Innovation doesn't sleep. Product lifecycles aren't what they used to be. Competition is fiercer – and comes from more unexpected sources – than ever.
Indeed, the work is never done in the electronics industry. And every time an industry leader introduces a new product or capability, it's up to the supply chain to make sure those innovations reach the market quickly, efficiently, and at a price that will keep both customers and shareholders happy.
As electronics manufacturers look ahead to 2016 and beyond, some of the biggest themes shaping the future of their supply chains will arise from the challenges they face today: Globalization, network optimization, and the Internet of Things. Within each of these areas, there's great opportunity to become more responsive, agile, and better equipped to meet constantly shifting demand in markets around the world.
Global supply chain evolution
One of the biggest challenges for electronics manufacturers has been to balance the cost pressures associated with short product lifecycles with the high level of service customers demand. Selling to both enterprise and individual consumers adds an extra layer of complexity on top of that. Understanding the true cost to serve a particular market or customer segment is critical.
When a company like HP or Lenovo launches a new consumer product, the pressure is on to get that product to the market quickly enough to capture the most margin possible before the technology moves on and customers begin clamoring for the next big thing. That's causing manufacturers to begin thinking differently about how they produce new products and how they deliver them to customers around the world.
Globalization is causing manufacturers to become smarter about supply chain segmentation and developing mixed mode transportation strategies that can help ensure the right products make it to the right markets in a way that protects margins while meeting the right service levels for a given set of customers. For instance, Lenovo might use air freight to move enterprise servers to an enterprise client but ship its latest Chromebook to retailers via ocean carrier. Although air is more expensive, it helps maintain a service level that a more profitable enterprise customer expects. Meanwhile, Lenovo is able to save money on the more commoditized products being sold at retailer, although that comes with the longer lead times associated with ocean shipping.
Although specific situations may vary, this shift in global transportation management is causing manufacturers to look for more data on carrier capacity, inventory levels, and consumer habits. It's forcing electronics manufacturers themselves to bring more technology into the supply chain.
The network effect
High tech in general has always been an early innovator in manufacturing, whether it's been the move to outsourcing or the development of deeper specialization. Now the established electronics makers are being challenged by fast upstarts and new product entries made by younger companies that aren't burdened by legacy processes or complex supply chains. These new competitors can move can move faster and have more agility in some cases because they have more control over their network. The effect has been that some of the largest electronics companies have been challenged to become more like their newer, nimbler peers. This will effectively push electronics manufacturers to develop greater end-to-end orchestration throughout the supply chain.
The shift will be for electronics manufacturers to optimize their entire supply network beyond the four walls of their own enterprise. It's especially important as more production takes place at contract manufacturers, and more finished products are shipped to more markets around the world. Greater agility requires end-to-end orchestration, rapid time to market, and responsiveness versus cost.
More data, smarter products
The Internet of Things was a hot topic throughout 2015, and that buzz will hang around this year too. The big difference is in the number of products that will become available.
The IoT will not only shift the way devices are made, but also the way hardware is consumed. For instance, there is a great deal of demand for cloud services. Now instead of putting a hard drive on every individual device, hard drives being consumed mostly into data centers. The Internet of Things will also cause the service layer to continue evolving. It's shifting the source of demand and how consumers leverage their devices. No longer will manufacturers be able to think about new products as something that stand alone. Rather, you have to think about the services and content around it. The more technology becomes about data, and the less emphasis on the devices themselves, the more the whole supply chain strategy will need to change.
Now, take a look in your own crystal ball. What big shifts do you foresee in the coming year? Let us know in the comments section below.