Selex - Driving Change at Selex through Integrated Global...

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Driving Change at Selex through Integrated Global Souricng Selex, a U.S.-based electronic devices company, is an organization undergoing major change. It is in the process of transforming itself from a slow-moving, research-driven company to a flexible, market-focused company. The 1990s, which include the longest period of economic expansion in U.S. history, were not rewarding for Selex. The company experienced eroding profit margins due to intense global competition and mature product lines, suffered through several costly new product failures, and lost market share as new technologies and competitors encroached on core markets. And, with some difficulty, the company was forced to change its culture to respond to the demands of a new marketplace and CEO. For most of its history Selex viewed itself as a high technology company that could provide internally the inputs required for production. The company rewarded its researchers for complex and exotic materials and designs that were often difficult or costly to manufacture. The company stressed basic rather than applied research, leading to many patents “sitting on the shelf” without ever being commercialized. Furthermore, Selex’s culture endorsed the “not invented here” syndrome, a belief that rejected new ideas and help from outsiders. Internally, there was no incentive or willingness to pursue new ideas with suppliers or for supply chain members to collaborate with Selex. Change was resisted since it would likely alter something that historically worked well. Selex’s traditional business model, which featured the development of a few breakthrough products that required four to five years to develop, began to break down in the early 1990s. This was due to several costly new product failures and the introduction of new technologies by competitors that encroached on core product lines. As a result, Selex’s financial condition reached a crisis point during the mid-1990s. During this period Selex’s CEO retired and an outside management team arrived to revitalize the company. This new team decided that as part of its strategy the company must reduce material costs while growing revenue through the rapid introduction of innovative new 1
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products and technology. As Selex struggles to again become a market-leader through innovative new products and control of purchasing costs, the need to rethink how to approach worldwide sourcing has become evident. This case focuses on the global sourcing approaches taken by Selex’s three primary procurement groups to support the company’s revitalization efforts. These groups include indirect purchasing (non-production goods and services), raw materials purchasing (any material that is required directly for production), and contract or finished goods purchasing (outsourced finished goods). Indirect Purchasing
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This note was uploaded on 04/21/2011 for the course MGT 01 taught by Professor Gad during the Spring '11 term at Tanta University.

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Selex - Driving Change at Selex through Integrated Global...

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