Today’s marketplace for electronics products is more dynamic, global, and unpredictable than ever. Anticipating customer needs, predicting demand patterns, and, ultimately, ensuring that products are in the right place at the right time are immensely challenging issues for large and small companies alike.
Orchestrating an optimal supply chain or network provides an important competitive advantage within this difficult electronics manufacturing environment. To function well, though, the supply chain or network has to be designed well in the first place. Yet eight key factors often are overlooked in designing effective supply networks.
Many manufacturers think the supply chain begins after a product is designed. In reality, product design is the first step in the supply chain process—and one that can often benefit from the outside expertise of those who will be engaged in later stages of the process. Even when a company views product design as an in-house function, getting inputs from outside partners early on can dramatically facilitate innovation and market impact.
UNDERSTANDING END USE
Multiple intermediaries such as distributors, resellers, and retailers naturally distance manufacturers from their end-use customers. Understanding user preferences, designing products, and anticipating demand are extremely difficult under these circumstances. That’s why gaining access to end-use data is invaluable in optimizing a supply chain. Negotiating access to this information in partner agreements and/or purchasing it from research vendors is often well worth the time and cost.
FINESSING THE FINANCING
The cost of capital is an especially important consideration in today’s difficult economic environment. With bank terms more restricted, manufacturers should look for other, creative ways to finance their operations at the time of designing their supply chains or networks. Partners represent a key source of capital via the financial agreements that can be negotiated with them. For example, extended payment terms and profit-sharing arrangements can reduce upfront capital requirements and enable a business to get to market more cost effectively.
The lifecycle of electronics products is getting shorter, with upgrades and new features rapidly obsolescing older versions. Given this phenomenon, manufacturers might consider future-proofing products as a supply chain strategy. By developing designs and manufacturing specifications that can easily adapt to changing technology, companies may be able to eliminate entire development cycles, greatly enhancing their speed to market.
Businesses typically devote extreme attention to their manufacturing specifications and production requirements. However, they often give far less consideration to “transportationomics.” Detailed transportation contracts should be carefully bid out with the goal of maximizing route efficiency, eliminating unnecessary re-loading expenses, reducing wasted time, and locking-in labor rates and fuel costs. Product designers too can help by accounting for standard transport unit dimensions.
SECURITY & INSURANCE
Lost, damaged, and pilfered goods create enormous supply chain inefficiencies. Often, these problems can be mitigated by specifying inspection procedures at key points, requiring sealed/certified containers for shipping, and deploying en route tracking devices. Beyond these steps, the potential for serious loss should be addressed with property insurance specifically written for international commerce.
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. This makes an end-to-end, robust technology platform that facilitates communication and collaboration an absolute must.
While product customization is a long-revered aspect of electronics manufacturing, “customsization” is an entirely different consideration. Efficiently getting shipments through international customs authorities can be a cumbersome, time-consuming, expensive process. 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.
OVERLOOKED NO MORE
Addressing all these factors will help electronics companies large and small optimize their supply networks, compete more effectively, and get to market faster at a lower cost with innovative products that meet customer needs.