Business Visit to Arima Display Company:

1
Business Visit to Arima Display Company The
planning of e-procurement system and its
prospect
AdviserProf.Hwang,Ching-Shyang Students
Chen,Hung-Che
Chen,Chih-Peng
Lai,Yu-Ting
2
Agenda

• Introduce Company profile
• Something about procurment and e-procurement
• LCD Components and Raw Materia lndustry
• The situation Arima Display Company faces
• Why e-procurement is urgent to it ?
• Other issue and when they plan to build
  e-procurement

3
Company Profile

• Arima Display Corporation(ADC)
• Located in Kaohsiung Taiwan, was founded in june
  2000 as a member of Arima Group, a Taiwan based
  notebook and handset OEM/ODM group.
• With strong RD teams and in-house made key
  components such as color filter and ITO coating
  capability, ADC is now a leading manfacturer in
  the field of Color STN LCD/LCM.
• Besides , having experienced production force ,
  ADC is able to provide products with high quality
  and competitive prices.
• To establish a long-term relationship by meeting
  customer satisfaction and providing best service
  after sale is always ADC to achieve.

4
Company Profile(continued)

• Company CapitalUSD 57 Mio
• Chairman of BoardMr. Stephen Lee
• Main BusinessDesigning ,Producing and
  Distributing Color/Mono STN
  LCM/LCD TFT Module
• Factory Kaohsiung ,Taiwan Wujiang, China
• Employee Number800(in Taiwan)

5
Product Application

• ADC offers a wide variety of display products
  suitable for telecom , commercial , automotive ,
  educational , military and industrial
  applications.
• From small size to middle size , the standard
  products ADC now provides are color STN modules
  of 1, 1.5, 1.6, 1.9, 2.8, 3.9, 5.7, 6.5
  and 7.5.

6
What is procurement?
procurement is the process of obtaining services,
supplies.
7
Different types of goods purchased by the firm

• Strategic components
• components that are part of the finished goods
• company specific, and integral products
• e.g. PC motherboard and chassis.
• Commodity products
• can be purchased from a variety of vendors
• price is determined by market forces
• modular components that go directly into the
  finished product. e.g.memory unit in a PC
• Some commodities that do not go directly into the
  finished product e.g.electricity.
• Indirect materials
• MROmaintenance, repair, and operations and
  components .
• They are not part of the finished product or the
  manufacturing process
• e.g.lighting, office supplies, fasteners, and
  generators.

8
What is e-procurement

• E-procurement is the business-to-business
  purchase and sale of supplies and services over
  the Internet.
• E-procurement is sometimes referred to supplier
  exchange.
• E-procurement Web sites allow qualified and
  registered users to look for buyers or sellers of
  goods and services.
• Buyers or sellers may specify prices or invite
  bids.

9
Why companies implement an e-procurement system?

• Successful examples
• 1.General Electrics (GEs) Trading Process
  Network (TPN)
• Transaction costs , labor costs in the
  purchasing process , drop 30 .
• Material cost reduces in the range of 5 to 20
• Purchasing departments gained 6 to 8 days per
  month to work on more strategic initiatives .

10
Why companies implement an e-procurement system?
(continued)

• Successful example
• 2. Dell Computer
• Michael Dell s trading inventory for
  information is one of firms fundamental
  operating principles.
• The result has been inventory levels to the
  extent less than 8 days
• So-called virtual integration is the Internet
  by Michael Dell is the linking of buyer and
  supplier not by inventory but by information .
• The information link is essential to
  comprehensive e- procurement strategy.

11
Some Suverys from Consulting

• Boston Consulting Group It
  estimates that business-to-business Internet
  purchases will reach 2 trillion by 2003.
• Deloitte Consultings survey comparied with 2000
  and 2001 show two facts

12
Deloitte Consultings survey

• The majority of companies are expecting
  significant savings.

13
Deloitte Consultings survey(continued)

• Significant benefits are expected from contract
  compliance and process efficiencies

14
Framework of e-procurement
15
LCD structure
16
(No Transcript)
17
Raw Material was over 50
raw materials are a major cost item in LCD panel
production, accounting for 51 of the cost
18
Individual raw materials of LCD panel
19
Cost Structure 0f LCD panel (raw materials in
detailother costs)
20
LCD Material Supported by Internal supplier was
growing high
The degree of self-sufficiency with major LCD
material in Taiwan
21
TFT-LCD Material Producer
22
The situation Arima Display Company faces

• Raw materials are a major cost item in LCD panel
  production, accounting for 51 of the cost.
• Arima Display Company try to reduce those costs.

23
(No Transcript)
24
Bargining Power of Arima Display company is poor

• Most of material suppliers have their own
  partners, whereas Arima Display is only a small
  company.
• Sony Errisson is the largest customer , and Arima
  Display Company have poor bargining power to the
  company
• The life cycle circle of mobile phone is very
  short make Arima Display Company have to
  customize .
• 4. Because panels vary in size ,. Arima
  Display Company can not purchase a lot in volume
  inraw materials

25
Take Measures

• The company want to plan to establish
  e-procurement system to leverage the disadvantage
  condition and copy with the bargining power from
  suppliers.
• Besides strengthening its bargining power to
  suppliers , Arima Display Company also want to
  enhance the relationship between itself and
  partners , and share their information to
  optimize the sulpply chain via e-procurement.

26
MROs are the first step in the e-procurement

• MRO , such as lubricants , light bulbs, tools for
  repair , and some troubleshooting services , is
  easy to do well because they are non-production
  related good .
• The best way is to join e-marketplaces in no
  time.
• Our government is going to develop several
  e-marketplaces for LCD related Industry in this
  year.

27
E-marketplace

• E-marketplaces are represented on the internet by
  a complex web-site, where buyers and sellers meet
  to exchange products and services.
• Three kinds of e-marketplace
• Buyer-centric B2B marketplaces e.g Covisint-
  The automobile exchange set up by Ford,GM, and
  DaimlerChrysler
• Seller-centric B2B marketplaces e.g Cisco, Dell
  Seller-centric marketplaces are set up by one or
  few suppliers
• Neutral linear B2B marketplaces

28
Three kinds of e-marketplace
Seller-centric B2B marketplaces e.g. Cisco,
Dell
Neutral linear B2B marketplaces
Buyer-centric B2B marketplaces e.g.Covisint
29
E-marketplace benefit buyers

• Buyer benefits
• Increased visibility in terms of product
  information,availability and price
• Access to multiple suppliers
• Easier comparison of supplier products
• Improved procurement processes
• Lower prices through aggregate buying
• Less maverick buying
• Easier to monitor a companys expenditure
• Disintermediation
• Decreased inventory levels

30
Other issues when proceeding the e-procurement
systemin Arima Display Company

• In the past , ERP run well and was adopted by
  end-user without any difficulty.
• In the company,all MIS members have to do is to
  construct a robust and flexible information
  technology infrastructure , and optimize the
  workflow of every function.
• It is danger to underestimate resistance to
  change plays in this transformation and the need
  for ease of use foe end-user.
• Resistance to change for an e-procurement system
  can be readily overcomes with strong commitment
  to change management.

31

• QA