April 21st 2007
The Board of Directors
Quantum Corporation, CA, USA
Director, eSupplyChain Group
Quantum Corporation, CA, USA
SUB: Redesigning of Supply Chain initiatives taken by eSupplyChain Group to include eHITEX
Quantum Corporation had formed the eSupplyChain Group in April 2000 with the aim of restructuring it's, then inefficient, supply chain and take the advantage of new emerging e-technologies to improve efficiencies across the chain. The company has recently entered into a new strategic alliance with eleven other top computers makers and suppliers. This alliance, known as eHITEX would build a new B2B online exchange protocol for supply chain management and will act as a platform for buyers and sellers to exchange exclusively via the internet.
Having just started with the initiatives to design new processes, develop new strategies, improve supply channels efficiency, and force an impact on the bottom lines, the eSupplyChain Group suddenly faces a new challenge. Now, eHITEX needs to be incorporated while designing these new methods and processes for supply chain of Quantum Corporation. Its impact needs to be considered in every decision making process.
This report will discuss the existing operations of Quantum Corporation and try to analyze the various approaches and initiatives that need to be taken in order to have higher efficiencies and reap maximum benefits from the newly formed web exchange eHITEX. Although this new development seems very attractive, there are several factors one needs to consider before committing. Instead of trying to align and redesign existing or envisioned supply chains to eHITEX, Quantum should focus on extracting what it needs in order to achieve its long term goals, from eHITEX. An approach of partial commitment without much redesign of the envisioned supply channels is suggested.
Quantum Corporation has seen a rapid early growth, mainly due to its dedication to product innovation, high quality, ability to meet customer demands consistently and thus achieving very high customer satisfaction levels. It had endured this rapid growth and was the market leader for seven consecutive years till 2000, with a market share of about 25%. They owed, in part, their success to their supplier Matsushita-Kotobuki Electronics Industries Ltd., Japan (MKE). The company had sustained the phenomenal growth rate and market capitalization of Quantum Corporation. However, this sustained growth in sales did not result in profit growth; instead the company experienced financial net loss during last four fiscal years. [See APPENDIX (Fig.1)]
In response to the changing market scenario, the company adopted several measures to reduce cost across the supply chain and improve order fulfillment efficiency in order to improve profit margins and sustain growth. The growing Internet-based collaboration within the industry had lead Quantum Corporation to form a separate group to be known as eSupplyChain Group to investigate new trends and technologies that could significantly affect their overall operations. eHITEX  was formed by 12 top computer manufacturers and component suppliers along with Quantum Corporation. It was envisioned to act as a platform that will allow cross company, vertical and horizontal integration and allow companies to take advantage of the latest technologies and use them as tools to leverage their overall operation of supply chains.
"Quantum Corporation has joined the eHITEX, along with eleven other top computer makers and component suppliers. The eSupplyChain Group needs to formulate a strategy and a system of integrating their own vision and the possibilities offered by formation of eHITEX. Successful integration would eventually improve operational efficiencies and increase customer fulfillment."
Some Significant Existing and Potential Problems: