Executive Briefings

Synchronizing Demand in the Consumer Electronics Industry

Consumer electronics makers are starting to do a better job of matching production with actual demand. Kedar Kulkarni, director of Supply Chain Division at VTech Communications, talks about how far they've come.

The consumer electronics business is more competitive than ever, prompting companies to look for ways to differentiate themselves in the marketplace. One solution is to do a better job of synchronizing operations with consumer demand, says Kulkarni. Players in that sector are following the lead of consumer packaged goods (CPG) companies, who routinely work with retailers to obtain point-of-sale (POS) data in a timely manner.

"Most national retailers are now willing to share POS data with manufacturers, and have a ... joint execution plan," says Kulkarni. "They make the most of the data, which is now visible at no cost to most manufacturers." Companies have become aware of the value of such information over the past three to five years, he adds.

Obtaining POS data isn't the issue for most manufacturers; it's how to maximize its value. The first critical application is using the information to validate the fulfillment plan being offered to customers. "It's the clearest demand signal that lets you get the right product to the right shelf at the right time," says Kulkarni. "If that problem is solved, the benefits are in exponential amounts."

The ability to react quickly to the data varies among industries and supply chains. Up to now, Kulkarni says, most responses by suppliers "have been haphazard and based on a gut feel." As companies become more comfortable with the system, they can position themselves to anticipate consumer demand, instead of merely reacting to changes.

"It's a journey for companies to start getting better at sensing demand," says Kulkarni, "but once they've done that, they can start structuring their supply chains to react a whole lot better than they have been doing."

The next step is to convey that information further up the chain, to the manufacturer's own suppliers. Ultimately, consumer-electronics sellers should be able to deploy POS intelligence at the earliest stages of product design and engineering. And while the pieces of the puzzle haven't yet come together, Kulkarni says, companies have already seen enough benefits to be convinced that "this is the direction the industry is progressing."

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The consumer electronics business is more competitive than ever, prompting companies to look for ways to differentiate themselves in the marketplace. One solution is to do a better job of synchronizing operations with consumer demand, says Kulkarni. Players in that sector are following the lead of consumer packaged goods (CPG) companies, who routinely work with retailers to obtain point-of-sale (POS) data in a timely manner.

"Most national retailers are now willing to share POS data with manufacturers, and have a ... joint execution plan," says Kulkarni. "They make the most of the data, which is now visible at no cost to most manufacturers." Companies have become aware of the value of such information over the past three to five years, he adds.

Obtaining POS data isn't the issue for most manufacturers; it's how to maximize its value. The first critical application is using the information to validate the fulfillment plan being offered to customers. "It's the clearest demand signal that lets you get the right product to the right shelf at the right time," says Kulkarni. "If that problem is solved, the benefits are in exponential amounts."

The ability to react quickly to the data varies among industries and supply chains. Up to now, Kulkarni says, most responses by suppliers "have been haphazard and based on a gut feel." As companies become more comfortable with the system, they can position themselves to anticipate consumer demand, instead of merely reacting to changes.

"It's a journey for companies to start getting better at sensing demand," says Kulkarni, "but once they've done that, they can start structuring their supply chains to react a whole lot better than they have been doing."

The next step is to convey that information further up the chain, to the manufacturer's own suppliers. Ultimately, consumer-electronics sellers should be able to deploy POS intelligence at the earliest stages of product design and engineering. And while the pieces of the puzzle haven't yet come together, Kulkarni says, companies have already seen enough benefits to be convinced that "this is the direction the industry is progressing."

To view this video in its entirety, Click Here