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How Contract Manufacturers Are Expanding Their Services

Arpad Hevizi, vice president of supply chain solutions with Celestica, talks about the challenges his company faces in gaining full visibility of supply and demand, and in dealing with increasing supply-chain volatility.

Celestica, a leading high-tech contract manufacturer, is in an “interesting transitional stage,” says Hevizi. Like its major competitors, the company is branching out from pure production to offering an extended menu of supply-chain services.

A common problem among Celestica’s customer base is loss of visibility. At one level, companies can’t see how their suppliers are executing. At another, they don’t have a clear understanding of what drives changes in demand, “and how they flow to the supply chain,” Hevizi says. Celestica’s goal is to help customers “start reconnecting the dots.”

Visibility is essential both upstream and downstream. Manufacturing supply chains typically consist of multiple tiers of suppliers, and the more distant they are from the end customer, the harder they are to track. Hevizi believes that Celestica’s position in the middle of the chain allows it to monitor activities in both directions.

Supply-chain initiatives that promise the greatest return today are those that involve collaboration among multiple partners, with an emphasis on supply and demand planning. The effort eventually filters down to supply execution as well, says Hevizi.

Still, lack of key information continues to plague many high-tech supply chains today. The goal, says Hevizi, is “really understanding what constrains our supply chain, and what we need to react on.”

The challenge becomes even greater with the shrinking of product lifecycles. A typical product used to exist for two to three years. “Right now, it’s six months, and it’s obsolete,” says Hevizi. Manufacturers and retailers must be able to react to changes in customer demand, while tracking the birth and retirement of a host of new products.

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Keywords: supply chain, supply chain management, high-tech supply chains, supply chain planning, contract manufacturers, supply chain services, sourcing solutions, inventory management, retail supply chain

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