The electronics industry manufacturing supply chain is a technology marvel. As you read this, millions of electronic devices of varying functionalities, end-markets, shapes and sizes are being assembled, packaged and shipped to enterprise customers and consumers worldwide. The process is almost flawless. Most of these equipment will work perfectly well. A few devices don’t work quite as expected and some won’t arrive on schedule but there’s even a process in place – after-sales support service – to address such snafus.
From OEM product conception, design and supplier technology innovation to component sourcing, regulatory compliance, production, shipping, warranty fulfillment and end-of-life disposal/management, it would seem the super-effective folks who manage the electronics supply chain have thought of it all.
A toast would seem to be in order. Except this is an industry that cannot afford a celebratory break; too many things can go awfully wrong during that brief pause. A volcanic eruption can throw up ash plumes that would frustrate the best logistics plans and derail carefully calibrated delivery schedules, putting a company’s end-of-year/holiday sales in jeopardy. Other natural disasters ranging from earthquakes to flooding have in the past savaged enterprise objectives. Management blunders and other manmade problems, such as inaccurate demand and supply forecasting, create other challenges to which the industry must respond swiftly.
Failure to monitor latest innovations, implement an optimal (pricing and timely delivery) component sourcing strategy, create a cost-efficient and flexible production system with built-in redundancies or stay abreast of regulatory changes could hobble an enterprise’s revenue and profit growth plans.
There’s a perfectly justifiable reason why the best managers in the electronics industry obsessively ignore past performance – good or bad – and instead closely monitor current performance while developing strategies for the future. The past, unfortunately, does not always offer a good basis for determining future performance. In order to keep winning in this market, you’ve got to assume what your company does efficiently daily, consistently and with little or no fanfare, represents only a foundation for continued development and improvement. The business that stays still or that doesn’t move in the right direction will either get overtaken or mowed down.
What’s even more important is that the activities that can make an enterprise a consistent winner are no longer exclusively within the four walls of the organization. The reign of the super OEMs over the electronics supply chain ended more than a decade ago. Today, there are very few, if any, OEMs with the resources or desire to go it all alone. Take the example of Apple Inc. and Samsung Electronics Inc. As acrimonious as their relationship has been in recent years, the two companies are still partners in certain areas: Apple sources components from Samsung and the Korean company is happy to fill its fabs with orders from its American rival.
A supply chain is only as good as its various constituents. None of us should forget this. The electronics industry works as well as it does today because all of the parts fit together, fine-tuning itself without calling a break/timeout and somehow doing this while anticipating what the customer needs even before the buyer is even aware of such a need.
I stress this point because in recent years some firms have begun focusing on certain key players and functionalities at the expense of others. Component suppliers, for example, act as if the electronics market is dominated by design engineers. They avidly court this group to win OEM design sockets and have pulled distributors into this circle. That world does not exist, however. Rather, what we have is a marketplace – a network – comprised of design engineers, components engineers, software engineers, other technical experts, finance specialists, administrators, logistics, manufacturing, sales and marketing, procurement and purchasing as well as senior managers who have risen through the ranks from these operational divisions. Winning requires coordinating all these activities effectively.
Here, again, is a list of the things customers expect:
- Innovate: Conceive and develop new products; improve on existing devices; make them smaller, better and faster and; do all these every six months.
- Manufacture Perfection: Assemble all necessary components; produce the finished equipment; test to ensure they work as well as conceived; seek ways to do it cheaper, faster and better than in the prior 12 months.
- Deliver and Support on Schedule: Get the products to the customer at the right time, at the right price and at the right place. Provide pre- and post-sales support, again, at the right time, at the right price and at the right place.
- Stay Compliant: Stay on top of and comply with all regulatory requirements. Failure to do so could result in expensive litigations and loss of goodwill.
Take a bow if you have figured out how to build an efficient design and supply chain that effectively coordinates the activities of all your suppliers, partners and customers. Don’t waste more than a few seconds on the back slapping, though; someone else wants that bragging right.
A version of this article appeared in the September/October issue of Electronics Sourcing North America.
Bolaji Ojo is editor-in-chief and publisher of Electronics Purchasing Strategies. The views expressed in this blog are those of the author alone who promises to base his sometimes biased, possibly ignorant, occasionally irrelevant but absolutely stimulating thoughts on the subjective interpretation of verifiable facts alone. Any comments should be sent to the author at email@example.com.