132 The Technology Balance Sheet

he compared the experience of dealing with vendors in a Texas city, a California city, and a Japanese city:

Texas: We have the fastest, biggest, and cheapest parts. If you don't believe it, write me because I’m the president of this new division. (They don't really have a competitive product. On calling them, the secretary to the president states that you have to write because the letter goes directly to the marketing VP. I wrote to the president and informed them they lie about their parts and even lie about their willingness to listen. The letter does go through the company like wildfire, but the division president is still there, selling the same parts in the same old way.)

California: Everyone knows our parts are the fastest and the biggest. We started the industry. (We ask for a delivery commitment. It reads "We'll make our best effort to deliver." On inspection, the parts fail after a year without special treatment that's not part of the specification. The customers all complain about missed delivery schedules, and manufacturing people scream when they hear the name of the company. Every transaction with the company requires negotiation.)

Japan: We have fast, large parts as stated in our specs, and we are committed to high quality. (Existing customers agree, and no one can identify a part ever failing. We selected them because the contract simply states that they will meet their specs and deliveries. All specs and delivery dates were met.)

The following story illustrates the type of havoc that can ensue when a company deals with a poor vendor.

WAVETRACER. In building a signal-processing computer, WAVETRACER used an unreliable printed circuit board vendor to make its prototype boards. The boards had numerous errors, costing the firm several months over its plan at a critical time' when it needed a product and credibility with its first customer. Because of this schedule slip, WAVETRACER was forced to seek additional financing earlier and in a greater amount than would otherwise have been necessary. The valuation was decreased and the external ownership increased.

New microprocessors have historically had bugs. New complex microprocessors from semiconductor companies-including Intel, Motorola, and National-have all had bugs. The more complex the part, the more error-prone it is; hence, another reason for RISC. The first users are able to help find new flaws and often rediscover flaws that manufacturers forget to address. Apollo, Sequent, and several other companies have war stories to tell in this regard.

previous | contents | next