Executive Briefings

Transforming the Supply Chain for a New Era in Electronics Manufacturing

The global recession has shattered many of the long-accepted principles, practices and trends regarding product design and supply chain management in the electronics manufacturing sector, as demonstrated by these three examples:

• Some companies that had previously outsourced a large percentage of their manufacturing to EMS providers have begun moving production in-house to boost capacity in their own factories.
• Contract manufacturers that had deepened vertical capabilities are now suffering - and are beginning to look like the slower-moving, capital-intensive customers they sought to help.
• The rush to China is being tempered by labor and transportation costs considerations, and service and recall problems.

In light of these conditions, electronics OEMs, software companies and brand managers are increasingly scrutinizing the total cost of going to market.  They recognize that, beyond manufacturing, they must holistically assess factors like transportation, risk mitigation, currency fluctuations, volumetrics, end-user locations and product lifecycles in order to make sound business decisions about their product design, manufacturing and supply chains.

These diverse, complicated issues are forcing electronics companies to adopt novel solutions, to examine new partners in Eastern Europe, Latin America or even within the U.S.; creating a highly dispersed supply chain linked via sophisticated technology; or producing products with a build-to-order versus a build-to-forecast strategy.

Embracing a transformational model of product design and supply chain management is the key to succeeding in this new era of electronics manufacturing.  For agile companies willing to abandon old paradigms, the rewards can truly be significant.

The World is Your Stage

The supply chain model of tomorrow is geographically agnostic. It draws on a huge spectrum of dispersed design and manufacturing resources that can be uniquely selected, combined, integrated and managed for optimal effect. 

The challenge, of course, is identifying the right resources in the right locations to meet a company's specific needs.  That can be difficult because in today's recessionary environment, detailed due diligence is required to ensure that each supplier is a well resourced, financially sound entity that will be in business for the long haul. Beyond this, it is essential to confirm that each supply chain participant is technologically capable of operating on a sophisticated technology platform.

Supply chains link more than just materials, facilities and logistics; they also link the know-how of experienced people.  In designing an optimal supply chain, business principals should ensure that the right human expertise is available and on call at all times.  From design through production to end-point delivery, talented, empowered, responsible people solve problems and make things happen. Every partner contract should address this important human success dimension.

A robust technology platform is essential to the transformed supply chain model.  It must provide complete transparency to the supply chain principal, while enabling each supply chain participant to fully utilize real-time data about its operational components and responsibilities. Digital dashboards, collaboration tools and automatic alert systems are important features of a fully functional supply chain technology system.

Real-time data obtained via the technology platform not only facilitates operational performance, but it also enables intelligent data mining that can improve business decision-making.

Sophisticated software that can model demand and capacity as well as things like currency fluctuation will enable agile companies to prepare and respond faster and more profitably than their competitors can.

The rush to low-cost manufacturing countries like China must be carefully analyzed. The new supply chain model starts by assessing demand. 

For example, a 'near-market' manufacturing resource may be more cost-effective and market-sensitive than a remote provider, albeit a lower-cost plant.  For example, stiff tariffs on international goods can quickly counteract savings achieved in low-cost manufacturing countries.  Recognizing this circumstance, nations are streamlining their customs processes to enhance the appeal of manufacturing within their borders.  In addition, the U.S. is currently negotiating new free-trade agreements with several countries. Businesses should monitor these arrangements and factor them into their total-cost planning for going to market. To model the ideal supply chain, managers must identify all relevant variables - including the potential need to customize products to local tastes - and then determine the option that provides the lowest total cost option for going to market.

Proactive Supply Chain Management is Key

Today, it's helpful to think of supply chains as organic entities that need constant, proactive attention.  Unlike command-and-control hierarchies, these dispersed resource networks require different management skills.  Diverse supply chain participants - often operating in different cultural settings - need to be nurtured, monitored and, on occasion, prodded to respond, share, collaborate and, of course, deliver.

Businesses that embrace the transformed model of supply chain management and learn how to benefit from an efficiently orchestrated global supply network are destined to be tomorrow's leaders.

Source: Advanced Innovations

The global recession has shattered many of the long-accepted principles, practices and trends regarding product design and supply chain management in the electronics manufacturing sector, as demonstrated by these three examples:

• Some companies that had previously outsourced a large percentage of their manufacturing to EMS providers have begun moving production in-house to boost capacity in their own factories.
• Contract manufacturers that had deepened vertical capabilities are now suffering - and are beginning to look like the slower-moving, capital-intensive customers they sought to help.
• The rush to China is being tempered by labor and transportation costs considerations, and service and recall problems.

In light of these conditions, electronics OEMs, software companies and brand managers are increasingly scrutinizing the total cost of going to market.  They recognize that, beyond manufacturing, they must holistically assess factors like transportation, risk mitigation, currency fluctuations, volumetrics, end-user locations and product lifecycles in order to make sound business decisions about their product design, manufacturing and supply chains.

These diverse, complicated issues are forcing electronics companies to adopt novel solutions, to examine new partners in Eastern Europe, Latin America or even within the U.S.; creating a highly dispersed supply chain linked via sophisticated technology; or producing products with a build-to-order versus a build-to-forecast strategy.

Embracing a transformational model of product design and supply chain management is the key to succeeding in this new era of electronics manufacturing.  For agile companies willing to abandon old paradigms, the rewards can truly be significant.

The World is Your Stage

The supply chain model of tomorrow is geographically agnostic. It draws on a huge spectrum of dispersed design and manufacturing resources that can be uniquely selected, combined, integrated and managed for optimal effect. 

The challenge, of course, is identifying the right resources in the right locations to meet a company's specific needs.  That can be difficult because in today's recessionary environment, detailed due diligence is required to ensure that each supplier is a well resourced, financially sound entity that will be in business for the long haul. Beyond this, it is essential to confirm that each supply chain participant is technologically capable of operating on a sophisticated technology platform.

Supply chains link more than just materials, facilities and logistics; they also link the know-how of experienced people.  In designing an optimal supply chain, business principals should ensure that the right human expertise is available and on call at all times.  From design through production to end-point delivery, talented, empowered, responsible people solve problems and make things happen. Every partner contract should address this important human success dimension.

A robust technology platform is essential to the transformed supply chain model.  It must provide complete transparency to the supply chain principal, while enabling each supply chain participant to fully utilize real-time data about its operational components and responsibilities. Digital dashboards, collaboration tools and automatic alert systems are important features of a fully functional supply chain technology system.

Real-time data obtained via the technology platform not only facilitates operational performance, but it also enables intelligent data mining that can improve business decision-making.

Sophisticated software that can model demand and capacity as well as things like currency fluctuation will enable agile companies to prepare and respond faster and more profitably than their competitors can.

The rush to low-cost manufacturing countries like China must be carefully analyzed. The new supply chain model starts by assessing demand. 

For example, a 'near-market' manufacturing resource may be more cost-effective and market-sensitive than a remote provider, albeit a lower-cost plant.  For example, stiff tariffs on international goods can quickly counteract savings achieved in low-cost manufacturing countries.  Recognizing this circumstance, nations are streamlining their customs processes to enhance the appeal of manufacturing within their borders.  In addition, the U.S. is currently negotiating new free-trade agreements with several countries. Businesses should monitor these arrangements and factor them into their total-cost planning for going to market. To model the ideal supply chain, managers must identify all relevant variables - including the potential need to customize products to local tastes - and then determine the option that provides the lowest total cost option for going to market.

Proactive Supply Chain Management is Key

Today, it's helpful to think of supply chains as organic entities that need constant, proactive attention.  Unlike command-and-control hierarchies, these dispersed resource networks require different management skills.  Diverse supply chain participants - often operating in different cultural settings - need to be nurtured, monitored and, on occasion, prodded to respond, share, collaborate and, of course, deliver.

Businesses that embrace the transformed model of supply chain management and learn how to benefit from an efficiently orchestrated global supply network are destined to be tomorrow's leaders.

Source: Advanced Innovations