Ken - Nice reconnecting with you. It's been a long time. I think you're onto to something with supply chain design and supply base design. It does feel like the existing sc models many companies use have exhausted their usefulness. Revamping it, though, is probably too scary for most people, and for better or worse, what's in place is the evil they know. But, I agree. Some incremental steps better aligning supplier choices with better-defined expected outcomes makes sense.
eemom - Right: "Loyalty, differentiation and added value will all play a role in how ODMs and supply chain manufacturers team up."
But what feeds this loop? Competitive pricing, high quality, and supplier reliability may eventually open the door for discussions about value-added services and differentiation options if a supplier os considered a potentially long-long strategic partner. What if you're not in the running to be a longer-term partner, you're the commodity guy filling a short-term hole, where does loyalty play there? It probably doesn't, really, and price becomes thething by which most in this category are judged.
I also agree with previous posts. While companies have always worked on reducing their costs, the economic downturn has made this step more imperative. I do agree that strategic relationships will be crucial to ensure lower costs and enable competitive pricing. Strategic relationships to me though, mean more than just providing lower pricing. Supply chain manufacturers will have to work with ODMs to add value and figure out how they can reduce their pricing without themselves taking a hit on profit. Just shopping price will not work long term especially when ODMs start to demand more and more out of their supply chain. Loyalty, differentiation and added value will all play a role in how ODMs and supply chain manufacturers team up and align to address this issue.
Jennifer, I like this article a lot. I really resonate with your comments on the lack of novelty in most supply chain approaches.Like you, I seem to hear the same old pap regurgitated with very little innovation.
I think there is hope in the area of supply chain design where supply chains are designed to a specification of expected outcomes and each step in the chain is understood in terms of its value contribution to the end goal. Supply base design, a subset of supply chain design, examines supplier choices in the context of the end objective.
The supply chain needs to create differentiating value for a company and “forging stronger relationships and engaging in collaborative innovation with suppliers” only makes sense with a limited few suppliers that can help with differentiation. Most of the rest are commodity suppliers whose main contribution to value creation is through price.
That's right Jennifer, you gave light to one of the crucial issues in terms of how to manage infos flood coming from all over. Some experiments related to virtual presence to treat "bits flow" in addition to ourserlf have been done. Of course it takes a few years as stable feature to introduce within the supply chain process.
@Jay_Bond: You raise equally valuable points about everyone trying to balance the "to-hold-or-not-to-hold" inventory equation. And, you're right in saying that we're still in this phase of "everybody has to justify the path they choose." But, shouldn't we be out of the justifying phase by now, with all this collective experience we have? Shouldn't something more definitive than circumstancial justification bubbled up to the surface yet?
@barbara - I think if can move out the "justifying" phase Jay alludes to, we'll finally get to this next revolution, or evolution, at the very least.
@mfbertozzi - Agreed. mobile telecommunications has already tipped many supply chain innovations. The problem is how to avoid being roadkill on the information superhighway when 5,000 things are zipping around all of us at 100 mph.
Maybe Ken Bradely post's The Art of Pricing raises a valid point also relevant here in regards to pricing vs keeping suppliers game to play:"Let's consider three things a company can do to create leverage with a supplier: 1) Agree to favorable payment days; 2) Link new design win awards to price considerations on production materials; and 3) Sell your company’s success path to the supplier."
I am in line with previous posts; Jenn is reporting a very fascinating scenario. Till now industries tried to save cost especially on production leaving off supply chain as process in reality included in.
@ Jenn/Barbara: not to say following is THE solution, anyway some steps ahead in improving supply, reducing costs and holding/increasing consumers' satisfaction have been done introducing mobile telecommunications in the process.
I'm with you, Jenn, these results aren't exactly mind-blowing. I'm wondering if perhaps the supply chain has reached a plateau--there were so many big changes post-2001 that we're awaiting the next revolution. That's not to say there is not a lot of innovation going on, but when was cost and flexibility NOT an issue in the industry?!?
Personally I don't think there is a simple answer to solve this issue. This is something that has been plaguing companies for a long time. It is very hard to justify keeping inventory in preparation for sales when it is money that is tied up and not moving unless the sales are there. On the other side it is very hard to not keep the inventory in place to meet demands of customers and have a quick turnaround. In a perfect world planning out your budget and future sales wouldn't be a gamble. Unfortunately, this isn't a perfect world and everybody has to justify the path they choose. This is a valid issue that should have played a factor long before the latest financial crisis.
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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