COMMIT
SHIPMENT COMMIT (REVENUE
MRP LOAD LOAD (decrease)
RECOGNITION)
(increase)
RECEIVE
CUSTOMER
CUSTOMER
DEMAND PULL
LvC > 0
FORECAST / PO
TO SUPPLIER FINISHED GOODS
Inventory
STORE Inventory
PRODUCTION LINE
Inventory INCOMING RAW MATERIAL

11 GBE-LSC-2-001-00 Rev.05
FOCUS
TO MAKE
TO
REDUCE COMMIT
INCREASE SHIPMENT COMMIT (REVENUE
MRP LOAD LOAD
LOAD
LOAD
(increase)
= (decrease)
COMMIT RECOGNITION)
RECEIVE
CUSTOMER
CUSTOMER
DEMAND LvC >= 0 PULL
REDUCE LOAD INCREASE COMMIT

Based on : Based on :
- Past forecast - Frozen Firm PO from
consumption data customers
FORECAST / PO
TO SUPPLIER - Finish goods - Commit based on FINISHED GOODS
entitlement % historical consumption
Inventory
- Balancing vital few - Daily linear tracking

to trivial many of revenue
models
STORE Inventory
Inventory INCOMING RAW MATERIAL
PRODUCTION LINE

12 GBE-LSC-2-001-00 Rev.05
E&O
MATERIAL PULL
EXTERNAL
SUPPLIER (REP) FORECAST / DEMAND

MRP FLEXTRONICS CUSTOMER
PO TO NORMALIZATION
SUPPLIER
SUPPLIER
(FACTORY)
DEMAND
CHANGES IS A
REALITY
RAW MATERIAL RESULTING IN
SUPPLIER
E&O
TOTAL REACTION LT
E&O Inventory E&O Inventory

E&O Inventory
DEMAND
FLEX’S REACTION LT TO DEMAND CHANGES
SUPPLIER’S REACTION LT CHANGES
• FLEX HAS SOME DEGREE OF CONTROL

• WITHIN FLEX’S CONTROL • OUT OF FLEX’S
CONTROL
• DEGREE OF CONTROL DEPENDS ON HOW
QUICK FLEX CAN REACT TO CHANGES IN
DEMAND

13 GBE-LSC-2-001-00 Rev.05
E&O
MATERIAL PULL
EXTERNAL
SUPPLIER (REP) FORECAST / DEMAND

MRP FLEXTRONICS CUSTOMER
PO TO NORMALIZATION
SUPPLIER
 BRIDGE GAP BETWEEN LvC

SUPPLIER  REDUCTION OF OVERALL SUPPLY CHAIN LT
(FACTORY)  QUICK POAN EXECUTION & ECO MANAGEMENT
DEMAND
 SMI PENETRATION
CHANGES IS A
 STD / CUSTOM PART CATEGORIZATION REALITY
RAW MATERIAL  MOQ and SPQ REDUCTION RESULTING IN
SUPPLIER
 CONTINUE TO BRIDGE GAP BETWEEN CUSTOMER & SUPPLIER T & C’S E&O
TOTAL REACTION LT
E&O Inventory
E&O Inventory
E&O Inventory
DEMAND
FLEX’S REACTION LT TO DEMAND CHANGES
SUPPLIER’S REACTION LT CHANGES
• FLEX HAS SOME DEGREE OF CONTROL

• WITHIN FLEX’S CONTROL • OUT OF FLEX’S
CONTROL
• DEGREE OF CONTROL DEPENDS ON HOW
QUICK FLEX CAN REACT TO CHANGES IN
DEMAND

14 GBE-LSC-2-001-00 Rev.05
E COMMERCE & Automation
TRADITIONAL BUSINESS
TRANSACTIONS
Supplier E MAIL
Flextronics
PO PO
OR
MRP
Data export from

and Import into
Acknowledgement MRP System
of PO Receipt OR
Physical Delivery PO Changes FAX
-Part/Supplier/Qty Manual update
-Blanket PO# into MRP System
Goods
Receipt

15 GBE-LSC-2-001-00 Rev.05
Supplier E MAIL
Flextronics
PO PO
OR
MRP
Data export from

and Import into
Acknowledgement MRP System
of PO Receipt OR
Physical Delivery PO Changes FAX
-Part/Supplier/Qty Manual update
-Blanket PO# into MRP System
REPLACED WITH E COMMERCE

Goods
Receipt

16 GBE-LSC-2-001-00 Rev.05
Forecast
PM receives forecast
PO Release &
Uploads via
Upload PO PO Change Excel template
S to ERP Sub-system
C
U MRP ADM U
P Send to
output
S
suppliers
P Ecommerce
Non-
BCD T
ERP
L E-commerce RapidResponse SCP O
CTB
I W
M
E E
B
E
R PO / PO SI E-commerce Reduced Transaction $$ R
Change
S response ET FLEX EDI
Reduced Lead time
Forecast Commit
S
E
D Legend:
Non-Ecommerce
I FLEX EDI Enhanced PO Action Notification process
UPLOAD
ADM Process Flow
CTB : Clear To Build, LTB : Last Time Buy , E&O : Excess & Obsolescence

17 GBE-LSC-2-001-00 Rev.05
PO Action Notices (POAN)
SUPPLIER
PO Action Notices CUSTOMER
 NEW BUY
DEMAND
 PULL IN
CHANGES
 PUSH OUT
RESULTS IN
 CANCEL
UNSQUARE SET UNSQUARE SETUNSQUARE SET

NO
SHIPMENT
INVENTORY INVENTORY INVENTORY

18 GBE-LSC-2-001-00 Rev.05
SUPPLIER
NEW BUY/ NEW BUY/

PULL IN PULL IN
 NEW BUY
 NEW BUY DEMAND
 PULL IN DEMAND
 PUSH
PULL IN
CHANGES
 OUT UPSIDE
RESULTS IN
 CANCEL
UNSQUARE SET UNSQUARE SETUNSQUARE SET

NO
SHIPMENT
HIGH INVENTORY
19 GBE-LSC-2-001-00 Rev.05
SUPPLIER
NEW BUY/ NEW BUY/

PULL IN PULL IN
 NEW BUY
EFFECTIVENESS DEPENDS ON
 NEW BUY DEMAND
 PULL IN DEMAND
 PULL IN CHANGES
 RECEIPTS OF  PUSH OUT
MATERIALS IN SQUARE SETS UPSIDE
RESULTS IN
 CANCEL
UNSQUARE UNSQUARE UNSQUARE SQUARE SET

PULL IN
SET SET SET
SQUARE NO
SETS SHIPMENT

MINIMUM INVENTORY
HIGH INVENTORY
20 GBE-LSC-2-001-00 Rev.05
SUPPLIER
PUSH OUT/ PUSH OUT/

CANCEL CANCEL
 PUSH OUT DEMAND

 CANCEL DOWNSIDE
4
3
1
5
2 DAYS
BUYER’S REACTION LEADTIME

STOP STOP
SHIP SHIP
HIGH INVENTORY
21 GBE-LSC-2-001-00 Rev.05
SUPPLIER
PUSH OUT/ PUSH OUT/

CANCEL CANCEL

EFFECTIVENESS DEPENDS ON
 PUSH OUT DEMAND
 LEAD
 QUICK REACTION CANCEL
TIME TO POAN EXECUTION DOWNSIDE
4
3
1
5 DAYS
IMMEDIATE
2
BUYER’S REACTION LEADTIME

STOP STOP
SHIP SHIP
MINIMUM
HIGH INVENTORY
INVENTORY
22 GBE-LSC-2-001-00 Rev.05
LSC Initiatives
Component Lead Time Improvement – General Overview
SUBTIER SUPPLIER
SUPPLIER EDI
Customer
Receive, Log In Purchase Demand
Order Sent to (Wkly Bucket
PO & Normalization
Receive & Supplier X52 Wks)
Order Raw Mat & MRP Run
Log In PO
• SUPPLIER MLT REDUCTION

Total LT : 61 Days
• TIER 2 SUPPLIER MLT REDUCTION
LEAN AT SUPPLIER END Total VA: 12 Days Forwarder
• FORECAST TO ORDER RELEASE TIME REDUCTION Total NVA: 49 Days
• TRANSIT TIME REDUCTION
RAW
MATERIAL RECEIVING
STORE FG
STORE IQA ASSY RECEIVING
STORE FG
Suppliers
IQA KITTING ASSY
Suppliers
NVA NVA NVA VA VA VA NVA VA VA VA

M
8 weeks 1 day
1- 2
1 hour
3~5
1 day 1/2 day 72 hours
L
1 week 1 day
days days
T
LT to be 9 weeks 0.5 hrs 12 hrs 1.0 hr 0.5 days
LT to be 6.0 hrs
improved LT to beLead time LT to be improved
improved improved
50 DAYS 6 DAYS 5 DAYS
Supplier Lead Time Transit Lead Time Manufacturing Cycle Time

23 GBE-LSC-2-001-00 Rev.05
LSC Initiatives
Component Lead Time Improvement
END TO END BENEFITS OF COMPONENT LT REDUCTION (ALL PARTY)

RAW MATERIAL STAGE OPERATIONS (WIP) STAGE FINISHED GOODS STAGE
Eliminates complex, administration Reduces work in process inventory Reduces customer order lead-time
intensive inventory control systems
Indentifies and focuses improvement
Improves on-time delivery
Eliminates need for sales forecast activities
to drive production
Reduces re-work & scrap Generates sales
Smoothes demand on production

Reduces material handling Increases customer satisfaction
Reduces resources (equipment, people)
needed to meet spikes in customer Reduces the amount of inventory that
Reduces obsolescence
demands Flex / Customer has to carry
Reduces impact of customer changes

Reduces raw material inventory Reduces required floor space
to orders, or cancellation of orders
Reduces product travel Increases flexibility

Reduces expediting
Improves root-cause-corrective
Justifies premium pricing
action systems
Reduces inventory counting time
Reduces worker stress Reduces finished goods inventory
Reduces total setup time Enables stocking or vendor managed

Facilitates resource movements
inventory (VMI) programs for customers

24 GBE-LSC-2-001-00 Rev.05
LSC Initiatives
Supplier Managed Inventory (SMI)
SMI Flow Chart

1. Forecast
SUPPLIER FLEXTRONICS
2. Shipments 3. Pull Signal
4. Receipt Advice
HUB 5. Advance Ship Notice
Supplier Owned 6. Shipment

Inventory
8. Goods Receipt Notice 7. Goods Receipt Notice
Inventory and Min/Max Inventory and Min/Max

level Information level Information
9. Invoice
10. Payment

25 GBE-LSC-2-001-00 Rev.05
LSC Initiatives
Supplier Managed Inventory (SMI)
Supplier Benefits Flextronics/Customer

Potential increase in Business levels Reduced Inventory & DOS
Forecast visibility Improved ITO
Reduced Paperwork and Purchase

ADVANTAGES
System will reduce AccountOF SMIissues
Payable Order Management
Flexible Demand Reaction (minimally 2
Real time Usage data weeks)
Decrease in stock-outs Eliminate POAN activities
Visibility of Distributor’s Point of Sale

Decrease in inventory levels data makes forecasting easier
Dual Benefits
Decreased planning and ordering cost Reduced data entry errors A reduction in Distributor ordering errors
(responsibility shifted to the Manufacturer)
Improved processing speed
Overall service level improved by having the Stock Level visibility helps identify
right product at the right time Have correct item in stock when needed priorities
Stabilized timing of Purchase Orders
Improved partnership

26 GBE-LSC-2-001-00 Rev.05
LSC Initiatives
Dock to Stock (DTS)
Supply Relationships
Arm’s Length Relationships Collaborative Relationships
Traditional Certified Partnership Type Strategic

Vendors
Suppliers Suppliers Relationships Alliances
Lower Value-added Relationships Higher Value-added Relationships
Reduced Level of Involvement Greater Level of Involvement

Reduced Level of Trust Greater Level of Trust
Reduced Level of Quality Engagement Greater Level of Quality Engagement
Reduced % of DTS material Greater % of DTS material

27 GBE-LSC-2-001-00 Rev.05
LSC Initiatives
Dock to Stock (DTS)
CURRENT STATE (NON DTS) MATERIAL Supplier
VA DELIVERY
NVA NVA
-Validate P/N ACCEPT

& retrieve
RECEIVING HIGH DPPM: < 3б
specifications IQA
- Inspect LOW OQA YIELD
using AQL -Transfer -Validate external shipment
materials to
- Create FIFO
IQA
-Inspect NVA NVA NVA

material vs.
specifications MATERIAL
REVIEW
BOARD
DISCREPANCIES RETURN TO VENDOR
REJECT
ACCEPT
VA
ACCEPT MULTIPLE TOUCHES
POOR SUPPLIER QUALITY
STORE
LONG LEAD TIME
-Transfer materials to kitting store

28 GBE-LSC-2-001-00 Rev.05
LSC Initiatives
Dock to Stock (DTS)
Supplier
FUTURE STATE (DTS)
VA
RECEIVING MATERIAL DELIVERY LOW DPPM (6 SIGMA)

HIGH OQA YIELD
-Validate external shipment
- ENGAGE SUPPLIER IN LEAN PRINCIPLES
- Confirm as DTS supplier
- Create FIFO - DETAILED VSM WITH VA/NVA IDENTIFIED
- PROCESS DATA ANALYSIS VIA 6 SIGMA
- SCORECARD TRACKING
ACCEPT
- AUDIT & BENCHMARKING ACROSS SUPPLIERS
WORK WITH
SUPPLIERS TO
VA IMPROVE DPPM
REDUCED LEAD TIME
IMPROVED SUPPLIER QUALITY
POINT OF USE REDUCED TOUCHES
-Transfer materials to POU

29 GBE-LSC-2-001-00 Rev.05
Engagement in Lean Supply Chain Initiatives
L v C Delta POAN Effectiveness
Load Vs Commit
Leads To…. Load vs. Commit (Entitlement vs. Actual)
Penang POAN
POAN success
Success
Penang
(Entitlement Vs Actual)
20 9.0
10 100.0%
18 8.5
16 7.5
7.7 8.0 Inventory ($) Vs ITO 8
90.0%
80.0%
Plan vs Actual
7.2 7.1 7.1 7.5 70.0%
14
Performance
Entitlement vs Actual %
7.0 6 60.0%
12 6.5 50.0%
# of turns
400 8.5 4 40.0%
10 6.0
5.5 30.0%
8 2 20.0%
6 5.0 10.0%
4.5 0 0.0%
4 4.0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb
350 Q4'0 Q4'0 Q4'0 Q1'0 Q1'0 Q1'0 Q2'0 Q2'0 Q2'0 Q3'0 Q3'0 Q3'0 Q4'0 Q4'0
2
ITO
3.5 8 8 8 9 9 9 9 9 9 9 9 9 9 9
0 3.0 TTL PO to be Pushout/Cancelled (US$Mil) 6.7 8.6 0.5 5.5 2.1 3.4 6.6 4.8 3.2 8.9 7
Act Reschedule+Cancellation (US$Mil) 3.1 5.2 0.4 2.5 1.3 3.1 6.1 4.3 2.8 8.1 6.5
Q2 ' 09 Act Q4 09 Plan 8.0
Q4'08 Act Q1'09 Act Q3'09 Plan Performance (%) 46.5 60.2 89.5 44.5 61.8 90.0 92.4 89.6 87.5 91.0 92.9 0.0%
Entitlement (%) 6.0 6.0 6.0 6.0 6.0 300

Act (%) 7.6 6.0 5.6
ITO (# of turns) 7.5 7.2 7.1 7.1 7.7
SMI Penetration
250
Component Lead Time 7.5
Inventory (US$Mil)
% SMI vs Discrete PO
% SMI Penang
vs. Discrete PO
ITO
200
Component Lead Time (LT)

Penang
Component Leadtime(LT) INV $
7.0
150
100%
50 90%
40
E & O Trend 100
80%
70%
60%
%
6.5
30
# of days
50%
40%
20 50
30%
10 20%
10%
- 0 6.0
0%
Q4 09 Plan Q1 Q2 Q3 Q4 Q1 09 Act Q2 ' 09 Act
Q3'09 Plan
Q4 09 Plan
Q4'08 Act Q1'09 Act Q2'09 Act Q3'09 Plan
Discrete PO (%) 35 34 32 30
Target LT (days) 47 46 44 39 35
RM (US$mil) WIP (US$mil) FG (US$mil) ITO (# of turns) SMI&CRP - JIT (%) 65 66 68 70
Act LT (days) 47 46 43
E&O % Material Loss DTS % via Supplier Quality E Commerce

E-Commerce Trend
E&O trend
Part Count E Commerce
Penang % Material Loss
% Material to Revenue
Loss to Total Total Part Count Dock-to-stock %
Penang
Penang
30.0 Revenue Penang

85.0 Dock To Stock % 100.0
Trend
0.70
25.0
0.60 98.0
20.0 80.0
0.50
US$Mil
15.0 96.0
0.40
%
%
10.0 75.0
0.30 94.0
5.0 0.20
70.0 92.0
0.0 0.10
Q2 ' 09 Act Q4 09 Plan
Q4'08 Act Q1'09 Act Q3'09 Plan 0.00 90.0
Excess (US$mil) 14.0 13.7 15.0 17.0 13.0 Q4 ' 08 Q1 ' 09 Q2 ' 09 Act Q4 09 Plan 65.0 Q4 09 Plan
Q3'09 Plan Q1 09 Q2 09 Act Q3 09 Plan Q4 09 Plan Q4'08 Act Q1'09 Act Q2'09 Act Q3'09 Plan
Obsolete (US$mil) 13.3 7.7 8.0 4.0 3.7
Plan (%) 0.58 0.58 0.55 0.52 0.48 Plan (%) 68.0 73.0 79.0 80.0 Plan (%) 95.0 96.0 96.1 96.1 96.1
Act PO received (US$mil) 6.8 5.2 5.9
Act (%) 0.58 0.58 0.35 Act (%) 70.0 79.0 Act (%) 95.0 96.1 96.1
Claim Submitted (US$mil) 8.3 5.6 6.0 8.2

30 GBE-LSC-2-001-00 Rev.05
Best Practice - Integrated Demand
Management (IDM)
31 Lean Supply Chain Overview

GBE-LSC-2-001-00 Rev.03
Best Practice
Lean Supply Chain Release 21-069
Source : SGA
Site Name : WuZhong
Must Do #10 : Management Review Council Month, Year : Sep, 2012
Joy.chen2@cn.flextronics.com
Operations/
Problem Action Taken Results Must Method for Sustaining
Station
Do Savings
BP
% Improved
No standard process for Defined MRC process
Before
MRC review Have the meeting to review
After
Metrics Hard Soft Inventory
Office/East Joint Current process can't the check list items by (UOM) (USD/ (USD/ /AR/AP MRC Review Process and
Office cover 13 check list items weekly basis. month) month) (USD) checklist
Improved scorecard of MRC
performance. LVC (%) 109.0 103.0 6% 667K
Customer
Implementation Start Date
27-Sep-12
PM,PC,MC,IE
100% Implementation Plan
22-Dec-12
Tools Used Goals X Lead-Time x 1/2
Potential Savings/Month
X Lean Defect x1/10 Energy x 9/10 after 100% Implementation
Inventory /
Inventory x1/2 Scrap x1/10 Hard Soft
Six AR/AP
Sigma X Productivity x2 Space x1/2 US$0 US$0 US$667K
Before Kaizen After Kaizen
Have MRC
No MRC Review Review
Process Process on
weekly basis
MRC
Review
Process
Site Yokoten
32 GBE-LSC-2-001-00 Rev.05
Implementation Status
Guide: 81% ~ 100%
Best Practice
Source: SGA
Site Name: Nanjing
Title: Forecast Review Lead Time Reduction Month, Year: Feb, 2012
Kevin.Liow@cn.flextronics.com
Operations/
Problem Action Taken Results Method for Sustaining
Station
% Improved
Long process time to Using 7 Steps of Office Savings
Before
review the new forecast Kaizen, the processing Inventory
After
Metrics Hard Soft
loading number due to lead time improved from /AR/AP
3F Office (UOM) (USD/ (USD/ Standard Work and Execute
LvC not matching 6.6 hours to 4.5 hours. PM (USD/
month) month) new process
month)
to align the sale commit
before generating a new L/T
Customer forecast for pre MRC (Hours/ 6.6 4.5 32% 120
discussion time) 4-Jan-12
ALU
31-Jan-12
Tools Used Goals X Lead-Time x 1/2 Site Yokoten
X Lean Defect x1/10 Energy x 9/10 Implementation Status after 100% Implementation
7 Steps of Office Kaizen Inventory /
Six Guide: 81% ~ 100% AR/AP
Sigma Productivity x2 Space x1/2 US$XXK US$0.01K US$XXK

Project Title: ALU Forecast Review Lead Time Reduction
7 STEPS OF OFFICE KAIZEN
Date: Originator:
Duration Step 1 Step 2 Step 3 Step 4 Step 5 Step 6 Step 7
Total
No Task
(Minutes) (N / AB) (Time) (C#) (Time) (S) (A#) (Time)
1 Forecast received from Customer to PM 0.08 N 0.08 0.08 0.08 0.08 0.08 0.08
forecast 2
3
PM converting the forecast to Flex format with revenue
PM review the forecast trend

5.00
5.00
N
N
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
review lead 4
5
PM forward the new forecast to MP to calculate new ROP
7 Steps of Office
MP send back the new ROP to PM
0.17
5.00
N
N
0.17
5.00
C5
5.00
x
5.00
x
5.00
x
5.00
x
5.00
time: 6
7
PM / MP discussion on the new ROP
Kaizen: LT
PM work out the Ex-work plan as loading plan
10.00
10.00
N
N
10.00
10.00
10.00
10.00
10.00
10.00
10.00
10.00
10.00
10.00
10.00
10.00
6.6hours 8
9 reduced to
MP prepare the loading plan comparison
MP / PM pre MRC meeting and LvC number

20.00
60.00
N
N
20.00
60.00
20.00
60.00
20.00
60.00
20.00
60.00
20.00
60.00
20.00
60.00
4.5hours
10 PM de-rate the forecast 10.00 N 10.00 C3 x x x x
11 PM forward the derated forecast to MP to calculate new ROP 0.08 N 0.08 C4 x x x x
12 MP send back the derated ROP to PM 5.00 N 5.00 C5 x x x x
13 PM / MP discussion on the derated ROP 10.00 N 10.00 C6 x x x x
14 PM work out the Ex-work plan as loading plan 10.00 N 10.00 C7 x x x x
15 MP prepare the loading plan comparison 20.00 N 20.00 C8 x x x x
16 MP / PM pre MRC meeting 60.00 N 60.00 C9 x x x x
17 MP prepare Baan laoding plan 120.00 N 120.00 120.00 120.00 120.00 120.00 120.00
18 MP laoding Baan 30.00 N 30.00 30.00 30.00 30.00 30.00 30.00
19 MP check and confirm the MRP 15.00 N 15.00 15.00 15.00 15.00 15.00 15.00
395.33 395.33 280.08 280.08

33 GBE-LSC-2-001-00 Rev.05
Best Practice
Lean Supply Chain Release 19-048 Source : Internal Kaizen
Site Name: Zhuhai HVS-Mobile
Must Do #10: Management Review Council Must Do Month, Year: Apr, 2012
BP Hu Jie@cn.flextronics.com
Operations/
Station
% Improved
1. No MRC review 1. Set up MRC meeting Savings
Before
process for MPS Load, with GM, Planning,
After
Material & Resource planning Purchasing, Program and (UOM) (USD/ (USD/ /AR/AP Weekly MRC meeting
Program and demand change Operations to review key month) month) (USD) process by project
management. metrics.
2. Set up demand LvC (%) 112% 107% 4%
Customer
management rules and
demand loading process. ITO (Turns) 13 18.7 44% 6.4 Mil 2-Sep-11
Mobile 3. Weekly MRC meeting
E&O (USD 100% Implementation Plan
8.1 1.7 79%
Mil) 30-Apr-12
Tools Used Goals Lead-Time x 1/2
Defect x1/10 Energy x 9/10 after 100% Implementation
X Lean
Inventory /
X Inventory x1/2 Scrap x1/10 Hard Soft
AR/AP
Six
Sigma Productivity x2 Space x1/2 US$XXK US$XXK US$6.4M

Process flow Support
Process Process Flow
MRC Meeting Room
Raw Demand Weekly PORForecast
Pre-MRC/ MRCReview
Pre-Management PMadjust forecast into MRP profile as load proposal

Review Council
Run MRP
No project implement MRP Load

Clean up Plan order for ECO/NPI/alternative parts
Order Placement
Set up MRC meeting with GM, Planning,
Purchasing, Program and Operations.
MRC Review Process Supply Commit

Clean POA(remove the unnecessary actions)
Check POA/POresponse within 48hours

Load vs. Commit Entitlement
ReviewPOA result/performance and sorting out
escalation item
E&Omitigation(IRP/cross-selling MPAs/reselling)
ReviewE&O with Customer(Weekly)

MRC data trend by project
Material Clear-to-build(CTB)
Clean to build
Resource plan and daily production schedule

Build/Pack Plan
Commitmentto customer
Finish goods availability

Weekly MRC
MRCMeeting
Meetingfor all project
Room
Daily output plan vs actual
Shipment outbound
Revenue Recognition
Review E&O, Inventory, LvC.
Revenue recognition
Site Yokoten
Lean Supply Chain Overview Implementation Status
34 GBE-LSC-2-001-00 Rev.05
Guide: 81% ~ 100%
Best Practice
Source : Internal Kaizen
Site Name: Zhuhai B11
Must Do #10: Management Review Council Month, Year: Apr, 2012
Aaron.Dong@cn.flextronics.com
Must Do
Operations/ BP
Station
% Improved
1. No Pre-MRC & MRC 1. Set up Pre-MRC meeting Savings
Before
review process for MPS with BU ops lead, IE, MPS,
After
Material & Load, Capacity, Program and Procurement (UOM) (USD/ (USD/ /AR/AP Weekly Pre-MRC & MRC
Program Resource planning to review key metrics. month) month) (USD) meeting process by project
and demand change 2. Set up MRC meeting
management. with GM, BU ops Lead, LvC (%) 119% 106% 13% 15Mil
Customer
Program, MPS and
Procurement to determine
2-Apr-11
All demand loading and track
Inventory, E&O and etc. 100% Implementation Plan
30-Apr-12
Inventory /
AR/AP
Six
Sigma Productivity x2 Space x1/2 US$XXK US$XXK US$15M
MRC Meeting in progress

Review Process MRC Meeting in progress
Management
ManagementReview
Review Pre-Management
Pre-Management
Review Raw
RawDemand
Demand
Review
CouncilProcess
Council ReviewCouncil
Council
• Normalized Demand •
• Review and Received based on
No project
validate proposed • Net Change Analysis customer formats
load • Use of ADM Tool - PM • Run Sanity Checks
• Load in RR • Verify forecast with
Capacity Review customer IF
implement
• Past Qtr Pack Trend & Profile by necessary (PM)
Account
• Rationalize the Current / Next Qtr
Build Plan
• Determine Capacity Plan based on MRC File
Pre-MRC MRP
MRPLoad
Load
Build Plan
Supply
SupplyCommit
Commit
Materials
Materials
Clear-to-Build
Clear-to-Build(CTB)
(CTB)
& MRC Process • Load into MRP • Analyze Materials • Generate CTB through
MRC File
and confirm
accuracy •
Shortages
Work with Suppliers to
close Supply gaps
Weekly Pre-MRC & MRC
Rapid Response
meetings for all projects.

(Procurement)
Revenue
Revenue Finished
FinishedGoods
Goods
Build
Build//Pack
PackPlan
Review
MRC Capacity,
Meeting LvC,
Recognition
Recognition Availability
Availability Plan
Room
•
•
Actual vs Commit
for CRD & OTD
Inventory ITOs
• Weekly FG On hand &
Aging Report
•
•
•
E&O, Inventory
Load vs CTB Report
Daily Pack Plan Report
Daily Rev GYAT Report
Site Yokoten
35 GBE-LSC-2-001-00 Rev.05
Guide: 81% ~ 100%
Best Practice Source: Internal
Site Name: Penang
Title: RIM PRD Customer Commit Process Improvement Month, Year: Feb, 2012
Santhaneswary.Muthiah@my.flextronics.
com
Operations/
Station
% Improved
Long order response Use 7 steps office kaizen to Savings
Before
time to customer study time taken for each Inventory
After
Metrics Hard Soft
task and review all task for /AR/AP
OPS 1 CFT (UOM) (USD/ (USD/
removal / simplify / month) month)
(USD/ Work Standard Updated
month)
combination / automation to
improve order response Hours 6 3.1 48% 204
Customer time
CCD 97% 100% 3%
12-Sep-11
RIM 1.40m
CRD 93% 100% 7%
Sep/11
Inventory /
Six AR/AP
Sigma X Productivity x2 Space x1/2 Time Reduction: US$XXK US$ 204 US$1400K
2.9 hours
Inventory Reduction :
$1.4M
7 Steps of Office Kaizen
Site Yokoten
Lean Supply Chain Overview Guide: 81% ~ 100%

36 GBE-LSC-2-001-00 Rev.05
Best Practice - Excess and Obsolete
(E & O)

GBE-LSC-2-001-00 Rev.03
Best Practice
Site Name : HVS Mobile
Must Do #8 : E&O Reduction & Preventive Action Month, Year : Sep, 2012
YM Yang@cn.flextronics.com
Operations/
Station Must
High E&O Inventory in Reviewed and negotiated Do BP
Savings
% Improved
Before
NCMC Project, long with customer on E&O
After
Planning process time on EOL claim . (UOM) (USD/ (USD/ /AR/AP Standard Process
/Program claim Simplified EOL model E&O month) month) (USD) Weekly review meeting
claim process.
EOL
Customer 922 687 25% 233K
($K)
17-Sep-12
NCMC Number
84 72 14% 192 100% Implementation Plan
of pallets
25-Sep-12
Inventory /
x Inventory x1/2 Scrap x1/10 Hard Soft
AR/AP
Six
Sigma Productivity x2 Space x1/2 US$233K US$0.2K US$XXK
Before Kaizen High E&O After Kaizen

Model
E&O
Total NCMC
inventory
Liability
FLEX
NX6450&6490 269 269 USD922K
-
NX6510&6520 67 67 -
NX6580&6590 405 405 -
NX9250&9270&9290 8,513 8,513 -
Last year EOL model total 9,254 9,254 -
NX9300 103,125 103,125 -
EOL
NX6640 167,391 167,391 -
Model
NX6610 115,733 115,733 -
Option 2,680 2,680 -
Nov'11 to Jan'11 EOL model total 388,929 388,929 -
Penguin 237,757 237,757 -
Turtle 29,349 29,349 -
Dec'11 to June'12 EOL model total 267,106 267,106 -
NX9320
Armor
83,688
173,064
83,688
173,064
-
-
E&O reduced by
On going Model KGM - - - USD233K
GG3/GG3L - - -
On going Model 256,752 256,752 -
NCMC all Model NCMC all Model 922,041 922,041 -
Site Yokoten
38 GBE-LSC-2-001-00 Rev.05
Guide: 81% ~ 100%
Lean Supply Chain Best Practice
Release 18-052
Source: Internal
Site Name: Timisoara
Must Do #8 : E&O Visual Management and Preventive Month, Year: Mar, 2012
Management Victor.Georgescu@ro.flextronics.com
Operations/ Must Do
Station BP
% Improved
Low transparancy and Introduce visual management Savings
Before
visibility on E&O status and aids inside tracker : Inventory
After
Metrics Hard Soft
progress : 1. Deploy visual tracker able to /AR/AP Standard Work
E&O process 1. No visual management show status, progress and
(UOM) (USD/ (USD/
month) month)
(USD/ Asset Management
rules defined history at E&O month) Procedure
2. No clear triggers for 2. Create transparency in E&O Visual
escalation process process by introducing clear No Yes 100.00%
Customer 3. Long IRP feedback triggers for progress and
Management
waiting time escalation process

E&O opportunity Implementation Start Date
lines transacted 7 145 88.00% 71K
15-Apr-11
Site level 3. Deploy visual board in order to
make visible hidden informations 100% Implementation Plan
and to reduce waiting time 30-Apr-11
Site Yokoten
X Lean Defect x1/10 Energy x 9/10 Implementation Status after 100% Implementation
Inventory /
Six Guide: 81% ~ 100% AR/AP
Sigma Productivity x2 Space x1/2 US$XXK US$XXK US$71K
Change in Process
Customer Claim Additional
demand or Claim Process Yes Demand
to be executed Demand
commit Increase

C le a r vis u a l m a n a g e m e n t
Customer No
1.Tes t E&O
agains t 2.Claim 3.No v alid 4.Claim
Excess and
Obsolete Mitigate E&O
Flextronics
Determine
Contractual
Terms & Sell/Consign Yes
Inventory
Consignment DEL T A :th is w e e k vs p r e vio u s w e e k 3M E& O d ata c o lo r c o d e c ontrac t s ubmitted c laim c los ed
Prevention Inventory Liability Conditions Inventory Process or
Sales Process n e w cp
Sg m tM ar k e t C u s to m e r c Vis ual E&O c laim proc es s
No
Invoice
Successful? Review E&O
Customer L as t ye ar
Indata notstandardized Status with
Customer
Cash Only Yes
according
IRP E& O E& O
Processnotd efinedasp erspecific to PO
Visual management color

Yes
Op p o r tu n itie s tr an s acte d am o u n t
segmenta ndcustom errequirements
n e w cp Fe b in Fe b claim
withneedv isualaids
No
No change
in E&O Internal Review Sg m tM ar k e t C u s to m e r c T o tal E& OT & C 's s u b m itte d w k1 w k2 w k3 w k4 w k5 w k6 w k7 w k8 w k9 w k 10
position of E&O status
A u to m o tive Ne xte e r DPI 1,060 DPI 10,000 10,238
code with status and

A u to m o tive V is te o n V NC 9,266 V NC
In d u s tr ial L an d is & Gyr LAN - LA N
Asset
Reports
Review XS/OBS Demand Analysis In d u s tr ial Sch A u to m atio n SEA 3,078 3,450 SEA 311,564 171,598 157,000
Inventory OH/OO (incl. Waterfalls)
In d u s tr ial Sch n e id e r P& P SEA 1 10,944 364,237 SEA 1 306,250 120,000 288,485
Pro cesssplit in3d ifferentareas In d u s tr ial SM A So lar T e h n o lo g y SL R - SLR
w ithoutcon s olidate dlink
progress visible,
Determine
disposable/sellable
In fr as tr u ctu r e A lcate lW C DM A ALC7 32,368 60 A LC7 71,482 80,278
IN d a ta
E&O Inventory
In fr as tr u ctu r e A DV A Ge r m an y A DV 116,473 15,093 A DV 116,000 27,086 174,000 278,000

Review disposable
or sellable E&O
inventory
No
s ta n d a rd ize d
In fr as tr u ctu r e
A lcate lA DSL
A lcate lItaliaBattip ag lia
ALC2
ALC4
13,378
268,558
452
330,832
A LC2
A LC4
Keep
Approved?
Yes
Clear triggers for control, In fr as tr u ctu r e
A lcate lItaliaT r ie s te
A lcate lPr o to typ e
A lcate lC T O
ALC3
ALC6
ALC5
168,163
147,202
42,003
6,836
- TA
A LC3
A LC6
rig
LC5 g e rs fo r
416,000
In fr as tr u ctu r e Er ics s o n EHX ERB2 6,979 e s ERB2

120,317 c a la tio n in
120,000 119,023
Visual management board

Offer E&O for Sale
to broker network
In fr as tr u ctu r e Er ics s o n FW T ERB4 87,650 509,217 ERB4 503,000 503,000

Positive
respons
Yes
Review offer
(reserves and P&L
Offer
acceptable?
Yes
Ship E&O
inventory via Sales
In fr as tr u ctu r e Er ics s o n T N ERB3 4,053 c- a sERB3
e o f is s u e s 63,000
impact) Order Process
In fr as tr u ctu r e En te r as ys ENT 596 - ENT 1,100
Low process transparency,

In fr as tr u ctu r e L u ce n t ALC 37,260 14,905 A LC 61,462 62,052
No
in place
In fr as tr u ctu r e M e llan o x M LN - MLN
C le a r tra c k in g
Scrap or keep?
Scrap M e d ical Ph ilip s M e d ical PBE 5,111 13,898 PBE 83,944 1,075
Inventory write-oiff
and physical
M e d ical Er ics s o n ET K ERB6 - ERB6
fo r c la im s
No visual management rules defined

M e d ical GEHe alth car e GEC 10,509 - GEC
disposition
M e d ical T u n s tall T UN 2,702 TUN

T o tal 912,320 1,434,328 863,814 27,086 233,060 277,000 1,049,429 63,000 549,534 781,000 120,123 91,591 -
No clear triggers for escalation

process
E&O Demand Customer
Forecast MRP report Liability Claim report
Planner
No link between
IRP report and E&O
No clear tracking
for claims
IRP IRP Sales
MDSS report opportunities
Broker No triggers for

Broker Sales
Asset tool report escalation in
opportunities
case of issues

39 GBE-LSC-2-001-00 Rev.05
Best Practice
Site Name : HVS-HW(B13)
Must Do #8 : E&O Reduction & Preventive Action Month, Year : Sep, 2012
Nicole.Li@flextronics.com
Operations/
Station
Do BP
Too many aging Return >60days aging Savings
% Improved
Before
materials pallet sleep in pallet to HW.
After
B9 WH central WH without Sell excess material to (UOM) (USD/ (USD/ /AR/AP
disposition. spot market. month) month) (USD) Standard work
Sell back excess
materials to HW. Pallets 1684 1057 37% 5016
Customer
Cost 2,905,991 1,650,000 43% 6652 1561982 9-Sep-12
HuaWei
14-Sep-12
Inventory /
AR/AP
Six
Sigma Productivity x2 Space x1/2 US$11K USXXK US$1.6KK
Return > 60 days aging pallet to

Too many aging HW.
materials pallet Sell excess material to spot
sleeping in central market.
WH Sell back excess materials to HW.
Site Yokoten
40 GBE-LSC-2-001-00 Rev.05
Guide: 81% ~ 100%
Best Practice
Source : External Kaizen
Site Name: Malu Shanghai
Must Do #8: E&O Reduction & Preventive Action Month, Year: Jun, 2012
Eileen.Li@cn.flextronics.com.cn
Operations/
Problem Action Taken Results Must Do Method for Sustaining
Station BP
% Improved
1.FG entitlement not 1. Established FG entitlement Savings
Before
defined for each by customer.
After
FG W/H customer. 2. Work with customer for (UOM) (USD/ (USD/ /AR/AP Visual management of FG
2.No visual management aging inv and clear all FG month) month) (USD)
aging inventory
of FG aging inventory aging > 7days.
3. High Aging FG in 3. Developed automated FG Space
1600 600 63% 3,936
Customer warehouse tracking system to trigger (m²)
abnormalities and aging Implementation Start Date
DOS 2.19 1.25 43% 2.6 Mil
beyond entitlement. May/12
4. Consolidate FG inv and 100% Implementation Plan
All
release space for raw Crew Size
8 4 50% 2,730
material from ext warehouse. (H/C) May/12
Tools Used Goals Lead-Time x 1/2 Aging >7days Potential Savings/Month

41 14 66% 90,000
Defect x1/10 Energy x 9/10 (# of Pallets) after 100% Implementation
X Lean
Inventory /
AR/AP
Six
US$
Sigma x Productivity x2 x Space x1/2 US$2.7K
3.9K
US$2.69M

1. No ownership
2. No due date 2012-6-15
3. No visual
management
1. Established FG
Entitlement
2. Developed
automated FG
tracking system
Site Yokoten
41 GBE-LSC-2-001-00 Rev.05
Guide: 81% ~ 100%
Best Practice
Lean Supply Chain Release 19-046 Source : External Kaizen
Site Name: Timisoara
Must Do #8: E&O Reduction & Preventive Action Must Do Month, Year: April 2012
BP Simon.Brown@flextronics.com
Operations/
Station
% Improved
No good review process on Setup a notice board next Savings
Before
Inventory and E&O. Inventory to Materials Head & GM's
After
report are sent to SC team room. Publish Inventory (UOM) (USD/ (USD/ /AR/AP
Supply Chain Notice Board
through emails without effective and E&O Data on weekly month) month) (USD)
Standard Work
action taken. basis. Regular review
process with supply chain Inventory
18.5 12.5 32% 6
Customer team for action plan to (USD Mil)
drive down inventory and Implementation Start Date
E&O inventory 8-Mar-12
ALU-CTO
30-Mar-12
Inventory /
Six AR/AP
Sigma Productivity x2 Space x1/2 US$XXK US$XXK US$6mil
N/A E&O
Pareto chart at
Materials
Inventory
Data
No Visual Communication
Area to monitor and
Management control E&O and
inventory
Site Yokoten
42 GBE-LSC-2-001-00 Rev.05
Guide: 81% ~ 100%
Best Practice - E
Commerce & Automation

GBE-LSC-2-001-00 Rev.03
Best Practice
Site Name: Tczew Campus
Must Do #6: E-Commerce/FSP Implementation Must Do
Month, Year: May, 2012
Monika.Zyborowicz@pl.flextronics.com
BP
Krzysztof.Blawat@pl.flextronics.com
Operations/
Station
% Improved
Many purchase orders Analyse ISI database for FSP Savings
Before
(POs) sent to suppliers by opportunity. Set Gantt and
After
email, Flex and suppliers implementation plan for non- Operational Buyers trainning
Supply Chain comment on PO status by FSP supplier/parts. Increasing
(UOM) (USD/ (USD/ /AR/AP
month) month) (USD) document, new report based
email. Risk of mistake when number of suppliers using
on common criteria
PO updated manually. FSP/EDI to manage Purchase PO manually
Many suppliers using Orders. 28% 16% 44%
Customer changed (%)
current PO Automation
Supplier Response Implementation Start Date
solution incorrectly, need of 5.22 2.9 44%
Time [days] 07/11
manual changes on POs
Common 54,615
No of suppliers 100% Implementation Plan
EDI/FSP 130 145 12%
04/12
Tools Used Goals Lead-Time x 1/2 FSP Penetration (%) 64 84.2 32%
after 100% Implementation
X Lean Defect x1/10 Energy x 9/10
Inventory /
Six AR/AP
Sigma x Productivity x2 Space x1/2 US$XXK US$54K US$XXK
Open EDI/FSP
orders touched
manually
Increased number of
suppliers using FSP/EDI.
Decrease of overdue and
non-confirmed POs
Site Yokoten
44 GBE-LSC-2-001-00 Rev.05
Guide: 81% ~ 100%
Best Practice
Site Name : Gushu
Must Do #6 : e-Commerce / FSP Implementation Month, Year : Jul, 2012
Didy.Chan@cn.flextronics.com
Operations/
Station Must
% Improved
Some suppliers still have not Negotiated with suppliers on Do BP Savings
Before
After
use FSP system, buyers implementation of FSP Metrics Hard Inventory
Soft (USD/
PMC need to spend time to deal system to reduce time spent (UOM) (USD/
month)
/AR/AP
with manual POs; on manual POs and month) (USD) Standard work
Long weighted average lead improved buyer productivity;
time components; Shorten Weighted Average FSP parts (%) 82 95 16% 63
Customer
ITO is only at 7.6 Component from 58 days to Headcount Implementation Start Date
28 days; 0 2 100% 1024
reduction 1-Apr-12
All
POAN (%) 82% 88% 7%
20-Sep-12
weighted
Tools Used Goals X Lead-Time x 1/2 average 58 28 52% 395K
component/day Potential Savings/Month
after 100% Implementation
Defect x1/10 Energy x 9/10 ITO 7.6 9.3 22%
X Lean
Inventory /
AR/AP
Six
Sigma X Productivity x2 Space x1/2 USD1K USD0.06K USD395k
Before Kaizen After Kaizen Details

Plan (Q1FY12) (Q2FY12) (Q3FY12) (Q4FY12) Plan (Q1FY13) (Q2FY13) (Q3FY13) (Q4FY13)
( Metrics) Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 (Metrics Apr-12 May-12 Jun-12 Jul-12 Aug-12 S ep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13
E Goal 90% 90% 90.0% 85% 85.0% 86.0% 86.0% 86.0% 87.0% 87.0% 88.0% 88.0% E)Goal 90.3% 90.3% 90.3% 90.3% 95.0% 96.0% 96.0% 96.0% 97.0% 97.0% 97.0% 97.0%
Commerc Actual 76.0% 85.0% 82.0% 73.7% 78.0% 85.2% 83.2% 84.8% 80.7% 83.7% 85.1% 86% Commer Actual 82.0% 88.0% 92.0% 95.0% 95.0%
100% 100.0%
90%
80% 95.0%
70%
60% 90.0%
50%
Goal 85.0% Goal
40%
Actual Actual
30%
80.0%
20%
10%
75.0%
0%
70.0%
1 2 3 4 5 6 7 8 9 10 11 12
Site Yokoten
45 GBE-LSC-2-001-00 Rev.05
Guide: 81% ~ 100%
Best Practice
Site Name: Segment Materials
Must Do #6: E-Commerce > 90% Must Do Month, Year: Mar,2012
BP Marcin.Fic@pl.flextronics.com
Operations/
Station
% Improved
1. No metric available to Savings
Before
After
validate PO automation 1. Implemented Total Metrics Hard Soft Inventory
Buyer Process (including manual ThroughPut Automation metric (UOM) (USD/ (USD/ /AR/AP
touches) in 3 pilot sites month) month) (USD) Standard Work
2. No actions taken to (Zhuhai,Tczew,Milpitas)
eliminate manual PO transferred from
2. Change re-scheduling filters 84% 92% 10%
Customer touches on EDI/FSP 3. Buyer training
MRP suggestion (%)
orders 4. Supplier training & tracking Open PO FSP/EDI Implementation Start Date
66% 80% 21%
5. Rolling tracking Top 5 (%) 01-Jan-2012
suppliers to implement FSP 100% Implementation Plan
All 170,000
6. Cancel Beyond LT tolerance Open PO manually
setup 47% 35% 26%
Touched (%) 01-Feb-2012
Total Throughput
Automation (%)
29% 48% 66%
E&O Prevention after 100% Implementation
Defect x1/10 Energy x 9/10 0 400 100% 400,000
X Lean (USD)
Inventory /
AR/AP
Six
Sigma X Productivity x2 Space x1/2 US$XXK US$400K US$170K

Total Through-put PO Automation Factor
No
measureme
PO transferred from ERP suggestion (%)
nt in place to
track manual X
touches by Open EDI/FSP Orders (%)
buyers X
(1 – Open EDI/FSP Orders touched
manually %)
Site Yokoten
46 GBE-LSC-2-001-00 Rev.05
Guide: 81% ~ 100%
Best Practice - Component Lead Time
Reduction

GBE-LSC-2-001-00 Rev.03
Best Practice
Site Name : FPS Chennai
Must Do #9 : Component Lead Time Reduction Month, Year : Sep, 2012
Sathya.Arumugam@in.flextronics.com
Operations/
Station Must
% Improved
Long component LT Pushed suppliers to Savings
Do BP
Before
Sourcing always cause the provide their processing LT Metrics
After
Hard Soft Inventory
CPM potential risk of inventory and tried to figure out the (UOM) (USD/ (USD/ /AR/AP
up, materials shortage, cause of long LT. Studied month) month) (USD) Standard Work
Purchasing
line down. and analyzed the solution
to reduce LT. Negotiated LT(day) 46 27 41%
Customer and advised the suppliers 21000
to improve and take action RM DOS 21 10 52.4%
7-Jun-11
App for shorter LT
25-Jun-12
Inventory /
AR/AP
Six
Before Kaizen After Kaizen Suppliers

Suppliers provided Short real Lead
1 the 2 CPM and Buyers
release PO based on L/T time
general component suppliers time
L/T to sourcing team
Study and
analysis
Site Yokoten
48 GBE-LSC-2-001-00 Rev.05
Guide: 81% ~ 100%
Best Practice
Site Name : Tczew Campus
Must Do #9 : Component Lead Time Reduction Month, Year : July, 2012
Anita.Biskupska@pl.flextronics.com
Operations/
Station Must
% Improved
Long Supplier Supplier LT reduction by
Do BP Savings
Before
After
Supply Chain LeadTime(Full LT) for introducing CRP program
NSN/WG parts causing for selected parts with (UOM) 3PL Elimination
(Strategic (USD/ (USD/ /AR/AP
high inventory. longest LT. month) month) (USD)
Procurement) Agreement with Suppliers on
No logistic solutions Training and presentations
implemented. materials review and Avg. Supplier CRP program
Lack of preparation for update. LT for NSN 70 35 50%
Customer
CRP negotiations with old Individual approach towards (days)
training materials and supplier during negotiation Avg. Supplier Implementation Start Date
presentation for potential resulting in negotiations LT for WG 70 23 68%
suppliers. effectiveness increase. 1-Jun-12
(days) 1200000
This allow the supplier lead
time to be effectively
NSN, WG New
compressed by giving the
components on 41 80 49%
supplier a planning forecast. 31-Jul-12
CRP (P/N)
Goals Lead-Time x 1/2

Defect x1/10 Energy x 9/10 after 100% Implementation
X Lean
Inventory /
AR/AP
Six
Sigma Productivity x2 Space x1/2 US$XXK US$XXK US$1.2KK

CRP training
materials do not
Old training show supplier’s
materials benefits CRP
agreemen
t
Negotiation with
suppliers based on
one standard
document, face to Strategic SUPPLIE
face meeting with Procurement Rs
Strategic SUPPLIE suppliers
Procurement R
Site Yokoten
49 GBE-LSC-2-001-00 Rev.05
Guide: 81% ~ 100%
Best Practice
Source :SGA
Site Name: Tczew
Must Do #9: Component Lead Time Reduction Month, Year: May, 2012
Magdalena.poloczanska@pl.flextronics.com
Must Do
Operations/ BP
Station
% Improved
Long Weighted Average Working with Top Savings
Before
LT on NSN and Cisco contributed suppliers to
After
Supply Chain account. reduce component lead (UOM) (USD/ (USD/ /AR/AP
time within CISCO (Arrow) month) month) (USD) Quarterly Practice
and NSN account
Cis co WALT
(EUROPE EN YAO OY, 33.1 25.1 24% 400,000
Customer SUZHOU CHUNXING
[Day]
NSN WALT Implementation Start Date
PRECISION, MURATA). [Day] 48.6 24.1 50% 1,428,000
03/12
Checking demonstrated LT
Cisco, NSN 100% Implementation Plan
and use the lowest LT with
the same MPN to negotiate 03/12
with suppliers.
Tools Used Goals x Lead-Time x 1/2
Inventory /
Six AR/AP
Sigma Productivity x2 Space x1/2 USD$KK USD$KK USD$ 1.82M

WALT Before:
NSN parts=48 days
Cisco= 33 days WALT After:
NSN parts= 24 days
Cisco= 25 days
Site Yokoten
50 GBE-LSC-2-001-00 Rev.05
Guide: 81% ~ 100%
Best Practice
Source: Internal Kaizen
Site Name: Zala Automotive
Must Do #9: Component Lead Time Reduction Must Do Month, Year: Mar, 2012
BP Edit.BaloghNemethne@hu.flextronics.com
Operations/
Station
% Improved
Long component lead - Downloaded past 6 months Receipt Savings
Before
time and site don't have report from Baan
After
benchmark lead time for - Calculated demonstrated lead time
Purchasing negotiation. using formula <Receipt Date minus
(UOM) (USD/ (USD/ /AR/AP
month) month) (USD) Change Standard Work
Order Date>
- Get the average Demonstrated lead
time for each parts, check against WALT
Customer
Quoted lead time 82 72 12% 2687
(Days) Implementation Start Date
- For parts with Demonstrated lead
9-Jan-12
time less than Quoted lead time,
ALL 100% Implementation Plan
negotiate with suppliers for lead time
reduction 29-Feb-12
Lean Defect x1/10 Energy x 9/10 after 100% Implementation
Inventory
/AR/AP
Six
X
Sigma Productivity x2 Space x1/2 US$2.7K N/A N/A
Before Kaizen Lead time After Kaizen

Median: 65 days LT reduced
Q3-Q1=50 days Median: 55 days
Q3-Q1=35 days
Site Yokoten
51 GBE-LSC-2-001-00 Rev.05 51
Guide: 81% ~ 100%
Best Practice - Supplier Managed Inventory
(SMI)

GBE-LSC-2-001-00 Rev.03
Best Practice
Site Name : Zuhai, Mobile
Must Do #4 : SMI RM DOS < 2 Days Month, Year : Aug, 2012
Ada.yang@cn.flextronics.com
Operations/
Station
Do BP
% Improved
High inventory Engaged and Savings
Before
caused by suppliers implemented SMI or
After
GG3 long lead time and CRP program with (UOM) (USD/ (USD/ /AR/AP
low SMI&CRP items suppliers and reduced month) month) (USD) Standard Work
for GG3 Project inventory
SMI/CRP
Customer 0.49 27.09 100%
(%)
396749
13-Aug-12
NCMC Lead time
49 35 29% 100% Implementation Plan
(Day)
24-Aug-12
Inventory /
Six AR/AP
Before supplier
support Full L/T
Negotiation with
High spending
supplier
After run SMI and CRP
program.
Site Yokoten
53 GBE-LSC-2-001-00 Rev.05
Guide: 81% ~ 100%
Best Practice
Site Name: Malu Shanghai
Must Do #4: SMI RM DOS < 2 Days Month, Year: Aug, 2012
Amos.yao@cn.flextronics.com
Must Do
Operations/ BP
Station
% Improved
1. High SMI parts 1. Reduce SPQ for Savings
Before
inventory. connector parts.
After
Metrics Hard Inventory
SMI Raw Soft (USD/ Standard work
2. Long transfer 2. Set Min-Max for (UOM) (USD/ /AR/AP
material W/H distance from Bulky parts. month)
month)
(USD)
oversea hub, which
need more safety DOS 12 2 83%
Customer
stock on hand. Inventory Implementation Start Date
300 240 20% 600 60,000
(KUSD) 1-Aug-11
All
Transit L/T 100% Implementation Plan
7 0.5 93%
(day) 1-Jul-12
Inventory /
Six AR/AP
Sigma Productivity x2 Space x1/2 US$K US$0.6K US$60K
High inventory
/ High DOS Regularly review
SPQ & Min-Max for
bulky parts
Site Yokoten
54 GBE-LSC-2-001-00 Rev.05
Guide: 81% ~ 100%
Best Practice
Site Name: Suzhou
Must Do #4: SMI Raw Materials DOS Reduction Must Do Month, Year: Mar,2012
BP Ying.Zhou@cn.flextronics.com
Operations/ Problem Action Taken Results Method for Sustaining
Station
% Improved
Warehouse pull buffer Standardize Pull process Savings Change system setting
Before
quantity from IPS store for IPS(In-Plant Storage), Standard worksheet
After
caused high DOS release pull request to
Warehouse (UOM) (USD/ (USD/ /AR/AP
IPS store based on month) month) (USD)
production requested qty
(W/O)
SMI DOS
2. System report to 4.4 2.5 43%
Customer monitor IPS stock if
(days)
greater than one SPQ 284,000
IPS DOS Implementation Start Date
(Standard Pack Quantity). 6.2 3 52%
(days)
27-Feb-12
All
30-Mar-12
Inventory /
AR/AP
Six

1 2 1 2
1) IPS pull request trigged by production

1) IPS pull trigged by store instead of
2) Only one standard pack quantity for IPS( In
production
Plant Storage) part in warehouse
2) More than one SPQ in Warehouse
Site Yokoten
55 GBE-LSC-2-001-00 Rev.05
Guide: 81% ~ 100%
Best Practice
Site Name: Suzhou
Title: CRP Raw Materials DOS Reduction Month, Year: Feb,2012
Ying.Zhou@cn.flextronics.com
Operations/ Problem Action Taken Results Method for Sustaining
% Improved
Station
1. Long cumulative MLT for 1. Reduce system default MLT Savings
Before
new launched model; MLT from 5 to 3 days. Monthly review
After
default setting in system is MLT by individual model Metrics Hard Soft Inventory
Warehouse 5 days 2. Change high unit cost B&C part (UOM) (USD/ (USD/ /AR/AP
month) month) (USD)
Changed system setting
2. 2-4 wks order frequency, (>$1USD) as A part, reduce order
5 days MLT for high unit frequency from 4-2 wks to 1 wk; Standard worksheet
cost part Reduce ILT(In Transit Leadtime) to
CRP DOS
3. System SPQ(Standard align with A part. 19.5 12.9 34%
Customer Pack Quantity) higher than 3. Check physical SPQ(Standard
(days)
physical SPQ which caused Pack) of parts with high SPQ
pull high inventory before amount,correct system MLT Implementation Start Date
actual build plan SPQ.Weekly publish the variance
15 9 40% 1,805,000
(days)
SPQ report between FIFO label 27-Feb-12
All and system. Request vendor
provide SPQ photo when RFQ 100% Implementation Plan
(bulk part)
SPQ (pcs) 1000 100 90%
30-Mar-12
Inventory /
AR/AP
Six
Sigma Productivity x2 Space x1/2 US$XXK US$XXK US$1,805K
Model list –
Reduced MLT
Before Kaizen After Kaizen 2
2
Total MLT is 15 days Total MLT is 9 days
1
1
1) Change system default setting

1) System MLT default setting is 5 from 5 to 3; review MLT by
days, cumulative MLT is 15 model and change system,
days cumulative MLT reduced from
2) Supplier quoted SPQ is 15 to 9 Revise Flex system
1000pcs SPQ (Standard Pack Qty)
2) Act SPQ is 100pcs; correct
79 Model list- system and ask supplier
MLT 5 days
provide SPQ photo when RFQ
Site Yokoten
56 GBE-LSC-2-001-00 Rev.05
Guide: 81% ~ 100%
Best Practice - Dock To Stock (DTS)

GBE-LSC-2-001-00 Rev.03
Best Practice
Site Name : Zhuhai Multek
Must Do #7 : DTS > 90% Month, Year : Jul, 2012
Grace.Zhang@hk.multek.com
Operations/
Station Must
Do BPSavings
% Improved
For sorting what material Set up automatic STS (Ship
meet the requirement of to Stock) management
Before
After
SQM DTS, it took much of time to system. All operation are Metrics Hard Soft Inventory STS system
sort, copy, sort, fill, check done in STS system, and if (UOM) (USD/ (USD/ /AR/AP
by excel softer based on some material meet the month) month) (USD/)
the information from IQC. reqirement of DTS, after key
Customer Mistakes happened, low preperties chosen, a list will Implementation Start Date
efficient and long lead time. be sorted automatically. Lead time 16 3 81.3% 32.6
Reduce extra motions, 2-Jul-12
increase efficiency and low
All 100% Implementation Plan
lead time.
26-Jul-12
Tools Used Goals x Lead-Time x1/2 Potential Savings/Month

Defect x1/10 Energy x9/10 after 100% Implementation
x Lean
Inventory x1/2 Scrap x1/10 Hard Soft Inventory /
Six AR/AP
Sigma x Productivity x2 Space x1/2 US$XXK US$0.03K US$XXK
Before Kaizen Manual

After Kaizen
Setting up DTS
summary system, became
DTS data, cost fast and easy.
long time.
Information Consolidation Sort

input item by P/N by P/N property by Sort successfully one-off
item property
Manual Long L/T : Short L/T :

3 steps One off Auto sort
operation 6 days 1 day
Site Yokoten
58 GBE-LSC-2-001-00 Rev.05
Guide: 81% ~ 100%
Best Practice
Site Name: Suzhou
Must Do #7: DTS > 90% Month, Year: July, 2012
Wendell.Wei@cn.flextronics.com
Must Do
Operations/ BP
Station
% Improved
1.The current IQA 1. Identify AQL level based Savings
Before
inspection sampling size on part criticality and
After
AQL:0.25, the min- redefine new AQL level for Updated new AQL level in
IQA (UOM) (USD/ (USD/ /AR/AP
inspection qty is :50 pcs inspection. month) month) (USD) IQC inspection system and
per lot 2. Validate past 10 lots update component specs.
2. Current inspection LT incoming to ensure no past Inspection
Customer is high with min quality incidents. Items (#/lot) 50 20 60% Implementation Start Date
50minutes per lot due to 3. Provide data to customer
210 N/A N/A 07/18/2012
the high sampling size. and get agreement to
All 100% Implementation Plan
change AQL level. Inspection LT
50 30 40%
(Minutes) 07/25/2012

Inventory /
Six AR/AP
Sigma Productivity x2 Space x1/2 US$0.21K US$XXK US$XXK

• Fixed AQL Level: 0.25 • Dynamic AQL
sampling Plan
• The Min-Sampling Size: 50pcs AQL: 0.65 If no quality
issue
• Even though the parts passed 5 • The Min-Sampling
lots without any quality issue Size: 20pcs
Site Yokoten
59 GBE-LSC-2-001-00 Rev.05
Guide: 81% ~ 100%
Best Practice
Site Name: HVS-Mobile
Must Do #7: DTS > 90% for Mobile – Sony ODM Must Do Month, Year: Mar. 2012
BP Hawk.Lu@cn.flextronics.com
Operations/
Station
% Improved
The actual DTS% for 1. Define material quality risk levels Savings
Before
Sony ODM project is according the current IQC LRR&
After
Metrics Hard Soft Inventory Work Instruction set according
Incoming 70% which is below prod line RTV rate; (UOM) (USD/ (USD/ /AR/AP to quality performance per
Quality target 90% - effective 2. Directly change into DTS list for month) month) (USD)
month to reassess& define
warehouse operation. good quality parts, Most of them are
DTS supplier or part!
electronics part. DTS (%) 75% 93% 24%
Customer 3. Push & work for quality
improvement with poor quality Implementation Start Date
H/C(IQC) 22 12 45.5% 5000
supplier! 3-Jan-12
Sony ODM 4. Apply Source Inspection to 100% Implementation Plan
Safety LT
monitor line quality with poor quality 3 2.5 17%
(Day) 3-Mar-12
supplier;
Inventory /
Six AR/AP
Sigma X Productivity x2 Space x1/2 US$5K US$XXK US$0K

Sony ODM Project sample :
1. DTS rise to 93%;
Sony ODM Project 2. After : IQC 12 persons (reduced by 10 )
3. Focus on inspection with 1043 incoming lots
sample: Mobile 22000
DTS vs HC
24
1.DTS was 75%; DTS(lots) vs H/C trend

20000
18000
22
19 19
18
22
20
18
16000
2.IQC 22 persons (Before)
STS(lots)
HC(DLs)
14000 16 16
15
14
12000
12 12
10000
3.Focused on inspection for 2689 incoming 8000

6000
10
8
6
4000
lots
4
2000 2
Site Yokoten 0 0
11-Aug 11-Sep 11-Oct 11-Nov 11-Dec 12-Jan 12-Feb
Implementation Status STS DL H/C
Guide: 81% ~ 100%

60 GBE-LSC-2-001-00 Rev.05
Thank you
For further information, please visit :

http://intranet.flextronics.com/gbe/default.aspx

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Lean Supply Chain Overview

Document Number : GBE-LSC-2-001-00

Revision Description of Change Writer/Reviser Effective Date

Revised the diagrams in Pg 17, 18 and 26. Removed outdated BPs

COMPANY CONFIDENTIAL Printed copies are uncontrolled copies.

Lean Supply Chain Overview

Inventory ($) Vs ITO

RM (US$mil) WIP (US$mil) FG (US$mil) ITO (# of turns)

Lean Supply Chain Overview

 Double the  ETE (End-to-End) Productivity  Defect : X 1/10

No Money … No Space … No Manpower

Lean Supply Chain Overview

OVER PRODUCTION OVER PROCESSING

Lean Supply Chain Overview

Using Management Review Council

Lean Supply Chain Overview

PROCUREMENT Timely arrival of Materials to

Lean Supply Chain Overview

Functional Owners : Program Program Materials Materials Materials Operations

Site MRC (Management Review Council) - Integrated Approach

Kaizen effort focused on balancing

LOAD (MRP) COMMIT (Shipment)

Lean Supply Chain Overview

Lean Supply Chain Overview

REDUCE LOAD INCREASE COMMIT

- Balancing vital few - Daily linear tracking

Lean Supply Chain Overview

SUPPLIER (REP) FORECAST / DEMAND

E&O Inventory E&O Inventory

• FLEX HAS SOME DEGREE OF CONTROL

Lean Supply Chain Overview

SUPPLIER (REP) FORECAST / DEMAND

 BRIDGE GAP BETWEEN LvC

• FLEX HAS SOME DEGREE OF CONTROL

Lean Supply Chain Overview

Data export from

Lean Supply Chain Overview

Data export from

REPLACED WITH E COMMERCE

Lean Supply Chain Overview

Lean Supply Chain Overview

PO Action Notices CUSTOMER

UNSQUARE SET UNSQUARE SETUNSQUARE SET

INVENTORY INVENTORY INVENTORY

Lean Supply Chain Overview

NEW BUY/ NEW BUY/

PO Action Notices CUSTOMER

UNSQUARE SET UNSQUARE SETUNSQUARE SET

INVENTORY INVENTORY INVENTORY

NEW BUY/ NEW BUY/

PO Action Notices CUSTOMER

UNSQUARE UNSQUARE UNSQUARE SQUARE SET

INVENTORY INVENTORY INVENTORY

PUSH OUT/ PUSH OUT/

PO Action Notices CUSTOMER

 PUSH OUT DEMAND

BUYER’S REACTION LEADTIME

INVENTORY INVENTORY INVENTORY