Obsolescence Insurance, a New High-Margin Business for EMS Companies
by 
Tive head of marketing, Dagny Dukach
Electronics manufacturers lose billions of dollars every year due to late and damaged shipments. But with new IoT technologies, these companies are gaining real-time visibility into the location and condition of their in-transit goods, enabling them to identify and eliminate the root cause of issues and adopt a data-driven mindset to the optimization of the supply chain. These IoT tools and data-driven optimization strategies are enabling electronics manufacturers to reduce waste, increase efficiency, and improve visibility across the supply chain.
Visibility, efficiency, waste reduction -- this all sounds great, but what does it actually mean in the context of an electronics supply chain? At a high level, the IoT-powered supply chain entails multi-sensor trackers on every shipment that are constantly connected to the cellular network, plus a cloud-based software platform to access and analyze the data coming from those trackers. This sort of IoT system can dramatically improve supply chain operations on several different levels.
Real-Time Alerting
First, an IoT-powered supply chain enables real-time alerting as soon as certain conditions are met. For example, many electronics products are very sensitive to being dropped, tilted, or otherwise mishandled while in transit. IoT shock sensors attached to electronics shipments can trigger an immediate notification as soon as set shock, tilt, or other thresholds are exceeded. So, if a fragile TV monitor is dropped on the loading dock, or bounces on a bumpy road, the IoT system can send the supply chain manager a text message or email right away, giving them time to respond and fix the problem.
Other products, such as server racks and hard drives, are particularly sensitive to environmental conditions and can corrode if exposed to excessive humidity levels or high temperatures. For products like these, manufacturers can use the same multi-sensor trackers to monitor the temperature and humidity of their shipments. With real-time alerting, the manager can get a heads up as soon as a shipment experiences potentially harmful conditions.
Similarly, if a location sensor indicates that a shipment will arrive late (or early), the manager can use that advanced warning to reschedule installation and assembly crews, alert customers of a potential delay, or make other arrangements. Instead of finding out about a problem too late to do anything about it, real-time location and condition data makes it possible to identify and mitigate problems as soon as they occur.
Analysis and Optimization
In addition to the operational benefits of real-time alerting, an IoT solution also makes it possible to incorporate data-driven analysis and optimization across the entire supply chain on a macro level. For example, if tracker data from a whole set of shipments indicates that goods travelling on a particular route experience significantly higher damage rates, the manufacturer can work with their carriers to find an alternate route and avoid the issue in the future. Or if location data shows that shipments from certain suppliers consistently arrive early or late, the manufacturer can update labor schedules to reflect a more accurate schedule.
Furthermore, access to IoT data makes it possible to adapt Lean and Six Sigma methodologies to the supply chain, enabling new levels of waste reduction and quality control. With comprehensive datasets regarding exactly when and where problems tend to occur, it becomes possible to pinpoint problem areas for optimization and distinguish noise from statistically significant issues.
On the Lean front, comprehensive data enables managers to reduce safety stock levels without sacrificing reasonable risk tolerances. If managers can be confident that delays will be identified with enough time to make alternate arrangements, they no longer need to rely on excess safety stock to avoid outages. And when it comes to Six Sigma strategies for quality control, access to data is similarly vital. After all, the first step towards quality control is quality awareness. If the manager knows exactly how often and in what circumstances delays and damages are occurring, they can use that data to develop intelligent processes to reduce and eliminate problems from end to end.
A New Level of Visibility
Ultimately, the IoT-powered supply chain is all about visibility. IoT tracking and data analysis tools are now shedding light on the dark corners of the complex electronics supply chain, giving managers the information they need, when they need it. With insight into the real-time location and condition of their in-transit goods, it has become possible for electronics manufacturers to prevent problems before they occur and take a comprehensive, data-driven approach to the optimization of the supply chain.
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