Is Your Supply Chain Ready to Compete?

The question is worth repeating: Matched against the competition, is your supply chain ready to compete? Your greatest innovation and latest products may be groundbreaking, and nothing that rivals have in the pipeline may come close to matching what you are ready to unveil. But without a world-class supply chain that is supple, cost-efficient, highly reliable, globally competitive, and supported by similarly motivated partners, the dreams of a profitable, marketshare-winning product will remain just that -- a dream.

Best-in-class manufacturers no longer match products against products or even innovation engines against a rival's R&D operation. Staying ahead of the competition requires much sharper tools, all of which can be found grouped together under the "supply chain" umbrella. In the high-tech industry in particular, winners and losers are increasingly being determined by the efficiency of a company's supply chain and the investments it is willing to make to retain an edge.

OEMs once were the only ones concerned with bringing a flexible supply chain to market. Nowadays all segments of the high-tech sector try to fashion supply chain systems with the distinct characteristics needed to win. In recent interviews across the electronics landscape, component suppliers, distributors, OEMs, contract manufacturers, and even independent design firms have confirmed that internal supply chain organizations have been elevated to apex status as the secret sauce for companies like Apple Inc. (Nasdaq: AAPL) has become clear.

Your focus on supply chain excellence is one of the ways you "demonstrate to the customer that you are committed to serving them," Otto Kosgalwies, executive vice president of company infrastructures and services at STMicroelectronics NV (NYSE: STM), told us recently.

For instance, we never compromise on quality, even though we know problems caused by natural disasters will arise. If you have a problem, and you manage it well, you deepen the relationship with the customer. But you can only deal with the problem if you are prepared and your supply chain is primed for disaster management.

Natural disasters are viewed as extreme risks in the electronics industry, but they happen nonetheless with devastating consequences, as demonstrated by last year's earthquake and tsunami in Japan and the flooding in Thailand that savaged the hard disk drive market. The more frequent challenges nowadays are also quite mundane, though they can be as devastating to the enterprise as a hurricane. Companies that understand these challenges are implementing measures that make their supply chains immune to the risks or at least better prepared to manage unexpected problems. They are also building responsive systems with everything a best-in-class enterprise would require in its support operation.

What characteristics make one company's supply chain more competitive than a rival's? Partly in an attempt to answer questions like these, EBN and Avnet Inc. (NYSE: AVT) have partnered to launch the Velocity channel on this site and devote more attention to supply chain issues as they impact the high-tech industry. Avnet, one of the globe's biggest components distributors and systems integrators, has been at the forefront of helping companies understand the crucial role of a vibrant supply chain system. It offers numerous supply chain support services, some of which we will detail in future reports.

For now, however, I would like to return to the subject of what makes a supply chain competitive. A review of recent industry reports confirmed the elements that executives, experts, purchasing and manufacturing professionals, and many in academia believe can help a company distinguish itself in the marketplace. We distilled these elements into a list of factors that EBN editors, contributors, and industry executives will be discussing on this site over the next month.

• Agility/adaptability/flexibility/responsiveness
• Effective risk management/mitigation
• Competency and speed
• Continual improvement/lean/TQM
• Sustainability
• Consistency
• Strategic fit
• Inventory optimization
• Stakeholder collaboration
• Global/strategic footprint
• Forward and reverse logistics
• Security
• Innovation
• Simplicity

Let us know what you think of the list. You can suggest new factors by commenting on these pages. We would like to hear from you.