If much of your time is spent addressing supply chain problems, a transition to supply chain product lifecycle segmentation will alleviate the pain. Based on our experience, you should expect to reap some combination of the following benefits:
Revenue improvement
of up to 4 percent of annual sales by focusing high availability where it's most valuable to your organization and customers.
Stock writeoff or discount reductions
of as much as 50 percent of current levels by exercising a clearer understanding of where inventory distress is likely to occur and applying expertise and tools accordingly.
Reductions in logistics expediting costs
of between 25 and 50 percent, facilitated by a move from unplanned rush shipments (a.k.a. firefighting) toward planned rush shipments (a.k.a. targeted stock positioning and redistribution).
Reduced complexity
in systems by automating where appropriate and applying analytics and planning expertise where they will provide the best result.
Improvement in supply chain talent
retention and recruitment due to the reduction in stressful firefighting and the refocusing on more interesting analytics and collaboration.
Globally, the combined annual revenue of the top 10 high-tech organizations is approximately half a trillion dollars. But this scale has created huge and hugely complex supply chains that often teeter on the edge of being out of control. By dividing the supply chain into manageable chunks, segmentation can reduce complexity and customization dramatically while delivering sizeable business benefits. But all segmentation is not created equal. Product lifecycle segmentation directly addresses high tech's greatest pain points. (See: The Cure for Chronic Inventory Distress .)
Supply chains should be subservient to product, but supply chain management has become a serious distraction in the high-tech industry. Lifecycle segmentation is an opportunity to reduce that distraction and free up time for your organization to do what it does best: Get bigger on big ideas.
Yes that is certainly the case. Segmentation will provide a view as to the relative cost and value of supporting each product segment through end of life. That gives the organization enough information to support an improvement in decision making. In many ways, its a move from unplanned to planned costs of carrying and eventual disposal.
Chris, I know you were talking about life cycle segmentation but is it possible this strategy could also be applied to product segmentation? By this, I mean, will it work for a company to decide early on what products it would support as it reaches end-of-life? Your description of life cycle segmentation tells me this is a possibility.
It is indeed surprising that an approach as compelling as segmentation hasn't already been more widely adopted. Much of this may be due to the organizations looking for the application that has the perfect fit accross the supply chain.
I think segmentation is appropriate for most industry sectors. The key difference should be in the choice of parameters from which to segment. The parameters should align closely with major costs and value drivers within the sector
The segmentation approach makes a great deal of sense, and based on the inventment tied up in inventory and manufacturing, is bound to save a lot of operating capital.
From a quick glance it seems that your idea of breaking the supply chain into smaller parts could save large sums of money. It is hard to believe that more companies have not looked at adopting this sort of system when so much money could be saved. I'm sure there are many companies who are aware of potential savings, but need some consultation on what areas to best focus on and where they will receive the most savings.
I have appreciated present editorial, it follows the previous one on segmentation process. I agree the principle proposed that it allows me to outline a question I would like to share: could we assume segmentation is valid in general or it depends on market addressed by producer? For istance, focusing on shipment, it is very different operations for addressing consumer market instead of big enterprises or 1st distributors layer.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Archived Dialogues
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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