Chapter 6 [My four years at Acer Taiwan]

Source: [https://m.facebook.com/story.php?story_fbid=1129566035829875&id=100063294665283](https://www.facebook.com/California.Life.Enrichment.Club/posts/pfbid04TYyd3uJ9ZwAHx5HSUM4WzyQPRdYVtdbapjLSN4vR48c8UYJCSG41rBd39ikWDRnl?

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In CLEC's FB [James Origins and Today] series, Chapter 6 cannot be read due to system reasons. Since the previous post can no longer be found, in order to allow everyone to fully trace the content, I will repost Chapter 6 today.

Chapter 6 My four years at Acer Taiwan 02/19/2022

In Acer's R&D design and manufacturing department

When I returned to Taiwan at the end of 1999, I was responsible for reorganizing the R&D and engineering departments. At that time, R&D had no leader, the PM was very inexperienced, and the system was very chaotic. Product development was delayed again and again, and no product was ever launched on time. I reorganized the system development process and used my management experience in the United States. I was transferred from the United States to Taiwan with the rank of an engineer in the American unit to build the system and reorganized Acer's R&D design department and all engineering departments.

At that time, I designed a system development process. From product specifications to the day of product shipment, all processes and detailed inspection items at the beginning and end of each process were completely written in the process inspection item list, so that all product development time can be fully controlled from product specifications to design, production and on-time shipment. This process is applied to product development for the first time, and orders can be placed and shipped around the world on time. For PM managers, as long as they look at the process and ask a few simple questions, they will know at which stage the product has been developed, whether there is a chance of mass production on time, where the problem lies, and they can immediately remediate and confirm that it can be completed on time.

At that time, Intel had a new CPU architecture, and we completed product development and production very quickly. At that time, Intel also awarded us a medal for being the world's first in on-time development and mass production. Although the research, development, manufacturing and production departments are completed on time, allowing each product development to be manufactured and sold on time, the company's brand department and sales departments in various regions around the world believe that all new products will be delayed based on past experience, so their sales pipeline plans around the world have not yet been completed. Holding a large amount of inventory of old products prevents new products from being put on the shelves for sale on time, which greatly weakens the competitiveness of the entire company. This is an international company. From production and export to sales, the entire company must be synchronized from the inside to the outside, from production to terminal sales, which is an arduous task.

In addition, the sales in each region and the reward system of the business department have also caused huge losses to the entire company. Global business departments, especially Europe, have business reward systems, so the business department often pushes products into sales channels and dealers, and can get a good bonus. However, the sales pipeline has a lot of inventory. In the end, the head office needs to use subsidies and sell it on the market at a reduced price, causing the company to suffer heavy losses. However, the business department has already received generous bonuses. As for the company's subsequent losses, they may not pay attention to them. Therefore, a company's business reward mechanism should pay attention to the negative consequences that such a system may have.

From past experience, I can see that Apple's one-stop production and sales is very efficient. When you order an Apple product online, you can see that it is manufactured from the Apple manufacturer's Longhua factory in China. Your name is engraved on the case, shipped to Hong Kong, and shipped to the United States. The entire process only takes five days. There is no inventory at all, or very low inventory, so the success of a company lies not only in the design of the product, but also in the entire production, manufacturing and sales pipeline, which is completely transparent and efficient, and is a part of its competitiveness.

Moved to brand business group

After I was in charge of the R&D and engineering department in Taiwan for nearly a year, I felt that Acer’s problems were not just in design, production and manufacturing. The biggest problem might be problems with the internal management and supplier management of the brand department. At that time, the brand and manufacturing were about to be separated, and I heard another voice in my heart: James, you should go to the brand department to help, and we will definitely succeed. I was also mentally prepared that the general manager of the brand department would come to me. Not long after, the general manager of the brand came to me and asked me if I could be responsible for the desktop computer business group of the brand. Of course, I agreed immediately because I had already heard the voice in my heart. This may be why my life has been so smooth. I am grateful that my heart will make a voice in advance at critical moments. I listen to this voice quietly and obey the voice of my heart. This is what I often say in life, you must obey fate. (In fact, the same is true for investing. I have been listening to an inner voice, which is criticism, reflection, thinking, and correction. Sometimes the voice is very loud, and sometimes you have to listen carefully to hear it. But every time during critical periods, the voice is particularly loud. Thank you very much).

The first big problem I faced when I transferred to the brand department was supplier management. At that time, the competitiveness of PCs came from price, so if your supplier management was not good, your costs were too high and you would not be able to sell at all. So I had to play a cat and mouse game with all suppliers. Each time I quoted two or three suppliers, I then compared the quotations of all system parts from these suppliers, with details as small as the price and quantity of a resistor and capacitor (sometimes the supplier would put the BOM The resistors and capacitors inside are waterlogged, and the unit price is low. Many purchases will ignore it, but the little adds up to a motherboard that can be a few dollars more expensive (compared to a motherboard that costs more than $30, which is more than 6% of the cost). I find the lowest reasonable price for each part and add it up to get the lowest system price. After that, I first ask the supplier I like, give him the lowest price, and tell him, if you can accept this price, this business will be good. It's yours, otherwise I will give it to another supplier and won't look back. Usually this price is almost their cost price or lower (in fact, we can know from this that if there is a problem with the supplier's procurement (a spy), the parts purchased are definitely not the lowest price; it may be that the supplier watered the quotation). There is almost no profit for the supplier to accept this price, and they will work very hard to decide whether to accept the order.

But I told them that until the end of the entire life cycle of this product, I will not ask you to lower the price again. All the suppliers' efforts to reduce costs and production efficiency belong to the suppliers. After a few months, the suppliers will usually be able to make a profit, and they will finally accept my quotation. This is what I am talking about. In fact, high-tech procurement is not much different from buying brooms and dustpans, and it is also similar to the mothers-in-law bargaining and shouting at the vegetable market.

In 2000, Acer was only ranked fourth or fifth among world brands, preceded by American and Japanese brands, and we had our own design and manufacturing department, so there were very few outsourced system suppliers. When Acer's brand and manufacturing were divided After our home, the orders released by Acer will be very huge. Moreover, after we started to build a brand, Acer has quickly reached the point where it is second to none in the PC industry. At this time, many suppliers are very eager to obtain Acer's OEM business.

In fact, the success of Acer's newly separated company is not only due to the separation of manufacturing and branding, and the improvement of bargaining power (this advantage disappeared after a few years!), but also related to the leadership and reward system of general manager Wang Zhentang. At that time, Wang Zhentang's reward for BU head was very generous. Finally, before I left my job, Wang Zhentang casually mentioned that if the company continues to be optimistic, each BU head will be rewarded with NT$100 million a year. I had already decided to leave at that time, and I didn’t think about the 100 million a year. Life is very important, don't change direction for other reasons.

Hon Hai looks for Acer

When the Acer brand and manufacturing were separated, most of the desktop computer OEMs were distributed in Flextronics, MSI, and Elite. The three OEMs should be enough to meet Acer's sales. I never thought that I would find a third OEM. Although I had contacted Gigabyte, in the end, because of the emergence of Cheng Yaojin "Hon Hai", everything changed. Whether it is a blessing or a curse is still unknown.

One day, I suddenly received a notice from the general manager that Hon Hai approached us and wanted to help us with OEM work. I'm a little confused. For a long time in the past, Hon Hai looked down on Acer. Suddenly, our superiors asked us to hand over product manufacturing to Hon Hai. My understanding afterwards was this. When Terry Gou met Shi Zhenrong by chance at the airport (it was probably Shi Zhenrong who was scheduled to meet him), Shi Zhenrong mentioned that Hon Hai wanted to do OEM work for Acer, so he told our general manager that he wanted to place an order for Hon Hai (this kind of thing happens!), and then he turned to me and specified that we need to have a product for Hon Hai OEM manufacturing. This is really unprecedented. No brand manufacturer needs to come up with a product that allows system suppliers to do business. This is really a brilliant move by Hon Hai in doing business.

At the beginning, the first system we built with Hon Hai was for products sold in China (at that time, Greater China was a battleground for the world’s major brands). It turned out that Hon Hai promised to subsidize Acer $150 for every desktop computer, saying it would help Acer enter the Chinese market. This was very useful to Acer’s senior executives, so they assigned our business group to find a Chinese product to manufacture for Hon Hai, and to deliver it on time and start selling it within three months.

It was the first month before the Lunar New Year, and SARS was occurring in China. It was a very arduous task to complete product development, manufacturing and sales within three months, including the Lunar New Year holiday. The general manager told me that if we could ship the goods on time, we would be rewarded with 100 shares. At that time, Acer's stock price had reached more than 100 yuan. Although I don't know how to work for 100 stocks, I can understand the ambition of the leader, and we will go all out.

Before the Chinese New Year, I assigned Han Xin to the top leaders of various departments, got all the documents and air tickets, and had to go to China on the third day of the Lunar New Year. SARS was still happening in China at that time, but we still took the risk for the company. When we arrived at Hon Hai's Longhua Factory on the third day of the Lunar New Year, all Taiwanese employees of Hon Hai were still celebrating the New Year's holiday in Taiwan. Terry Gou was very angry when he learned that the customers had already arrived at the door and you were still on vacation. He ordered all Taiwanese employees to immediately take their leave and go to Hon Hai's Longhua Factory with us on the third day of the Lunar New Year.

When we arrived at the Longhua factory, we were ready to inspect the final finishing touches of all the products. As a result, we found many problems. The display lights on the host panel were misplaced, the packaging materials were wrong, the contents of the user manual were wrong, and no less than three or four major mistakes. At that time, Hon Hai engineers could not solve the problem of the light signals on the display panel. I had to go to their design engineering department to discuss the entire circuit design with the engineers. Later, I drew a circuit diagram for their engineers to modify, and required I used the spare control pins of the microprocessor of the system keyboard controller to control the correctness of the light signals on the panel, but I needed to modify the keyboard controller software. I happened to meet a colleague who used to work at Acer at that time. He quickly understood what I was talking about, and started to modify the design and software of the entire circuit board. It was lunch time, so we went to have lunch first, and the engineer stayed to modify the circuit and software. When we finished lunch and returned to the laboratory, the engineer said there was still a problem.

I was very puzzled, how could it be possible? It is theoretically feasible, and it should be correct in execution. This is the scientific principle of electronic engineering. I went to the laboratory with the engineer, and I asked him to measure several key points. It turned out that the engineer made the wrong correction (jumper error). Later, after After the correction, it worked completely normally. Later, Hon Hai engineers were very surprised and secretly asked our product manager, "Why does the top executive of a business group have such strong design skills?" He may not know that I was Acer's annual outstanding design engineer.

In this way, we directed the entire Hon Hai design and manufacturing department within a week to correct all the errors one by one. Hon Hai's employees were still very efficient and corrected all the errors one by one. With the full cooperation of their upstream manufacturers, we finally got a point. The shipment was always on time. I still remember that when the shipment was being shipped, the container trucks were lined up at the shipping gate. Hon Hai customers had to worship heaven and earth for their first shipment, and then the truck drove out and shipped to the entire China. I immediately sent a text message to the general manager, "ship on time."

In the process of dealing with suppliers in the Acer business group, I found that Hon Hai is a company that is very good at doing business. At that time, Hon Hai promised us to subsidize each Chinese system with RMB 150. When we shipped the first batch, we had a subsidy of $150. But when this product was sold for a month, Hon Hai immediately talked to us about a second Chinese product. When the second product was shipped, there was no further subsidy of $150 RMB. Later, Hon Hai changed its position and only the first product was subsidized by $150 RMB. This surprised me at Hon Hai’s vague strategy and makes you realize Hon Hai’s business management skills.

Another thing that made me realize that Hon Hai is still a very business-oriented company. Of course, this is what every company should do, but Hon Hai really opened my eyes. When we were doing design, we always asked them to quote NRE first, but they said it didn't matter. Hon Hai and Acer are brothers. Let's not talk about it now. The success of the product is more important. I always insisted that they should quote the cost of designing molds. They kept pushing the envelope, saying that there is business first and sales are good. These are not problems.

On the principle of requiring product development to be completed on time, we could no longer delay. As a result, they continued to carry out design and development before they reported the design and mold development costs. After we started shipping, we received a bill, a huge NRE bill. The goods had already been shipped. Finally, we found out that the cost of the entire design mold was so high. Hon Hai finally said that it was the quotation. Or they would charge an extra $2 for each machine. This was all at the beginning. You didn't expect it, but when you insist on asking them to quote at the beginning, they just can't quote you. They will never give you a quote first, and do it first. This is the Hon Hai business skill I learned (in fact, many business groups of Acer don't care much about quotations, and they are not good at it. They are completely eaten by suppliers. Some PMs are very bad and cannot be strong on suppliers. In addition, Acer's senior managers have ambiguous relationships with suppliers, which really makes it difficult for business groups to do things). "After Hon Hai established a good relationship with the top, we had no choice but to follow suit. As a result, all the quotations and prices were definitely not understandable by the superiors. Later, when I planned to choose external suppliers to fight Hon Hai, it was impossible. The superiors were already married to Hon Hai."

ending

The last episode is that some suppliers will ask you to go out and have coffee with their general manager. Usually I know what they are going to do, so I tell them that you don’t have to give me anything, as long as you quote a lower price for your product.

Those in power should remember that your benefits and rights all come from the office and the position on your business card. The flattery others give you, helping you carry your luggage, helping you drive, treating you to dinner, and all kinds of honors. Remember, it is not because of how great you are, but entirely because of your position, that valid business card, and that office. When one day you leave this position and the company, you will be nothing. So during my four years in Taiwan, even though I held a very high position, I still kept one thing in mind: when I leave this position at Acer, everyone will still think of you and miss you. This is success.

In addition, our department holds birthday parties every month. Sometimes we go to the bathhouse, sometimes we go play paintball, and sometimes we go to Kiss to dance. Anyway, we have had a lot of fun with our department in the past few years!

The above is my happy four-year experience in returning to Taiwan to assist the company's transformation and change.