The Mobile Supply Chain: Not Just About the Chip Guys

The mobile industry moves fast, and its supply chain needs to move equally fast.

As Mattias Lewrén, global managing director, Electronics and High Tech, Accenture, aptly points out in his recent EBN blog:

Chips for mobile devices require a much faster turnaround time, sometimes in less than six months, to keep pace with the number and types now flooding the market. It's becoming more difficult for chip makers to determine future pricing levels and overall volume demand for mobile devices.

Lewrén emphasizes how important it is for the semiconductor companies to keep pace with this change and take steps to improve their supply chain positions to meet OEM demand in this space. He teases up the burden component makers face:

Can chip companies keep pace with the production of next-generation mobile devices? If they make changes to their supply chain, the answer is yes, but if they don't, it's not likely.

I don't disagree that semiconductor companies need to rethink their strategies for serving the mobile industry. The mobile industry has different needs than its predecessors in the PC space or in other hardware verticals. And the suggestions made by Lewrén and in Accenture's report, “Semiconductor Supply Chains: An Urgent Need for Change,” are valid and offer good starting points to better address mobile-specific supply chain challenges.

Consumers have adapted habits and lives quickly in  the mobile age; it's time for OEMs to do the same.

Consumers have adapted habits and lives quickly in
the mobile age; it's time for OEMs to do the same.

Complex equation
However, supply chains are never just about improving one link in the chain. Real supply chain improvements come from addressing the entire end-to-end process from part and board design up to when a consumer buys and recycle a device.

Arguably, suppliers can't fix the mobile supply chain by themselves. OEMs in the mobile space have to take their share of responsibility, too. Will they be willing to send partners better information about end-consumer behavior and forecast data, find new ways to collaborate with suppliers, and (dare I say this) share some of the financial burden it takes to make the supply chain run more effectively?

All too often we see OEM demand the impossible from their suppliers — as, in this case, “Go figure out how to design a chip we'll need for a mobile device we want to launch in six months, and make sure you have it in stock when we need it, but we can't really tell you a lot about when we'll need it or how many we might need.”

But how often do we hear about OEMs stepping up and saying we'll help create best-practices hand-in-hand with the supplier? Or, Dear Supplier, here's all the customer data we have and our point-of-sale trend information that may be helpful with next-generation chip design and manufacturing plans and inventory-holding strategies. And, yes, while we — your great OEM customer — expect fair pricing, we won't wring your necks if you don't offer the lowest price on the market; we believe in total landed cost strategy and won't keep low-balling you.

Right, we don't often hear these stories happening as much as we'd like to think they should be in “enlightened” supply chain day and age — regardless of which vertical market we look at.

Challenges ahead
So, if Accenture's other report, “The 2013 Accenture Consumer Electronics Products and Services Usage Report,” is true, and consumers are focusing buying on fewer, multiple-function devices and that they are not locked into any single platform nor have loyalty to a specific operating system, then OEMs will have a lot of supply chain challenges before them as well.

What tips can we give OEMs to improve the mobile industry's supply chain?

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2 comments on “The Mobile Supply Chain: Not Just About the Chip Guys

  1. SP
    April 11, 2013

    sharing the customer data with the suppliers may not be that simple and straight forward although it will defintiely help the supply chain business.

    April 12, 2013

    One thing that would help suppliers is for the OEMs to be a bit more forthcoming with their roadmaps.  I understand why they don't but it might avoid them saying we need samples of this whizbang new chip in 2 months when the semicon cycle times are way longer than this.

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