4.1 Case background ‐ Asus
4.1.1 Architecture
國
立 政 治 大 學
‧
N a tio na
l C h engchi U ni ve rs it y
4.1.1 ‐ Architecture
Notebooks and computers in general are very complex. These are the products, which consist of hundreds of components connected together so they can execute a great number of operations and use.
Hawlett and Packard define 15 major component groups, and each of them is further divide on further subgroups. Wikipedia specifies ten most critical components of the personal computer.
This gives us scale of several hundred components within the frame of the computer that must be carefully coordinated so the whole will work.
The typical components are the CPU, memory (RAM), power supply and battery, video display controller, display, removable media drives, internal storage (Hard drive), input (touchpad, mouse etc.), cooling etc. The motherboard is the centralizing unit which utilizes all the communication of the components and therefore plays a vital role in every computer.
Source: www.hp.com
Figure 7: PC/Laptop components conceptualization
When developing a new product, the developers need to consider all of these components and each ones particular impact on the final product. This is so since the PC industry is extremely
‧
國立 政 治 大 學
‧
N a tio na
l C h engchi U ni ve rs it y
The components linkage pattern (connectivity) within the Notebooks can be identified as the reciprocal ‐ since computers are interactive systems and most if not all of these components are interconnected and interlinked. In this way, each elements output may become each element`s input. This bring us into situation with high level of differentiation as well as connectivity – a clear condition for very complex products.
4.1.2 ‐ Innovativeness
4.1.2.1 ‐ Product Newness
The innovativeness of the notebook computers is moderate to rather high. There is quite substantial number of components (such as CPU, HDD, display, memory) that are subject to regular change – such as the Moore`s Law etc, that would affect the overall innovativeness of the product as defined by Wheelwright and Clark.
Also, we can identify a large group of innovative new products that emerged I the PC industry in recent years – be it the EEE PC, which might be identified as the New to the world product, established product lines – such as the new Asus Transformer, which plans to tackle on the tablet market or the new additions to the existing product lines – be it the new smartphones, gaming notebooks etc.
4.1.2.2 ‐ Time to Market
Time to market in the PC industry is ridiculously fast, with development times from concept to manufacture within one year. Today the designers are literally developing products that will be marketed one year after, so that they can stay competitive and on the tip of the peloton. This requires some good background on the product vision as well as great market reading and analysis.
On the other hand, in case the company did not register the competitive or breakthrough project, they still might have the chance to throw an “me too” product on the market within less than a year from the competitor`s announcement – thanks to the help and support of suppliers. This was the case of EEE PC, where every major PC company was able to introduce its own netbook within a very short time from ASUS`s introduction of EEE PC.
‧
國立 政 治 大 學
‧
N a tio na
l C h engchi U ni ve rs it y
4.1.2 Buyer‐supplier relationship in NPD
4.1.2.1– Segmentation of suppliers and vendor management
Asus` products can be described as the highly innovative and high complex as well. For this reason, they must be open to new technologies and ideas from outside as well, and in cases when there is no existing component on hand – simply co‐develop it using the supplier`s existing knowledge. This is very essential approach to foster the architectural innovation – change the configuration of existing components as well as develop or change those components that are critical for the new products.
In this way – they try to create some sort of business relationship, which is partially codified ‐ based on business deals and partially trust based.4
However, not every supplier is fit to work with Asus, and the company would be selective in who can work with them on the new product. In general, they have two tools to use to differentiate the suppliers – one is more long term, where the other is immediate one. In the most lose sense – they would divide the supplier based on their technology attractiveness – and to what extent the supplier can transform the knowledge into what Asus wants them to deliver.
This corresponds with Kraljic`s findings, where companies divide suppliers based on relative component commodity value.
For every critical component group, they would have a specialized engineer in their central R&D unit – so called “New Product Engineer” – who is knowledgeable about every major vendor from his sphere of responsibility. In this way, they can create so called technology bookshelves (Monczka et al) to keep track of attractive technologies outside the company.
Once they are about to choose who is eligible for the cooperation – they would use other considerations as well – where they have five most important factors:
- Quality - Cost - Delivery - Technology
‧
國立 政 治 大 學
‧
N a tio na
l C h engchi U ni ve rs it y
4.1.2.2 Supplier roles
Based on these indicators, they can divide the suppliers into different roles. It is obvious, that the suppliers are not all equal. On the other side, suppliers of strategic components, who can deliver specific solutions are perceived much more higher on the value chain than suppliers of non‐strategic, commodity based components. To reflect the importance of such an
relationship‐ Asus would do only system‐based testing of the components from the strategic suppliers – testing of component`s performance inside the system. For the component specific testing, they would completely trust the supplier and won`t do their own testing as long, until they have a serious suspicion that the component might be defective.
4.1.2.3 Goal setting and influence over planning
During the New Product Development – Asus would always first try to employ the existing components for the new product. Often, however they are faced with the trade off between use existing versus develop new, more suitable component. To deliver the vision to the market, they often have to choose the later part – and as they are mostly system integrator, who lack of deep component knowledge – they would have to rely on the supplier to provide the market with the cutting edge innovation.
As Mr. Shian mentioned during the interview: We would listen to their suggestions. Absolutely.
This is co‐working environment. We have the knowledge of what we want, but they have the knowledge of how to build it. So often its tradeoff between these two.
This means, that the supplier can actually have quite an impact on the final design of the product. Asus is a system coordinator, and if they believe that the option suggested by the supplier is better, they would go and redesign the architecture in the favor of such a change – so there are possibilities about the final specs and these might be affected in the supplier`s favor. Once these specs are set, there are not ay ways of how to change the major points. This is important so the component would not interfere with any others and would communicate within the interface properly. However, the suppliers are still quite free to do minor changes in their design if they think that can be of any benefit – as long as the changes don`t jeopardize the project as whole
‧
國立 政 治 大 學
‧
N a tio na
l C h engchi U ni ve rs it y
4.1.3‐ Timing
The consideration when to involve supplier into new product development is very crucial one – as an early introduction of supplier who is not fit might create great slow down in development, whereas late introduction of important and knowledgeable supplier might bring need for redesigning and subsequent retooling.
For the non strategic suppliers – Asus would only provide specs during the prototype stage and ask for the components they need at that time to do the overall testing.
This might be also the case of strategic partners, however without any innovative product for this project. On the other hand, those suppliers, whose input is necessary would be invited as soon as possible – usually during the product planning phase, just after the vision is created and approved by the top management. However, there are often preliminary discussions on the technology with the supplier even before that – so that Asus can work on their feasibility studies and have some more solid data to work with. This is also the time, when the suppliers are free to suggest any possible solutions and changes into the design – since their
understanding of the technology is much deeper than Asus`.
4.1.4 Development responsibility and development scope
4.1.4.1 Managerial alignment
In Asus, the top management is directly involved in the project development. Looking at their company background – this is understandable, with some great electrical engineers in the top management and chair.
The management is involved from the very beginning – and every projects future is connected with the ability of the development team to sell the idea to management. The strategic suppliers play an important role in this – as they need to provide the Asus central R&D team
‧
what they expect. The Asus development team than has quite free hands to work on the specifications with the vendor. Usually, they would provide the supplier with lot of space to show many possible solutions where only the main guidelines are the limits. If the suppliers is within these guidelines, than he has a lot of freedom for change.5 Such an approach is, however, typical in regard to the group of strategic suppliers. In case of non‐strategic or commodity suppliers, much less freedom is given and more rigid rules would apply.
On the other hand, the top managers of Asus and suppliers would not meet and discuss the new projects, instead, they would provide support to their own development teams in number of ways, such as meetings, envisioning etc. The rationale here is, that for more innovative projects they wish to attract suppliers with similar way of thinking as is theirs. Than the intercompany link is much easier to spark.
As Mr. Shian put it: This is art of negotiations, In PC industry, if you are number one vendor to provide with some new or more features to your customer, you have better advantage. So I think basically Asus have the image we want to provide some kind of innovation product to the market, so the most competent vendors would know that Asus is quite focused on do our best to provide innovation. So they are quite willing to provide the new features to market. I think this kind of image – is important to Asus. If we did not have this kind of record, it would be much more difficult to find vendors who were willing to innovate with us.
The contact between suppliers is mostly managed by Asus`s dedicated engineers and dedicated teams respectively. These will exchange the data in the form of CAD files, emails, prototypes etc. Also, there are common visits to each other`s plant, as well as visiting engineers in case of more critical and urgent component designs. For more complicated components or
components, where the design changes would interfere with the overall product design and therefore changes in other parts would be necessary they would create a special team under the central R&D unit.
These teams usually have some specialty in the component, as well have rather good
understanding of the overall system design – they posses good component knowledge as well as decent architectural knowledge. In this way they can filter the information necessary and
5 During the development of the new Transformer Tablet PC, Asus had to co‐develop new display. Since the marketing envisioned this product to be usable outside the house, on the direct sun as well, these displays had to be quite bright. Therefore one of the major specs given provided by the management was a limit to the lowest brightness as well as system of brightness settings. After discussion with the supplier, they decided for the IPS display technology as it was the most promising considering the usage. This was rather complex task, since the display will interfere into the design of other parts as well – the battery, casing etc. Still, they would provide only the rough specifications to the supplier – size, connection as well as the minimum brightness required – and give them the freedom to choose their own approach the target of the project – such as add ore LED or increase the transparence of the frontal glass etc.
‧
國立 政 治 大 學
‧
N a tio na
l C h engchi U ni ve rs it y
work as an liaison between the supplier and the central R&D. They would simply know what each needs to know and filter the information playing the role of an gatekeeper – so that neither is overwhelmed with unnecessary information.
‧
國立 政 治 大 學
‧
N a tio na
l C h engchi U ni ve rs it y
4.2 Case background ‐ ADVANSUS
Advansus Corp. was established in January 2006 as a joint venture between ASUSTeK and Advantech based on the strategic alliance agreement signed in September 2005.
The main scope of company operations is to provide both of the partners as well as their growing body of customers with the industrial computing and Design and Manufacturing Services (DMS).
The main idea was to have an platform, where both companies can share their industry talent to work on tailor made solutions and still keeping the costs low. This proved to be a successful move for both of the companies, where Advansus is working hard to become the industry global leader in its market niche.
Advansus has quite an unique position in the value chain, where we can see them an as both an imported and skilful supplier as well as an demanding customer to the suppliers of the
components they employ in their solutions. They often end to be very knowledgeable of both their suppliers and customers needs so that they can provide with the tailor made solutions tat are necessary.
They are in so called “embedded systems”, which means they do design computer subsystems that do control functions within a larger system, It is embedded as a part of a complete device, often including hardware and mechanical parts – embedded are dedicated to control and handle particular tasks.
In general, embedded systems have 3 main characteristics6:
1) They are designed to do some specific task, rather than general purpose computers for multiple tasks. Also, they usually have real‐time constraints that must be met (safety, usability, performance etc).
2) Embedded systems are not always stand alone devices – often they are small computerized parts within larger device that serves more general purpose (e.g. motherboard within PC) 3) The program instructions written for embedded are referred as firmware and are stored in
read only read only memory flash chips. They run very limited computer resources (little memory, small/no keyboard and screen etc.)
It is common that engineers would optimize these systems to reduce the size and cost or increase reliability and performance based on the customers need. To do so they will need to
6 http://en.wikipedia.org/wiki/Embedded_system