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.