“As we observed the PC industry changing, due to increased competition and macroeconomics, we knew we had to take action. Microsoft OEM Operations needed to make big, customer impacting changes that would reduce costs and improve service,” stated John Solheim, World Wide Supply Chain Director for Microsoft Licensing, GP (MSLI) in Reno, Nevada. The analysis of the present supply chain climate presented tremendously favorable circumstances to begin the OEM supply chain transformation project in 2008.

As part of the transformation, the OEM Operations team evaluated the supply chain architecture and focused on the question of how Microsoft Corporation could provide “Best in Class” service and help drive share gains by becoming the true software provider of choice. Microsoft’s OEM supply chain leadership team decided to focus on three main areas: listening to customers, improving processes, and empowering the team to challenge the status quo.

“A journey of a thousand miles begins with a single step” - Lao-tzu.

As the journey of transformation pushed forward, specific survey tools were produced and circulated amongst customers. The team used the surveyed customer’s feedback to evaluate how to improve the availability of value added services, execution excellence, product launch planning and pricing. Through their partnership and collaboration with customers, the OEM Supply Chain team was able to achieve their goals! Using a scorecard methodology, the team implemented an optimization framework that focused on a proactive supplier management approach. These changes improved processes and model design and customers felt empowered and that they had a voice in the changes Microsoft was making.

By partnering more closely with customers, it became clear that a drastic model change would not only improve and streamline existing processes, but could result in huge cost savings for both the customer and the company. In 2008, there were 76 Authorized Replicators (AR) sites located around the globe. Yet, while they were near their customers, the distance between the source of the certificate of authentication (COA) and the physical AR locations, invited many potential hazards. Microsoft’s OEM Operations targeted changing the existing model to improve specific issues including: theft or loss-in-transit, security burden and cost of on-shelf inventory. They applied the tenet of “the closer the better” and collaborated across multiple teams at Microsoft Corporation to change the existing restrictions that had required the AR locations to be in facilities separate from their customers. Robert Barrett, General Manager OEM Operations, MSLI, explained, “By changing the AR location model alone, we have enabled one of our customers to minimize its one week buffer stock to one day, reducing COA’s from 80k to 10k, and has saved this customer $120 million in inventory carrying costs to date.”

As the journey ensued, AR relocation efforts continued and savings increased as a result of greater customer collaboration, another transformation began – this one, internally, at Microsoft Corporation’s licensing division, MSLI. “We slowly began to see a cultural change within the OEM Operations Team here at MSLI. By empowering our employees to put the customer first, an internal transformation began,” said John Solheim. This cultural change gave the Microsoft OEM Operations team the ability to achieve a healthy, driven and empowered workforce. In time, with unrelenting energy and great leadership, the change took hold and the numbers proved it. By creating specific metrics, the leadership team in OEM Operations at MSLI concluded they had achieved a 30% morale increase within 2 years. Adrian Bucher, OEM Supply Chain Business Manager, MSLI, explained "Our customers are implementing creative cost cutting solutions by utilizing our AR relocation program, simplifying reverse logistic processes and reducing physical deliverables, saving over $35 million in COGs and $360 million in inventory over the next 3 years.”

Microsoft’s future is bright with endless determination to provide “Best in Class” service to their supply chain, continued successful partnering and collaboration efforts through improving processes, and by their team challenging existing paradigms each day. The OEM supply chain transformation project has proven successful results and continues to improve and empower Microsoft initiatives around the globe today. An emphasis on listening, improving and empowering has enabled the Microsoft OEM Operations team to reach a new level in both employee and customer satisfaction.

About Microsoft Licensing:
Microsoft Licensing, GP (MSLI), headquartered in Reno, Nevada since 1997, enables organizations, large and small, to acquire, distribute and utilize Microsoft’s vast array of products, including software, hardware and services. MSLI employs approximately 500 professionals across 22 states and supports Microsoft’s operations for OEM, Volume Licensing, XBOX and Dynamics throughout North & South America. MSLI and its employees contribute to the communities in which we live by emphasizing support efforts for education, youth organizations, diversity initiatives and disadvantaged communities to advance their information technology programs. Microsoft Licensing, GP: http://www.mslicense.com


Submitted by vchpar