| Published
August 1, 2005
For its next-generation Microsoft® Xbox360™ video game and
entertainment system, Microsoft faced more complex
manufacturing requirements than it experienced with the
original Microsoft Xbox® video game system. To provide full,
real-time visibility into the supply chain for the product’s
graphics chips, Microsoft created an integrated business
process automation solution based on Microsoft Windows Server
System™ integrated server software components, including
Microsoft BizTalk® Server 2004 and the BizTalk Accelerator for
RosettaNet.
Situation
The Xbox platform has become immensely popular
with gamers worldwide since its introduction in 2001. Now, as
Microsoft prepares the next-generation Xbox 360 platform for
availability in late 2005, it has to deliver game and
entertainment experiences that are even better than the
experiences that the original Xbox provided.
To do so,
Microsoft has developed entirely new hardware principles for
the Xbox, including:
• Delivery of more than a teraflop
of targeted computing
performance.
• A
multi-core processor architecture.
• A custom-designed
graphics processor.
The more sophisticated
hardware requirements for the next-generation Xbox 360,
compared to its predecessor, put new demands on the Microsoft
Home and Entertainment Division (HED), which produces it. The
pressure to build on existing Xbox momentum by delivering an
outstanding product, and to do so in time for the holiday
season, magnifies those demands. Even more challenging is the
fact that Microsoft outsourced the process for manufacturing
and delivering the Xbox 360.
Microsoft engages a
variety of suppliers and contract manufacturers to deliver the
components and key services that are crucial to the new
product. At the same time that Microsoft is outsourcing key
manufacturing operations, it needs to retain tight control
over those external processes to ensure that the suppliers and
contract manufacturers meet service level agreements (SLAs)
for on-time delivery and component quality.
During
manufacture of the original Xbox systems, Microsoft interacted
with its contractors through an EDI-based system that sent
batch transmissions daily. This solution lacked real-time
visibility into the supply chain, resulting in supplier
inefficiencies and inventory write-offs. In addition, the
tightly coupled nature of EDI required expensive and
time-consuming development work to bring each contractor into
the solution. Mcrosoft was determined to correct that
situation as it prepared for production of the next-generation
Xbox 360—particularly for the production of the crucial
graphics processing unit (GPU) chips that are at the heart of
the product’s enhanced functionality.
“Without
real-time visibility into the semiconductor manufacturing
process, we’re steering a ship with a blindfold on,” says
Robert Meshew, Group Program Manager, HED—IT Systems,
Microsoft. “We need to be able to see when delays in the
stages of supply and production are occurring and when yields
are not meeting expectations, so that we can take immediate
corrective action. Microsoft is on the hook for supplying its
contract manufacturers with the GPUs that go into the Xbox
360. If we don’t get those parts to them on time, we can’t
expect on-time delivery of the Xbox 360 from
them.”
Moreover, Microsoft needed a solution that would
validate the data coming from its suppliers, so that there was
no delay in requesting and receiving corrected data when
necessary. In addition, the solution had to meet a third
requirement—vendor acceptance.
“Whatever system we used
to get visibility into the supply chain, we needed to get our
partners’ buy-in, and we needed to get them onboard as quickly
and cost-effectively as possible,” says Larry Hamlin, Supply
Chain Manager, Silicon Operations, HED, Microsoft. “Because this is a dynamic
situation in which we expect additional partners—perhaps
another three to five—to join our supply chain over time, we
needed a solution that we wouldn’t have to rewrite to
accommodate future partners. We couldn’t meet either of those
requirements with EDI.”
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Solution
Microsoft
considered and rejected standard manufacturing software
solutions because the private processes that Microsoft would
have needed to develop for supply-chain integration would have
driven up both initial development costs and ongoing support
costs
| |
 By making our supply chain process faster
and more efficient, we expect to see significant savings on the bottom
line—while increasing product quality and on-time
delivery.
Larry
Hamlin, Supply Chain Manager
Silicon
Operations, HED, Microsoft Corporation |
|
Instead, as Microsoft prepares for production of
the next-generation Xbox 360 console, the company has
deployed a Business Integration and Intelligence (BII)
Framework based on BizTalk Server 2004 (a member of the
Windows Server System) and on the BizTalk Accelerator
for RosettaNet version 3.0. The BII Framework supports
integration and performance monitoring of the
participating customer-owned tooling contract
manufacturers and subcontractor suppliers. Microsoft is
using it initially to support the manufacturing
processes that supply the Xbox 360 console’s GPU chips.
Microsoft is using BizTalk Server to create
standardized data exchange between the enterprise
resource planning (ERP) and shop floor systems that
Microsoft contract manufacturers and suppliers use, in
addition to the following three systems that Microsoft
uses:
|
| • |
The SAP R/3 ERP system that
is used to manage financial processes (for example,
purchase orders, payables, and material ledger) for Xbox
production |
| • |
The Microsoft Business
Solutions Dynamics AX solution that is used for
manufacturing planning, work-in-progress tracking, and
yield management |
| • |
The Microsoft SQL
Server™–based BII data warehouse that is used to provide
data for reporting and deep visibility into the supply
chain, regarding supplier performance in particular
|
Microsoft is using the BizTalk Accelerator for RosettaNet
to facilitate the creation of private-to-public data
integration processes to enable the standardization of the
data exchange interfaces. RosettaNet is an industry standard
based on Extensible Markup Language (XML) and is designed to
enable companies to integrate applications and processes with
their supply-chain partners.
The Web-based user interface into the system is a digital
dashboard based on Microsoft Office SharePoint® Portal Server
2003, another product that is included with the Windows Server
System. The SharePoint portal provides the solution’s
end-to-end visibility into the supply chain through such
features as order disposition, inventory reconciliation, and a
supplier scorecard that tracks several measurements of
supplier performance. Those measurements include actual
performance against SLAs for on-time delivery and the quality
of supplier information provided to the solution, because
invalid data (for example, an empty field on a purchase order)
can impede the real-time view throughout the supply chain.
The solution manages a range of processes needed for Xbox
production, including the work-in-progress process, advanced
shipping notifications, purchase order transmissions and
receipts, and inventory synchronization message exchanges.
These processes are expressed as a series of RosettaNet
Partner Interface Processes (PIPs) that provide a standard way
for Microsoft and its vendors to exchange this information
without needing custom code to encapsulate the information.
The PIPs that the solution uses are:
| • |
3A4 (request purchase
order), which enables purchase orders to be sent from
Microsoft to vendors |
| • |
3B2 (shipping
notification), which enables vendors to inform Microsoft
when they have shipped against purchase orders |
| • |
4B2 (ship receipt), which
enables Microsoft to know when inventory has been
received at the assembly and test facility, in order to
update the Microsoft SAP and Microsoft Business
Solutions Dynamics AX systems |
| • |
7B1 (work in progress),
which gives Microsoft visibility into the manufacturing
stages of the GPU chips so that it can update its
schedules and financial systems
|
| |
A one-day increase in responsiveness is
huge in outsourced manufacturing. It means you have the
time to respond to problems… to save thousands of
dollars in unnecessary air freight and expediting
costs
Robert Meshew, Group Program
Manager
HED–IT Systems, Microsoft
Corporation |
Beyond moving data between various points in the system,
the solution includes messaging and orchestrations—including
file-handling and notification protocols—to enable Microsoft
to evaluate and acknowledge received documents and
information. In addition to supporting integration between
Microsoft and its suppliers, the solution supports application
integration between the SAP R/3 and Microsoft Business
Solutions Dynamics AX systems within Microsoft.
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