Executive Briefings

Seven High-Tech & Electronics Supply Chain Priorities to Focus on in 2013

Analyst Insight: During 2012, high-tech industry executives recognized that optimizing supply chain operations is directly related to profitable growth, higher operating margins and capital efficiency - each of which helps create value. While new products matter, factors such as selection, price, availability and service also enhance the buying experience. - Gene Tyndall, Executive Vice President, Tompkins International

Here are seven priorities that high-tech companies can focus on in 2013 to maximize value created by supply chains:

1. Adhere to the right operations strategy: Decide how to provide capabilities that capture the products' value proposition. Most have a thought-out business strategy but do not have the right operations to achieve it. In fact, 90 percent of strategic plans are not achieved, most likely because the operations strategy was nonexistent or flawed.  Without defined capabilities, supply chains constrain growth and profitability.

2.  Operate effective business processes with talented people: Supply chains are enabled by more than 20 business processes. Categories include overall processes, demand, supply planning and execution, and logistics. Under-performing processes are the primary cause of under-performing supply chains, leading to higher costs, lower service, and capital inefficiencies. Short life cycles of many high-tech products require speed, agility and workflow changes.

3. Integrate business planning and execution: While high-tech companies recognize the need for effective sales and operations plans (S&OP), the obsession to reduce forecast error via analytical methods has diverted many from the collaborative process that obtains effective results. When operations planning is inclusive, disciplined and integrated, the single number forecast is modified by actual sales. This leads the entire business toward the common objective - BUY, MAKE, MOVE AND SELL the right products to the right customers, at the right locations, in the right amounts and price points.

4. Operate in demand-driven value networks:To succeed, high-tech companies are focusing more on customer demand. Whether in product design, availability or service mix, if customers do not buy the value proposition, or value cannot be delivered, the company is in jeopardy. This is why real-time information is revered. By knowing what's selling now, companies can adjust immediately.

5. Optimize logistics: Logistics processes are key for value creation. The flows and storage of goods and components are very important for cost and service reasons. The cost to serve includes 80 percent of costs from freight, distribution, returns, packaging and support functions. All require continuous optimization.

6. Adopt new, powerful technology: Many technology options are available, but criteria has shifted from justifying ERP systems to driving speed, agility, flexibility and decision support to new business processes. Cloud-based, Software-as-a-Service and trading partner networks are the new technologies.

7. Proactively manage supply chain risks: There are many types of risks - business, labor, security, human or technology failures, and others. High-tech companies must go beyond contingency plans and build in adaptive solutions as close to real time as possible. This technology enables new sensing, solutions and methods to mitigate risk.

The Outlook

Many of the problems and failures that occurred in 2012 with high-tech companies can be mitigated by adopting these seven priorities. Sometimes it takes bad performance to cause positive change. Overall, the industry is starting to think about the right operations priorities. If it remains committed, positive results will accrue.

Source: Tompkins International


Keywords: supply chain management, 3PL, logistics services, logistics management, supply chain management solutions, electronics supply chain, supply chain risk management

Here are seven priorities that high-tech companies can focus on in 2013 to maximize value created by supply chains:

1. Adhere to the right operations strategy: Decide how to provide capabilities that capture the products' value proposition. Most have a thought-out business strategy but do not have the right operations to achieve it. In fact, 90 percent of strategic plans are not achieved, most likely because the operations strategy was nonexistent or flawed.  Without defined capabilities, supply chains constrain growth and profitability.

2.  Operate effective business processes with talented people: Supply chains are enabled by more than 20 business processes. Categories include overall processes, demand, supply planning and execution, and logistics. Under-performing processes are the primary cause of under-performing supply chains, leading to higher costs, lower service, and capital inefficiencies. Short life cycles of many high-tech products require speed, agility and workflow changes.

3. Integrate business planning and execution: While high-tech companies recognize the need for effective sales and operations plans (S&OP), the obsession to reduce forecast error via analytical methods has diverted many from the collaborative process that obtains effective results. When operations planning is inclusive, disciplined and integrated, the single number forecast is modified by actual sales. This leads the entire business toward the common objective - BUY, MAKE, MOVE AND SELL the right products to the right customers, at the right locations, in the right amounts and price points.

4. Operate in demand-driven value networks:To succeed, high-tech companies are focusing more on customer demand. Whether in product design, availability or service mix, if customers do not buy the value proposition, or value cannot be delivered, the company is in jeopardy. This is why real-time information is revered. By knowing what's selling now, companies can adjust immediately.

5. Optimize logistics: Logistics processes are key for value creation. The flows and storage of goods and components are very important for cost and service reasons. The cost to serve includes 80 percent of costs from freight, distribution, returns, packaging and support functions. All require continuous optimization.

6. Adopt new, powerful technology: Many technology options are available, but criteria has shifted from justifying ERP systems to driving speed, agility, flexibility and decision support to new business processes. Cloud-based, Software-as-a-Service and trading partner networks are the new technologies.

7. Proactively manage supply chain risks: There are many types of risks - business, labor, security, human or technology failures, and others. High-tech companies must go beyond contingency plans and build in adaptive solutions as close to real time as possible. This technology enables new sensing, solutions and methods to mitigate risk.

The Outlook

Many of the problems and failures that occurred in 2012 with high-tech companies can be mitigated by adopting these seven priorities. Sometimes it takes bad performance to cause positive change. Overall, the industry is starting to think about the right operations priorities. If it remains committed, positive results will accrue.

Source: Tompkins International


Keywords: supply chain management, 3PL, logistics services, logistics management, supply chain management solutions, electronics supply chain, supply chain risk management