Executive Briefings

Evolving Requirements for Supply Chain Visibility

Avnet provides leading-edge supply chain visibility solutions to OEM customers that have extended global supply chains and significant contract manufacturing operations. These supply chains often are highly complex and very geographically dispersed.

"A product might be designed in North America or Europe, but it generally is manufactured and assembled somewhere in Asia," says Lalit Wadhwa, vice president of global supply chain operations at Avnet. OEMs typically do business with multiple contract manufacturers, all of which use different information systems. "The result is that, at any given point in time, the OEM really doesn't know what is happening at each manufacturing location," says Wadhwa. "Visibility to the extended supply chain is what OEMs want."

Lacking this visibility has negative implications in three areas, Wadhwa says. The first is inefficient use of working capital. "If you don't know what inventory is in the supply chain around the world, chances are you are duplicating inventory and making things you don't need," he says. The second negative impact of poor visibility is very high process costs, particularly expedited transportation costs. The final and largest impact is an unsatisfied customer, which ultimately will lead to loss of revenue, he says.

For the past few years Avnet has addressed the visibility issue for its OEM customers with a solution it calls Supply Chain Central. This application sits on top of Avnet's ERP system and gives OEM customers visibility to every single transactional data point - what inventory Avnet is holding and where it is held, any backlog on that inventory, the inventory's age and obsolescence risk and whether there are alternative parts or products that can be used if the inventory is not available. "All of this information is available to our customers on a real-time basis," says Wadhwa.

And customers have used this information to good avail. Wadhwa says that customers using Supply Chain Central have, on average, lowered the working capital required to fund inventory by 5 to 12 percent, reduced their total cost of ownership by 2 to 8 percent and increased their fill rate by 5 to 10 percent.  "The ranges are rather wide because customers come in with varying levels of performance, Wadhwa says.

Supply chain visibility requirements for electronics OEMs continue to evolve, Wadhwa says. "Our customers now want to see not only what is happening within their supply base, but what is happening in the next tier of suppliers," he says. "They want to know that those suppliers are able to deliver as promised and will not cause a manufacturing delay."

In addition to next-tier visibility, OEMs also want the next iteration of solutions to enable companies to quickly tie together multiple nodes in the supply chain, such as demand signals and the supply base, in a cloud environment. Third, they want a solution that can be deployed very rapidly and at low cost, says Wadhwa.

Avnet is working with E2open on just such a solution, he says. "This solution is based on an E2open platform that is cloud based and it addresses all three of the major concerns of our customers. We are looking to deploy this solution with a wide variety of customers as we move forward," Wadhwa says.

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Keywords: Aberdeen Group, High-Tech/Electronics, Supply Chain Visibility, SC Planning & Optimization, Supplier Relationship Management, Sourcing & Procurement Solutions, Customer Relationship Mgmt., Order Fulfillment & P.O. Mgmt., Collaboration & Integration, Business Process Management, Business Intelligence & Analytics, Cloud, SaaS & On-Demand Systems, Quality & Metrics, Business Strategy Alignment, Global Supply Chain Management, Supply Chain Central, E2open platform, multi-tier supply base visibility

"A product might be designed in North America or Europe, but it generally is manufactured and assembled somewhere in Asia," says Lalit Wadhwa, vice president of global supply chain operations at Avnet. OEMs typically do business with multiple contract manufacturers, all of which use different information systems. "The result is that, at any given point in time, the OEM really doesn't know what is happening at each manufacturing location," says Wadhwa. "Visibility to the extended supply chain is what OEMs want."

Lacking this visibility has negative implications in three areas, Wadhwa says. The first is inefficient use of working capital. "If you don't know what inventory is in the supply chain around the world, chances are you are duplicating inventory and making things you don't need," he says. The second negative impact of poor visibility is very high process costs, particularly expedited transportation costs. The final and largest impact is an unsatisfied customer, which ultimately will lead to loss of revenue, he says.

For the past few years Avnet has addressed the visibility issue for its OEM customers with a solution it calls Supply Chain Central. This application sits on top of Avnet's ERP system and gives OEM customers visibility to every single transactional data point - what inventory Avnet is holding and where it is held, any backlog on that inventory, the inventory's age and obsolescence risk and whether there are alternative parts or products that can be used if the inventory is not available. "All of this information is available to our customers on a real-time basis," says Wadhwa.

And customers have used this information to good avail. Wadhwa says that customers using Supply Chain Central have, on average, lowered the working capital required to fund inventory by 5 to 12 percent, reduced their total cost of ownership by 2 to 8 percent and increased their fill rate by 5 to 10 percent.  "The ranges are rather wide because customers come in with varying levels of performance, Wadhwa says.

Supply chain visibility requirements for electronics OEMs continue to evolve, Wadhwa says. "Our customers now want to see not only what is happening within their supply base, but what is happening in the next tier of suppliers," he says. "They want to know that those suppliers are able to deliver as promised and will not cause a manufacturing delay."

In addition to next-tier visibility, OEMs also want the next iteration of solutions to enable companies to quickly tie together multiple nodes in the supply chain, such as demand signals and the supply base, in a cloud environment. Third, they want a solution that can be deployed very rapidly and at low cost, says Wadhwa.

Avnet is working with E2open on just such a solution, he says. "This solution is based on an E2open platform that is cloud based and it addresses all three of the major concerns of our customers. We are looking to deploy this solution with a wide variety of customers as we move forward," Wadhwa says.

To view video in its entirety, click here


Keywords: Aberdeen Group, High-Tech/Electronics, Supply Chain Visibility, SC Planning & Optimization, Supplier Relationship Management, Sourcing & Procurement Solutions, Customer Relationship Mgmt., Order Fulfillment & P.O. Mgmt., Collaboration & Integration, Business Process Management, Business Intelligence & Analytics, Cloud, SaaS & On-Demand Systems, Quality & Metrics, Business Strategy Alignment, Global Supply Chain Management, Supply Chain Central, E2open platform, multi-tier supply base visibility