50,000 people, manages $8 billion in assets in 11 factories, and brings in 30 million parts each day. The Seagate
supply chain involves about 300 component suppliers,
900 shipping lanes, and numerous warehouses, distribution centers, logistics partners, and service supply chain
collection points worldwide.
Mosley recently spoke with DC VELOCITY Senior Editor
billion in losses and has been cate-
gorized as the worst flood in history.
QWhat kind of shape was Seagate’s supply chain in
prior to the flooding, and a year
later, where does the recovery
stand?
ASeagate’s supply chain already was flexible and resilient. We
prepare for risks such as this with
buffer stock and inventory, which
we were able to draw on to meet
demand. We had multiple levels of
challenges, and Seagate forged
through them incredibly well. We
had a number of employees affected
by the floods, and they, along with
incoming parts, weren’t getting to the factories. As a
result, we had to quickly adjust our builds and delivery
commitments. As component factories recover, the sup-ply-demand balance is normalizing and inventory levels
are returning to pre-flood levels. The HDD industry
itself will emerge stronger and healthier, but it will take
some time to fully recover.
QDid you anticipate the Thai floods would do such widespread damage to hard drive production and
cause such disruptions to the supply chain? And was the
IT supply chain caught ill-prepared for the damage that
ensued?
AI think a lot of people outside the industry under- estimated the impact of the floods on the business
at first. Those inside the industry knew the serious ram-
ifications of the supply disruption because so much of
the component supply—along with final drives and
assemblies—was concentrated in the area where the
floods occurred. What happened is really a structural
change to the industry. As a result of this event, the market is waking up to the fact that HDDs are not commodities, but complex, high-tech hardware solutions
requiring sophisticated operations to design, make, and
deliver them.
Seagate weathered the event very well compared to
others because we had pre-planned to have supply, manufacturing, and assembly operations
in diverse locations. Nonetheless,
the event has created an opportunity to reassess our supply chain to
make it even more agile and resilient
to all kinds of risk, including natural
disasters.
QSeagate is undergoing an enterprisewide supply chain
transformation. What are the major
components of this strategy, how
far along are you, and was this initiative triggered by the floods and
their aftermath?
AThe current operation has erved Seagate and its customers well for the past 30 years.
With optimistic growth projections for the storage
industry, combined with relentless pressure on product
prices and innovation in new markets such as the cloud
and mobile devices, it’s imperative that our supply chain
adjust to these changing demands. The Thailand floods
accelerated already-planned initiatives to make Seagate’s
supply chain more flexible, robust, resilient, and responsive to change.
QFollowing the floods, Seagate reduced the number of just-in-time (JIT) hubs its customers operate
near their own delivery points. This enabled Seagate to
“bypass” the JIT process and ship directly to OEM customers. While this would obviously reduce JIT hub costs,
wouldn’t it also cause supply disruptions if an event—
natural or man-made—affected your factories?
