The 4th Annual UPS Change in the (Supply) Chain survey found that almost 60 percent of high-tech logistics executives rank themselves as "market leaders" in product innovation, but less than half think they are "market leaders" when it comes managing global product launches (46 percent). Complicating matters even more, 48 percent of the executives surveyed indicated that a firm's ability to carry out high-profile, global product launches is becoming increasingly important. High-profile product launches can lead to publicity, consumer interest and, most importantly, sales. However, day-specific, global product launches are becoming more complex and difficult for high-tech companies to manage and execute.
Understanding the Challenges
Most of the challenges during product launches can be traced back to internal issues, as successful product launches are contingent on collaboration across all major departments within an organization and clear lines of communication between stakeholders. Although important to the success of a product launch, high-tech executives must not focus exclusively on product innovation, but also launch planning and execution as well. From ideation to culmination, cross-functional collaboration is key.
In regards to planning and execution, challenges and costs often develop in many different parts of the supply chain during a product launch. For example, companies often run into unforeseen issues with product security or the local coordination needed to enable day-specific product launches. Collaboration across the entire network is the key to mitigating these challenges and costs because many of the decisions that need to be made during a product launch require input from all internal stakeholders. For example, the initial sales forecast can dictate manufacturing timelines; plans for synchronized global distribution can limit supply chain flexibility; and the distribution plan can impact the end-consumer launch-day experience.
Launch delays and unexpected costs can creep into any stage of the product launch if companies do not hold detailed, cross-functional product launch planning sessions and develop a holistic deployment and contingency plan that aligns manufacturing requirements to supply chain design and the desired end-customer experience. Manufacturing and logistics departments need to be in constant coordination to react to supply issues, manufacturing output fluctuations and sales forecast changes, and modify the overall product launch plan accordingly. Change will happen, and more times than not, solid contingency planning is the lifeline that keeps a product launch from failing.
Thinking through the key considerations should allow the organization to answer a few basic questions related to everything from country of origin to projected sales that will drive the high-level product launch supply chain plan. Once these questions are answered, detailed planning should occur for each stage.
Stage One - Getting Ahead with Forward Deployment
Generally speaking, most high-tech executives know and understand the answers to basic questions that set the high-level parameters for a typical product launch. Executives know where their products are being manufactured, how many products will be manufactured pre-launch and where those products are headed. However, as straightforward as this information seems, many executives do not understand the logistics behind moving products from point-of-origin to destination geographies. The complexities of customs brokerage and determining the most efficient way to move products based on size, weight, volume and cost can cause massive delays for product launches and impact a company's bottom line. Flawlessly executing the initial stage of the product launch plan is vital to the success of the overall launch, as this portion of the supply chain typically has the least amount of flexibility during high-tech product launches.
Stage one, or forward deployment, focuses on the initial pre-launch movement of products to destination geographies via various transportation options. In other words, this stage is all about determining the best strategy for getting your products into the supply chain, from manufacturing to warehousing. Product characteristics, manufacturing timelines and customs brokerage should be the primary focus when planning forward deployment.
Product characteristics and marketing strategy guide the majority of decisions made during the forward deployment stage. For any product, size, weight, value and manufacturing output dictate freight options, timelines and pricing. For example, if a company desires to move one million smartphones valued at $400 each from China to three different countries within a 10-day period, ocean freight is not an option. Additionally, the cost of the product and its packaging, which dictates how many products will fit onto a pallet, can help determine whether or not to use charter flights. This information will help the logistics provider determine the optimal aircraft utilization plan, which often comes down to balancing cost with desired speed-to-market, in order to achieve goals while remaining cost efficient. Lastly, the initial sales forecast and manufacturing output may also limit transportation options if the planning of the launch and launch day events does not occur well in advance of the designated launch period.
Once the plan for freight movement is set, in-country logistics personnel are usually required to ensure the manufacturing timeline is synchronized with aircraft departure times, and deadlines are met. Resources will also need to be dedicated to managing transportation vendors so that there are no issues with getting the products from manufacturing plants to air hubs.
Well before products are on plane (or vessel), high-tech companies should walk through key customs brokerage considerations. There can be unique clearance processes based on both origin and destination, as well as country and trade zone laws, that should be taken into consideration during this planning phase. Other brokerage complexities need to be planned for depending on whether or not the launch plan calls for the utilization of free-trade zones. Occasionally, products can be staged in a destination prior to gaining legal permission to sell the product in a specific country (e.g. U.S. FCC hold), but if companies do not plan to clear legal hurdles well in advance of the launch, delays during customs brokerage can cause the company to miss the desired launch date.
A key consideration a company should ask itself before stage one planning is whether or not they wish to outsource all forward deployment activities to a 3PL provider or coordinate origin and destination service providers themselves. Either option is suitable for most product launches, but companies need robust supply chain capabilities and an experienced staff when handling product launch planning and implementation on their own. Some other high-level key questions to consider are included below as you develop a plan for forward deployment.
"¢ Product characteristics: What are the most important or unique characteristics of your product to consider when planning (high-value, large in size, highly-secretive launch, etc.)?
"¢ Manufacturing timeline: Have you considered manufacturing timelines to ensure they will work with your distribution partners?
"¢ Customs brokerage: What are your key markets for distribution? Have you discussed product-, country- and region-specific customs regulations for both the export and import markets for your high-tech gadget?
Part 2, which is scheduled to appear Feb. 13, will cover the next stages of product launch planning, product processing and product delivery, helping to round out your global product launch considerations for the next high-tech gadget.
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