In 1986, Digital Equipment Corporation (DEC) was the world's second largest manufacturer of

communication systems in the world. In 1979, they had approved a new product strategy, which
differed from then-standard industry practice.

According to DEC engineers, the new VAX (Virtual Address Extension) based computers would allow
customers to would allow customers to build computer networks of almost any size and scope.

size and scope. Soon, networks became the cornerstone of DEC's corporate mission.

DEC's corporate mission. In the quest to connect an entire

company from the top down, the Distributed Systems Manufacturing (DSM) Group

Manufacturing (DSM) Group was a key player in the pursuit of this vision.

DEC products were manufactured by 6 groups: CSM ,SSM,STORAGE, LEST,GIA and

EUROPE . Within the CSM Group is found DSM, this company was in charge of
manufacturing area networks local (LAN), modems, expander cabinets for
equipment and among others.
It had 3 manufacturing plants (Maine, Ireland and Puerto Rico), 4 manufacturing
centers design and matrix. DSM was not a significant part of DEC but its
Products were shipped to the 6 DEC plants.
DSM aimed to become the high-quality, low-quality supplier
cost of products for networks and communication worldwide. Other
Their goal was to double their profitability (ROA). Until then.
there was no competitive pressure to be able to modify the strategy of
manufacturing. However, they wanted to capitalize on the advantage they had.
over other undertakings. To be able to carry out a change in the
Manufacturing strategy had to analyze the requirements of the
future customers, the activities of competitors and the advances of the
technology. This would carry out the increase in demand and to be able to
Covering it had to reduce the cycle time from 40 weeks to 15 days.
They proceeded to analyze three models. The "GM model", "Industry"
Generic" and "IBM". However, none of these models suited to
the reality of the DSM. So they decided to use a system virtually.
integrated called EndPoint Model. This approach maintained all areas.
of plants connected to suppliers and customers and became
the goal of the DSM business plan for the next 5 years. It was had
to analyze the four manufacturing processes in order to reduce the
inventories and automate and integrate functional tasks. With these
Analytics said they could reduce cycle time to 15 days. Without
However, in order to reach this goal, accuracy and
speed of information.
To do this, they made the EndPoint Plan where the
programs required at both plant and group level. Within the
this plan first had to be achieved by getting DSM certified as a
manufacturer MRPII CLASS A, because this was a planning system and
computer-supported programming that links systems
commercial, operational and financial of a business. In the year of 1985 the
7 DSM managers signed a statement agreeing to achieve
a Class A classification. This began to be applied in the plant of
Augusta. In this plant a system was used that generated many
Problems. Manager Jerry Sabel led the implementation commission 
6
of MRPII. In a meeting with the other managers, they established 13
parameters that was a measure of business performance. The software
to carry out the MRPII was MAXCIM. This was a manufacturing system
closed-loop that had production planning and capacity to
superior programming. Employees had to be trained to
be prepared to work with this new system. On the other hand, it was had
to assess the precise forecasts of products, since these helped
to guide those in manufacturing to be able to allocate resources well. With
This measurement measurements at Augusta reached 90% for the first time.
Then other programs were launched such as information speed, the
partnership program, CIM, TQC and JIT. After you've done everything
this impact of these programs was evident in the statistics
financial and performance DSM. Cycle time had been reduced by
10% and estimated that it would be reduced by 50% by 1988. The managers of
DSM were encouraged by its success.

IDENTIFICATION OF THE MAIN PROBLEM

DSM's main problem was the lack of information velocity in the

the company; due to the fact that the functional areas did not have a proper flow of information
between them.

flow of information among them. Through studies carried out, it was determined that

75% of the transactions were purely information transactions and the remaining 25% were material
transactions.

of the remaining 25% were material transactions. This showed the importance of reducing the time

importance of reducing the time used in the exchange of information for the process.
Information flow was a latent problem caused mainly by the software they were using,why? Because it
was so customized for each area of the company

area of the company that as a whole they did not know what information was handled; since it varied
according to the functional area, they did not speak the same language, the

information varied by functional area, they did not speak the same language, the information varied
according to the

information varied according to the convenience of each area.

On the other hand, in relation to the flow of materials, the company had high levels
of inventory; this is because, as the example given in the case, each area
expected to have a security stock "in case the units they handled were missing"
since by background, it was necessary to do so to meet the demand of the
subsequent areas in the process. This action resulted in a high level
of inventory in conjunction with all functional areas.

Example of inventory management at the Augusta Plant, DSM:

3.1. WHAT IS YOUR ASSESSMENT OF THE EndPoint MODEL? ABOUT WHAT
HOW "VIRTUAL INTEGRATION" DIFFERS FROM INTEGRATION
VERTICAL OR THE LOCATION OF THE MANUFACTURE ADJACENT TO THE
SUPPLIERS?
The EndPoint model became the goal of DSM's business plan for
next five years. With this model the network systems within the
DSM plants would gather, track and route the information between the
purchasing, marketing, finance, design and manufacturing departments. In addition
new or updated product designs could be transferred
immediately from engineering to production planning and at the same time the
Flexible manufacturing systems in the plant would automate the processes of
material handling and manufacturing. Also, externally customers and
suppliers could be connected online with plants, exchanging
order information and, probably in some cases, programs and plans
of production.
On the other hand, the planning staff also reviewed the manufacturing process.
of this company to be able to set a time cycle goal for the
EndPoint model. Thus it was proposed to reduce the cycle time from 40 weeks to
15days for which I needed to analyze the 4 stages of manufacturing (Test and
component burning, Module Assembly, System Integration and
Distribution) in such a way that, through inventory reductions, the
automation and computational integration of functional tasks can be made
reduce cycle time.
DSM to remain competitive, had to link all the elements of supply, manufacturing
and sales without centralizing operations. To do this, to DSM came up with an idea
for "VIRTUAL INTEGRATION", which consists of networks
integrated systematically connected to plants, suppliers, staff 
10 of engineering and customers. While it is true they would remain scattered
geographically, but they would be informed virtually. Also, this network
it would help above all to have a better communication and also to be able to carry
out
your plans in a more optimal way, moving the information
automatically from one user to another.

VIRTUAL INTEGRATION DIFFERS FROM

VERTICAL INTEGRATION
This is due to the following points:
This integration adapts with
ease of changes (
new products or
updated).
 Do not centralize the operations of
supply, manufacturing and sales.
 The flow of information is faster
and accurate

VIRTUAL INTEGRATION DIFFERS FROM

MANUFACTURE ADJACENT TO THE
SUPPLIERS

This is due to the following points:

 You don't need suppliers
have a nearby location with
plants, because communication
that you now have is way
virtual (it's online).
 Customers and suppliers would be
connected virtually with the
plant, in which it would be exchanged
order information and in some
cases, programs and plans of
production.
 Do not centralize the operations of
supply, manufacturing and sales.
 The flow of information is faster
and accurate.

WHAT IS YOUR ASSESSMENT OF THE ENDPOINT PLAN? WHY DSM

DID I CHOOSE TO START IMPLEMENTING MRPII?
The DSM planning group carried out a five-year scheme of programs
and activities to achieve the EndPoint model and reduce cycle time
40 weeks to 15 days. This plan focused on integrating four elements
(Information on management systems and tools, Control, Process of
physical manufacturing and Programs and philosophies). It also sequenced the
programs
required (MRPII, JIT, TQC) both at the production plant level so that
cycle time was systematically reduced. Partner suppliers
they directed and time and costs of the raw material. So through the flow of
information
in this model the time of product in process supported by studies is reduced
Pilots. The vast majority of those programs were not new to plants.
DMS. In all of them, several projects were worked on in order to reduce the time of
manufacturing cycle. However, inside the factory they had as islands of
automation. There were tactical rather than strategic solutions. In others
words there were the means to be able to execute an activity but there was no
appropriate method to be able to do so. It was difficult to understand how the
facilities,
process technology and people could work together. And
this plan was able to integrate all efforts. DSM had several programs and decided
start with the MRPII as this was a planning and scheduling system
computerized that integrated the commercial and financial systems of the
company compared to the other system that used a software called MC-10
that it had been customized so much that they didn't look like each other. In turn,
the MRPII
required a standard and common language for all departments and this
way to be able to monitor each manufacturing process to be able to
reduce the cycle time of each product. In this system there were classes from
A to D. Companies that had Class A used in the MRPII to
sales, manufacturing, purchasing, finance and engineering. Meanwhile the Class D
they only used it at the data processing level. DMS's goal was to reach
have Class A. And for that they had to create performance parameters and
implement software called MAXCIM. CSM managers met 
to establish performance measures that would help them measure progress
towards meeting the requirements for Class A. On the other hand, the
MAXCIM implementation brought problems after its implementation. While it is
a certain DSM had prepared for the change by accumulating 2 weeks of
inventory of finished products and creating support systems for all
computer activities of each functional area. All this was not
enough since a crisis arose due to unfulfilled purchase orders. The
new software required a purchase order format that unfortunately did not
it was compatible with the old system used at the Augusta plant.
Therefore, all the purchase orders that remained pending had
necessarily to be re-entered into the MAXCIM system. When
evaluated the performance of the plant, the results were on average 80% value
higher than the 65% of the previous year. Then they had to project sales by
computer units since before they were projected by systems of
computing and this prevented achieving a Class A rating or performance without
accurate product forecasts. Likewise, a sales plan was developed by
type of product family as it became difficult to translate the projections
from corporate sales to network product units per production line.
Finally, after having made all these changes the results of the
measurements reached 90% for the first time. This figure noted that the MRPII
added responsibility to the company's sales planning process.

WHAT DID DSM LEARN FROM YOUR EXPERIENCE WITH MRPII?

The company initially already had various software that controlled the orders
of delivery, the systems of requirements (programming and ordering of
materials) called Infinet, this system was made up of a variety of
programs that worked in isolation without a clear means of communicating
between areas, that is, each of the programs controlled only the area
functional that corresponded to him regardless of the planning or activities that
may affect adjacent or related areas. This system had as
consequence that the information, between areas, is not aligned to comply with the
general objectives of the company which caused the operations of the
company do not operate at full capacity. Thus, with the implementation of the
MRPII was able to implement a software that integrated all areas and areas
standardized, in such a way that all functional areas are controlled and
handle through the same language of data and numbers, standardizing the
information provided by each area, which resulted in the flow
of information is immediate and fluid, that is to say that each area knows and
understands
in real time and quickly the operations or changes made by your
adjacent areas so that they do not affect your planning or activities. In this way,
the company learned that with the implementation of the MRPII resulted in a flow
of
quick information which was reflected in the quality of the products and the
reduction
of cycle time, since through this process the studies can be focused
to the areas that contribute the most to the cycle time in order to be able to
reduce it constantly, always making a continuous improvement

WHAT ARE YOUR RECOMMENDATIONS FOR THE FUTURE?

For the implementation of the various integration systems is

a commitment from the managers and the operation is necessary to be able to
perform the optimal flow of information.
 The cycle time of production and production should be reduced to the maximum
inventory that it may produce; because managing a lot of inventory generates
logistics costs, increasing the total cost of production.
 Implementing MRPII in a company can serve as a vehicle to achieve
a Just In Time (JIT) production process; since the MRPII works
very well the basic discipline of manufacturing allowing this to get all
the information necessary to carry out a manufacturing operation of
quality.
 How quickly an organization assimilates a new program, change
of Plan or system, requires a great effort in the conduct and is preferable
that the tactical part be developed first and then the strategic part; already
that the latter requires a visionary effort and attitude.
 The time people need to assimilate a new program into a
Organization will depend a lot on how well organized the
human resources and the organizational culture they manage; since
both MRPII, JIT and TQC require dramatic behavioral changes in
those who will implement it; such behavioral changes are going to be
more or less easy to accept depending on how related they feel
operators with the company in which they work. In addition, the
Organizational change is a key factor in the continuous improvement of the
organizations, as well as the quality of human resource management in
the advancement of technology so that they can be flexible in the face of changes.
If our most valuable resource, human resources, is not right
trained, it will be difficult to advance hand in hand with technology.
 It is important not to divert too much attention from the direction of the
growth of the organization's output whenever you want
implement a new program; changes in the mixing of 
16 products and the growth of either the organization or its production,
may cause deployment to be delayed or need to be done
radical changes after it; it is better to have a balance in both
actions, having a notion of how the organization is doing with respect to its
growth and implement programs based on it.