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mgmt memo
Volume 2,
Number 12
December 1983-January 1984
Win Hindle
Talks About Product Demand
Support
For DECSYSTEM-10/20 Customers. Jack Shields Explains
Digital’s Strategy
New
Corporate Security Director
Digital Forms
New Systems Research Center In Palo Alto
Manufacturing has made several
organizational changes to better focus and more effectively
use its current strengths. According to Jack Smith, vice
president, Manufacturing and Engineering, these changes are
intended to:
o provide greater management attention
and control over current operations
and
o continue to establish proper linkages
between Manufacturing and Engineering, and between them and
other corporate functions.
"Effective immediately," says Jack, "I am
asking Bill Hanson, in addition to his current
responsibilities, to ensure that we have a fully coordinated
set of operating plans across all Manufacturing operations,
for reviewing and carrying out those plans and for all other
issues that affect the day-to-day operation of
Manufacturing. To support Bill in these responsibilities,
Finance and Administration (Dan Infante), Manufacturing
Planning (Dave Knoll), Far East Support (Ed McDonough) and
Low-End Manufacturing (Dick Esten) will report directly to
him.
"Manufacturing operations
organizationally coupled with Engineering groups -- Storage
Systems (Grant Saviers), LSI (Jeff Kalb) and Far East (Dick
Yen) -- will continue to report to me. Personnel (Larry
Bornstein), Process and Design Support (Don Metzger) and
Corporate Purchasing and Materials (Bill Thompson) will also
continue to report to me.
"The Boards Process Group (Don Hunt) will
become part of LSI Manufacturing/ Engineering, reporting to
Jeff Kalb," says Jack. This will bring together these base
technology groups with similar process-intensive operations
and business challenges.
"The Corporate Quality Control function
will transfer from me to Win Hindle, vice president,
Corporate Operations. We believe this will give this
increasingly important function corporate-wide management
attention.
"This evolution in our Manufacturing
organization greatly strengthens our long-term abilities
while giving us greater focus on operational issues. We have
new momentum in the marketplace now, and our number one
priority is to keep this going."
Programs are being set up to help speed
the delivery of Digital’s three personal computers to
customers. These programs were set up during Q2 to better
support the sales efforts in the Field.
Three of these programs are the
responsibility of the Low-End Business Center. They are "PCs
to the Districts," "DEC-24," and "The Order Action Desk.
"We're a separate order administration
organization, even though we're part of Manufacturing,"
explains Dawn Greeley, manager of the Center. "Most of the
other parts of Manufacturing do the scheduling and the
shipping, and someone else does the invoicing and bookings
for them. The Low-End Business Center is responsible for all
personal computers, printers and videos. We book, schedule,
ship, and invoice orders."
The Low-End Business Center does two
kinds of business. It ships directly to individual
customers. It also transfers units from stockroom to stock-
room, so that other Digital people can fill orders. Europe
and GIA represent two stockrooni-to-stockroom transfers.
PCs to the Districts was created to physically
demonstrate that PCs were available for immediate delivery.
It was implemented in early November in 20 locations for all
30 U.S. districts. The inventory is owned by the district
sales manager and managed by the Field Service Logistics
manager.
"We transfer the PCs from our stockroom
to their stockrooms. Then they fill orders locally. Product
quantities and configurations are extremely limited through
this program. We started with 100 units in each district.
They maintain that within plus or minus 50 units. Products
are in fixed configurations. In other words, you get a
monitor of choice and a printer of choice, but there are
only about 50 line items," explains Dawn.
"There are over 4000 PC units in the
Field through this program. We started with nine districts,
and then phased in seven more, then another seven, etc. We
did it in chunks, because that's a tremendous amount to ship
in one week," says Dawn.
"It's the district's inventory, and they
can manage it any way they choose. If a customer needs a few
units in a hurry, the district can immediately take care of
that out of its own inventory. Since there is about a
ten-day lead time between when they order new units from us
and when we replenish their inventory, the districts have to
be conscious of the impact of withdrawing large quantities
from their warehouses at one time. Our goal is to reduce
that ten-day lead time for deliveries, but we aren't there
yet."
Another program,
DEC-24, was piloted in the Central Region. Inventory
for DEC-24 is held in Northboro, not in the Field. It
involves a warehouse separate from the Springfield
warehouse, which is the main distribution center for PCs.
The people who take orders and those who fill orders for
DEC-24 work in the same building in Northboro, which is
stocked with a couple of days of inventory.
"An important point about DEC-24 is that
it's only a telephone call away from the Field office. The
person taking the call literally enters the order while on
the phone. All we need is the minimum information required
to ship the product. With DEC-24, from the time the office
receives the order to the time the product leaves our dock
is less than 24 hours. Beyond that, it becomes a
transportation issue.
"The DEC-24 program maintains a product
availability menu. This means that we only take orders for
products that we have in stock. So, we can ship what we
commit to ship," emphasizes Dawn.
DEC-24 is still being piloted in the
Central Region, but plans call for it to be nationwide by
the end of Q3. Eventually, there will be a much larger menu
of items available through DEC-24.
"The ultimate goal is for the DEC-24
Program to eliminate the need for the PCs to the Districts
Program," Dawn notes. "This will alleviate any inventory
management issues in the Field. However, before the latter
program can be eliminated, DEC-24 has to be able to ship
large quantities of small orders more efficiently than is
now possible. It's sort of a ramping-up process that we're
undergoing now."
The other major program for which the
Low-End Business Center is responsible is the Order
Action Desk. It is designed to help the customer, and
has nothing to do with speed of delivery.
"When you're shipping large volumes, it's
natural to have some small percentage of errors," explains
Dawn. "Now, we have a way to deal quickly with mistakes in
shipment configurations. The customer simply calls the local
Digital office, which in turn calls us on DTN 278-HELP.
"The people who answer that 'HELP' line
must solve the shipping problems. They have done extremely
well so far, and they've only been operating for a month.
Cables and software are the two biggest problems we have
encountered .
"We log the misshipped items by part type
so we can take corrective action. If 90 percent of the short
ships are a particular cable, there must be something wrong
with our process of getting it there. So the action item
will be to fix the process. But, in the meantime, we solve
that customer's particular problem."
(Recently MGMT MEMO interviewed Win
Hindle, vice president, Corporate Operations, about the demand
for all of Digital's products. His comments are reflected in
this article.)
"I think it's important to put into
perspective what the customer demand for our products is. It's
extremely good in what we call the mainstream of business.
"We've never had a higher order rate for
our VAXs or PDP-lls. For example, demand for the VAX-11/780 is
about twice what it was several years ago. The personal
computer business has not developed as rapidly as our plans
indicated, but we are optimistic about the next several
quarters.
"DECmate II is doing very well,
particularly in the office and small-business marketplace. We
are working very hard to stimulate demand for the Professional
and Rainbow. Ed Kramer and his task forces are initiating many
new programs to accomplish this.
"I should also point out that we've been
delivering the bulk of our orders on time. It's just that the
number of late deliveries is higher than it has been in the
past because of our information systems problems.
"We have a team focusing on order
administration. It is co-chaired by Mike Kalagher and Kevin
Melia. Mike is responsible for customer administration
systems, which means the order processing system as it goes
from the customer through the field office to the
manufacturing scheduling system. Kevin manages the system that
controls the actual scheduling in Manufacturing. (See related
article on order administration.)
"When we put our fiscal '84 plan into
place, we decided how much we would sell and manufacture of
each of our products. Our forecast was too low for VAXs and
PDP-lls, and it was too high for Professionals and Rainbows.
As a result, we're behind on VAXs and MICRO-lls, and we have
more Professionals and Rainbows than we have orders. So, we're
doing everything we can to balance that load. We've increased
our manufacturing build plan in VAXs and 11s in response to
customer demand.
"But, once we know that the order rate for
— let's say the 780 — is higher than we had predicted, it's
not a simple task to suddenly increase the production rate. We
need to buy parts and reorganize manufacturing processes.
That's why setting production capacities before the year
begins is such an important task.
"We have gone through a time that has given
us a lot of bad press; something we're not used to. And yet, I
sense employees have a great sense of loyalty. Yes, we have
some problems, but we are solving them. We are the same
company we were two quarters ago.
"I sense most of the Digital family has
real faith that we are getting back on track. I sense a
willingness to work hard to help make that happen. That's a
real bright spot for me.
"It's like being the favorite child in your
family for a number of years, and at the age of 26, you go and
do something stupid. The family is still right there behind
you, helping you to get back on the track again. That's how I
feel about the company right now. We've done some things we
feel badly about in terms of causing our customers
difficulties with information and deliveries. We know what
those problems are, and we will solve them.
"We are in a dynamic business, and should
be used to the fact that we must always be flexible and
capable of changing to meet the needs of our customers. We
have tremendous strength in products and people, and I am very
confident in our future."
The decision last spring to curtail
development of a high-end DECSYSTEM-20 (the Jupiter Project)
led to some confusion regarding the company's support of its
DECSYSTEM-10/20 customers. In a recent interview, Jack
Shields, vice president, group manager, answered many of the
questions that have concerned customers and people in the
Field.
"We will provide computing solutions using
the full range of Digital's products, from large mainframes
through personal computers, by integrating the DECSYSTEM
10/20s into the Digital Information Architecture," explains
Jack. "DECSYSTEM 10/20 customers will be able to take
advantage of substantial future improvements in cost of
computing and functionality, while protecting their
investments in DECSYSTEM hardware and software.
"We had an architectural incompatibility
between the DECSYSTEM-10/20s and our VAX systems. We feel a
very strong commitment to customers who use DECSYSTEM-10/20s,
but also believe the product offerings and functionality
enhancements forthcoming under the VAX architecture will
provide better solutions for these customers."
The VAX architecture has benefited from
greater engineering investment and from the architectural
commonality with the PDP-11 family, which Digital uses in most
of its supporting products developed under the network,
interconnect and storage architectures. The result has been
more new products and better time to market for VAX products,
which traditional DECSYSTEM-10/20 customers can now take
advantage of.
"So while we are going to continue to make
the current set of products and support DECSYSTEM-10/20
customers, we have an obligation to point out to these
customers that when they develop their long-term strategies
they should include the VAX architecture, which we believe
will provide more powerful computing solutions with greater
functionality and at lower prices."
Digital is not suggesting that customers
change immediately. There are still lots of applications for
which customers will continue to buy and use 10s and 20s.
Digital still has a commitment to those customers, and will
still make the products, install them and service them. The
main thrust of the strategy is to encourage customers to
consider the VAX for the new applications they are developing,
rather than try to get them to move existing applications.
Networking technology is smoothing the
differences between the architectures. With Digital's
networking and interconnect capabilities, a customer can have
communication between the different applications running on
the VAX systems and DECSYSTEM-10/20s, and can share data
between them.
DECSYSTEM-10/20 customers have two growth
alternatives. They can add DECSYSTEM-10/20s for applications
where these products best meet their requirements, or they can
implement new applications using VAXs and personal computers.
Under both alternatives, their hardware and software
investments will be protected by tying the DECSYSTEM-10/20s,
VAXs and personal computers together into the total Digital
network.
"Sales people have to explain and work out
the strategy customer by customer," says Jack. "Customer
emotion has been high since the decision to discontinue the
Jupiter project. But there are only a few customers with needs
that can't be satisfied by this strategy. For most customers
the strategy does meet their needs. Once we have put in the
effort to really understand these needs, we have been
successful in selling the benefits of the strategy. In many
cases we have already sold additional 10/2Qs, VAXs and
personal computers to these customers.
"These customers represent a substantial
opportunity, both current and longer term, for Digital, and we
are committed at all levels of the corporation to do what is
necessary to meet these customers' needs and retain them as
good Digital customers. We will do a better job, especially
within the Field functions, of communicating our progress in
implementing this strategy.
"For years, the DECSYSTEM-10/20 business
was a separate piece of the company. We want people to
understand that we aren't doing away with it. We don't look
askance on it. Rather, we believe the time has come to use our
networking capabilities to integrate these customers and this
architecture with the direction of the rest of the company. We
want these customers to be able to take advantage of more and
more computing capability being developed on our VAX-type
products and to be able to move in that direction, as it's
appropriate.
"Digital is committed to building computers
based on VAX architecture which will be more powerful than the
2060. And while we have stopped development of a high-end
10/20, we have committed to continue to develop 10/20 product
enhancements for a minimum of five years and have dedicated
substantial Engineering resources to this effort. We will also
continue to support DECSYSTEM-10/20s for a minimum of 10
years.
"All this ongoing commitment implies the
need for people dedicated to DECSYSTEM—10/20s in many
functions. In fact, the efforts of these people will be more
critical than ever to our continued success. We are committed
to providing career advancement opportunities for these
people, and the extraordinary efforts of many of them are
being recognized.
"In other words, we have a special group of
people here at Digital who we need and respect, who we want to
remain dedicated and committed to 10/20s and to these
customers.
"In terms of expertise, some of our best
technical systems people have traditionally been dedicated to
10s and 20s. I think their question is, 'am I going to be
technically challenged as much by these new VAX systems as I
was by the 10s and 20s?' And I would say, yes, absolutely. The
complexity of clusters and those kinds of architectures will
require a level of expertise in a systems sense that is above
and beyond what is required today for
The Colorado Springs facility recently
reached another milestone with delivery of its 25,000th
Winchester disk drive, an RA81 purchased by Maher Terminals of
Jersey City, N.J. The RM80, the first Winchester disk designed
and manufactured by Digital, went into production in June
1980=, The RA81, the latest member of that family, is the
highest area density drive available in the industry today.
Maher Terminals is a container shipment
company. They service 14 separate steamship line carriers
which generate over 230,000 vessel container moves per year or
about 1400 to 1800 truck moves per day. Years ago, they
developed an online shipment tracking application using MUMPS
on a PDP-15. They currently use five PDP-15s and two
VAX-ll/780s which support a nationwide communications network
of over 300 interactive terminals distributed throughout the
major cities in the United States and Canada. This network, in
addition to handling the containership facility, tracks the
land/sea movement of containers and cargo. Maher is in the
process of implementing a VAXcluster based on three 6-megabyte
VAX-ll/780s, 15 RA81 disk drives, two HSC50 storage
controllers, three CI-780 computer interconnects and a star
coupler.
Colorado Springs started manufacturing
disks with the RL01 in 1978. (They made their 100,000th
RL01/02 last summer.) To accommodate the demand for its new
disk drives, the plant was expanded to 715,000 square feet in
Oct. 1982. Now, 1800 people are employed there in the
research, design, engineering and manufacturing of these disk
systems for use on Digital computers.
It took three and a half years to produce
the first 25,000 Winchester disk drives. With the expanded
manufacturing capacity, it should take only one year to make
the second 25,000.
Since taking the management responsibility
for all of Digital's personal computers for the balance of
this fiscal year, Ed Kramer has developed task forces to deal
with all issues related to the successful sales, marketing and
delivery of DECmates, Rainbows and Professionals. Using the
expertise of the people on the task forces, Ed is pulling
together the FY84 and FY85 corporate plans for marketing and
shipping PCs.
Ed chairs a PC Task Force, which consists
of Joel Schwartz, Angelo Guadagno and Eli Lipcon. Joel, in
turn, is head of the PC Marketing Task Force. Angelo chairs
the PC Sales Task Force, and Eli Lipcon is chairman of the PC
Operations Task Force, which is responsible for day-to-day
operations including shipments and deliveries of personal
computers. Ed also chairs a PC Engineering/Manufacturing Task
Force.
Ray Humphrey has joined Digital as director
of the Corporate Security Department, presently located in
West Concord, Massachusetts.
Prior to joining Digital, Ray was manager,
Corporate Security, for Xerox, a position he held since 1977.
Before that, Ray held various senior-level management and
administrative positions with state and federal governments,
including service as Director of Industrial Defense for the
U.S. and responsibility for originating and conducting the
"Sky Marshalls" program and the Federal Witness Relocation
Program. He was a White House Fellow during the Johnson
Administration and was chairman of several committees of
national security organizations.
Digital is forming a new Systems Research
Center in Palo Alto, CA, to be headed by Robert W. Taylor.
According to Sam Fuller, vice president, Research and
Architecture, this new activity "underscores and strengthens
the company's long-term commitment to systems and software
research, areas which are crucial to the development of
innovative computer systems." The facility should be
operational within a few months.
Bob joins Digital after 13 years with Xerox
at its Palo Alto Research Center. During that time, he
organized the Computer Science Research Laboratory which did
pioneering work in personal distributed computing. Throughout
his career he has been involved in a number of pioneering
computer research programs.
In the 1960s, Bob managed the research
programs of the Defense Advanced Research Projects Agency
(DARPA), which became well known for its development of the
first timesharing systems and for the global ARPANET network.
While at DARPA, he was active in funding the research base of
the earliest university graduate programs in computer science.
According to Sam, this new research effort
will work closely with related research activities headed by
Forest Basket in Los Altos, CA, and with an East Coast
research group headed by Linda Wright in Hudson, MA.