Research confirms time and again that adaptability is the key differentiator between entities that thrive amid systemic change, transformation and uncertainty and those that don’t.
The technology industry — including electronics manufacturers and supply-chain operators — has had a lot on its plate over the last few years:
- Labor disruptions from a pandemic and waves of resignations
- More credible competition from an expanding global marketplace
- Expansion of consumer protection laws and regulations concerning connected technologies
- The breakneck pace of technological innovation, requiring swift times to market and quick pivots to capture excitement over emerging product types
- Uncertain current and future supplies of raw materials associated with LCD screens, batteries, chips and semiconductors
- Ongoing chip shortages meant $210 billion in losses for the automotive industry. Meanwhile, four-fifths of the chip and semiconductor sector is struggling to ramp up hiring qualified team members.
- The “Great Resignation” — an attempt at rewriting the social contract — has met up with spiraling population growth and the rapidly expanding demand for technology products. The nexus of these influences has caught many manufacturers flat-footed.
There are expectations from the public to continuously innovate and expand product lines, as well as pressures from regulators, supply and demand, global competition, and political or social events. As a result, electronics manufacturers need to be more adaptable and cleverer than ever about change.
The road to adaptability
Bringing fresh thinking to product and services design, logistics techniques and enterprise management will help manufacturers and supply chain companies throughout the tech industry navigate uncertain waters.
Here’s a look at how modern electronics entities are better preparing their processes, products and infrastructure for a changing world.
- Deploy automation technologies
The electronics sector is an ideal fit for automation. Manufacturing professionals are recommending against using traditional ROI models in the decision-making process and thinking instead of the benefits across a longer period.
Automation is a short- and long-term solution for electronics manufacturers concerning labor-supply fluctuations and rising costs. It’s also a way to wring as much utility out of physical assets, like warehouses, as possible. A facility built for automation might have up to 400% more storage capacity than one designed for foot traffic. The prospect of not spending more than strictly necessary on real estate or storage space is an attractive one in these times.
- Rethink just-in-time logistics
Electronics manufacturers and their supply chain partners pushed hard for years to make the entire logistics process leaner and faster. Just-in-time fulfillment was the order of the day, and it saw every entity in the supply chain keeping raw-material, component and finished-product inventories as slim as possible to eliminate waste.
The pressures of the last few years are bringing a departure from just-in-time logistics in favor of something more accurately termed “just-in-case” logistics. Stocking excess parts and inventory won’t solve manufacturing’s ongoing challenges, but it can help shield companies from some of the volatilities of the outside world. So will finding more reliable vendors with track records for timely deliveries and stock availability.
- Prioritize orders and buy in bulk
Electronics manufacturing service companies that want to stand a chance of keeping supplies of critical products stable should work with customers to revisit their ordering habits and schedules.
Manufacturers should request that people flag only the orders they truly need as priorities and place larger orders less frequently. These measures create more realistic expectations and consistent results for all involved and a more efficient fulfillment experience throughout the sector.
- Turn to lower-tech models
For several years, consumers have pushed for more complex, sophisticated, digitally connected, feature-heavy products. Now, with raw-material and supply-chain situations being what they are, manufacturers and consumers of electronics are contemplating a return to more basic, lower-tech models.
Consumer technology operates in cycles. The general concept can be a matter of practicality as well as taste. Having fewer embedded circuits in the family van and eschewing internet connectivity in the coffee maker will conserve resources and manufacturing capacity without significantly compromising the customer experience.
- Revise payment windows
Clinging to outdated or insufficient payment terms may be holding manufacturers back from being as adaptable as they want to be.
It used to be the industry norm to employ 90-day payment windows. However, with current challenges and companies needing a high velocity of money to keep their doors open, locking in shorter payment windows can remove some pressure. This grants electronics entities greater liquidity, flexibility and adaptability.
- Reshore as much as possible
The largest manufacturers in electronics, including Samsung and Intel, are committing billions of dollars to reshore semiconductor plants and other facilities to domestic soil. The timing makes it an undeniable reaction to trade wars and global pandemics. However, smaller companies specializing in chips, circuits and semiconductors have been moving back stateside for some time, and many never left.
Domestic sourcing gives clients of electronics manufacturing services considerably more agility than they’d have while sourcing parts from overseas. Eliminating expenses during shipping — not the least of which are lost time from transit and lost money from tariffs — is a welcome opportunity.
Meanwhile, the cost of freight is rising steadily. Addressing these variables through reshoring allows manufacturers to operate leaner, quicker and with the ability to adapt to emerging conditions.
Find the opportunities to become more adaptable
There are many other opportunities for electronics manufacturers to change how they operate in the name of adaptability. This determines success in the dynamic and challenging tech space. New partnerships, modes of thinking and supportive technologies can make the difference.