You would expect to see government regulations, counterfeit parts, and shortened device lifecycles dominate a list of concerns that worry supply chain professionals. What's less likely to turn up on the same report are consumer safety issues and product recalls. However, a new study from independent distributor Smith & Associates shows these issues are on the top the list of priorities for many folks in the industry, too.
Asked to rank the top challenges confronted in regular supply chain forecasting and planning activities, 185 participants representing OEM, EMS, ODM, and distribution companies ranked consumer safety issues as a high-level concern, according to the survey.
Overall, those who participated in the Smith & Associates’ study indicated that the “issues of greatest concern, or of potential negative impact to respondents’ business,” were:
- Component or device recalls
- Consumer safety issues
- Government regulations/legislation
- Counterfeit parts
- Reverse logistics
- Competitive/shortened device cycles
(See the Smith & Associates infographic below for more details or click this link for the graphic.)
Supply chain planning and forecasting concerns — including economic swings, demand fluctuation, supplier consolidation, margin pressures, and inventory management — vary slightly, depending on where a participant sits in the supply chain.
In general, consumer safety and recalls ranked as the two most important issues across all sectors. However, the report showed some variations on these themes. For example, consumer safety issues came in as the highest priority for ODMs, while distributors noted it was among their top three concerns.
Counterfeiting, which has been making headlines lately as more strict US government mandates attempt to address the issues, fell into the nervous-making category, just behind government regulation, the study noted. Neither of these issues is particularly surprising to see on the list. Recent legislation aimed at preventing — or at least reducing — the number of counterfeit or suspect parts entering the supply chain requires companies to report, track, and trace parts, which puts immediate and direct pressure on the bottom line.
It's natural that these two worries are cited in almost the same breath by those who participated in the study.
Likewise, I can see the price-benefit trade-off correlation with component or device recalls. Dealing with recalled items demands flexible supply chain practices. It also comes with a higher cost of ensuring that products are accounted for throughout a global supply chain, and that these are rapidly and properly handled. And, of course, e-waste, short lifecycles, and reverse logistics are things the electronics industry has been dealing with for years, more or less, but they still cause some stress and concern among businesses.
What I'm curious about, and what the study doesn't fully answer, is why consumer safety has come up as the most important issue this time around?
Is it tied to the anti-counterfeiting measures, where legislation has emphasized the “mission critical” nature of parts and systems used in airplanes and defense systems? Is it there some concern that there could be failures in the heaps of electronics devices being used and embedded in mobile platforms, healthcare equipment, or automobiles? Or is the reason that supply chain professionals — while they are being forced to find and deliver lower costs — have a heart and are concerned that the price-safety line is being crossed?
I would love to hear what you think is shifting this scale. Let me know in the comments section below.