Survey Identifies Change Drivers in High-Tech Supply Chain

The economy is still a drag on businesses today, but there seems to be hope for the future of high-tech exports from the United States, with growth pegged to rising demand from emerging markets.

In its annual survey focused specifically on exporting — “Change in the (Supply) Chain” — logistics company UPS, working with IDC Manufacturing Insights, found a “sizable increase” in optimism around the 2014 US export goal projected in the National Export Initiative. Of the 125 US-based high-tech executives polled, 85 percent believe the export goal is ultimately attainable, and 21 percent believe it is “very likely” to be achieved.

The study also found that “among executives who expressed optimism in the long term growth of exports, nearly one in three attribute this to the steady increase in disposable income in emerging markets.” More importantly, though, the survey respondents also picked key factors they believe will drive change in the high-tech supply chain over the next three to five years. These include costs, lead times, and responsiveness.

And, interestingly, 81 percent of them also anticipate that recent free trade agreements in Asia will increase their companies' imports and exports to and from the region. What's noteworthy, too, is an expected shift in the end-consumer market. According to UPS, while North America will remain the largest high-tech consumer market in the next three to five years, demand for high-tech products is expected to decrease by 7 percent in the region.

The flip side of this is worth some thought as well: Demand in other non-North American markets is expected to increase, potentially in some places by double-digit percentages. India, the Middle East, Africa, Brazil, and other South American countries, for instance, are the sweet-spot growth areas for sales and fulfillment, with Eastern Europe, South Korea, China, and other Asian nations also ranking on the list of top high-tech consumer demand markets, UPS said.

“The anticipated shift in consumer market demand for high-tech goods brings opportunities and challenges for high-tech companies,” said Ken Rankin, high-tech marketing director at UPS, in a statement:

    Global demand will continue to grow in new and existing markets, causing supply chain executives to shift not only their fulfillment operations but also their sourcing strategies to serve those markets. We have already begun to see such a shift as companies look to India and Brazil as key markets not only for fulfillment but for production as well.

Of course, this will have supply chain implications. As noted, survey participants cited supply chain costs, lead times, and responsiveness as the top three drivers of change in the high-tech supply chain in the next three to five years. Additionally, there will be greater need to effectively manage inventory, increase end-to-end visibility, identify unstable suppliers, and protect intellectual property, the company said.

So, while it's good news that US high-tech companies are confident that demand will drive products into new markets, the dilemma — now and always — is how they will align their supply chain practices to match the export growth they are hope will materialize.

4 comments on “Survey Identifies Change Drivers in High-Tech Supply Chain

  1. _hm
    October 20, 2012

    This is indeed very encouraging news. I wish it creates many more hitech jobs and brings manufacturing back to America.


  2. Ariella
    October 22, 2012


    We have already begun to see such a shift as companies look to India and Brazil as key markets not only for fulfillment but for production as well.

    does the quote signify that the actual production would be taking place in India and Brazil rather than in the US? Or would it mean that they will be playing a role in the supply chain for manufacturing in the US? 

    October 22, 2012

    I suppose once China has more disposable income it will only be the design that is done in the USA as production and order fulfilment will be done “locally” in China.  The tax and accounting implications of this will become quite interesting too.

  4. Barbara Jorgensen
    October 22, 2012

    I'll admit I have mixed feelings about this research: what does the US make anymore that can be exported? The less cynical side of me says “way to go!”

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