If there's one thing that throws any well laid manufacturing and supply chain plan into havoc it's the uncertainty surrounding the point at which competing devices deserve increased resources and production capacity. The electronics supply chain is facing such a challenge now in the jostling for consumer attention by manufacturers of e-readers and tablet PCs.
Pew Research Center in June released the results of its Pew Internet & American Life Project report showing a surge in US e-reader ownership. According to the findings, the share of adults who own an e-reader, such as a Kindle or a Nook, doubled to 12 percent in May 2011, up from 6 percent in November 2010.
Despite the market hype, tablet computers, which include the popular Apple iPad, have not seen the same level of growth in recent months, the firm said. Although tablet ownership was growing at a good clip prior to November 2010, by May 2011 only 8 percent of US adults reported having an iPad, Samsung Galaxy, Motorola Xoom, or similar device. This was just 3 percent higher than the November 2010 level, Pew found.
As if deciding which platform to bet on with manufacturing and supply chain resources weren't tough enough, now the industry will also have to weigh the potential outcome of patent infringement lawsuits heating up between Apple and Samsung. Negotiations between the companies are reportedly underway, according to an AllThingsD.com story, and the resolution could cause ripples further down the supply chain, affecting material purchases and production planning. (See: Which Company Does Apple Fear the Most?)
Obviously, device prices will sway end-market behavior and demand as well. In many markets, tablets are still too expensive for potential buyers, with only the die-hard gadget geeks and usual suspects of first-adopter types making purchases. E-readers, though, are approaching a much more buyer-friendly price point and will likely come down even further as the back-to-school and holiday season ramps up, forcing additional manufacturing adjustments in coming quarters.
Likewise, the similarities and differences in multiple form factors and technology shouldn't be ignored either. At some point the distinctions among e-readers, tablets, laptops, netbooks, and phones will blur even more, something Barbara Jorgensen touched on in a recent post. (See: Tablets, PCs & the ‘Aha!’ Moment.) With coming next-generation product launches, accessing email, connecting via Internet or 3G networks, shooting high-definition video, and allowing for various types of converged media playback will be the normal baseline for most consumer devices.
How, then, does a company decide which size touch screen to buy or PCB to use in the redesign? From an EMS and ODM perspective, whatever shakes out in these markets will surely require additional engineering and product development support. On the shop floor and in the supply chain group, this will demand a stepped-up ability to nimbly change production lines and secure supply in increasingly competitive niches.
As already seen with PCs, notebooks, mobile phones, and MP3 players, anticipating the inflection points, creating supply chain transparency, and testing flexible models are things most organizations ought to be thinking about now. And, hopefully, they are.