This year, The Consumer Electronics Association (CEA) projects that global consumer electronics revenues will top $285 billion, led by a 101% year over year growth in emerging product categories such as wearable devices, Ultra HD TV and 3D printers.
Just one year earlier, CEA's director of industry analysis, Steve Koenig, said:
These top revenue-driving products, namely LCD flat panel TVs and mobile connected devices, can now be found in millions of households in a remarkably short amount of time. This has resulted in a crowded market, naturally lending itself to slowed revenue growth. Yet we're at an interesting turning point in technology, as these same products are increasingly adopting premium, differentiating features, driving consumer interest and creating opportunities across other categories in the industry.
Consumer electronics innovators and manufacturers have heeded the message by continuing to evolve new products and designs to keep the value proposition of buying “new” fresh in consumers' minds. However, in addition to creating new product value, OEMs must manage profit margins, get products to market quickly, and firmly establish and continuously renew brand presence in mature and emerging markets. It takes a savvy logistics strategy to deliver on all of these other touch points.
Orchestrating a logistics strategy that can compliment your supply chain and please consumers is no slam dunk. Several years ago, many major electronics companies opted to air-ship goods into busy markets for holiday events and new product releases—but as they better understood the ebbs and wanes of these markets and their supply chain performances improved, they also understood that there was a place for slower trans-ocean shipments that were cheaper and improved profit margins. The key was gathering enough intelligence from their supply chains and market forecasts to know which goods they had to expedite to markets and which goods replenishments they could ship on slower routes to keep inventories replenished.
The end result was a move to more intermodal shipping approaches that combined the speed of air transport with the slower but cheaper advantages of ocean transport for “best mix” product infusions into markets around the world.
A second challenge to profit margins is product breakage during transport. For both new and refurbished electronics products, equipment is delicate and susceptible to the hazards of fluctuating environmental conditions and rough handling. “Sensitive electronic components require effective packaging solutions,” wrote Marc Caiola, channel & marketing manager, North America, for Pentair Equipment Protection. “These solutions are not only employed to protect against environmental factors, such as dust, moisture, shock and vibration, and potential structural damages, but also to protect electronics against thermal challenges that can lead to overheating and system failure,” he added.
Caiola recommended that electronics companies ask their logistics providers and distribution warehouses to conform to electronics packaging standards such as those issued by design committees like the PCI Industrial Computer Manufacturers Computer Group (PICMG)and VME International Trade Association (VITA). A third packaging standards organization, called the International Safe Transit Association (ISTA), specifically works on packaging for transportation.
The third logistics challenge is positioning the organization to meet the fulfillment needs in both mature and emerging markets in order to continuously build upon brand presence.
Two keys to providing markets with the goods they desire are architecting a best-in-class distribution and logistics network and navigating successfully through various countries' customs. An inability to craft transportation and distribution networks that get goods to destinations quickly, safely, and at least cost or to get goods through customs expeditiously, can have disastrous impact on revenues, profit margins and bottom lines.
“You would be surprised at how many companies don't even review their logistics networks on an annual basis,” said one logistics provider executive. “If they performed these reviews, they might find that it is actually cheaper and just as fast to store goods in a smaller market location that is not as close to a major population center and transport the goods into market from there.”
Finally, distribution centers and warehouse also often neglect yard management. This increases the risk of theft, or other delays that can result in goods being late to market while they sit in the yard.
In all of these scenarios, a logistics company that offers a visible and collaborative system as well as transportation for shipments, can be a strong partner. When logistics snags emerge, this system visibility enables shippers and logistics companies to collaborate and solve problems sooner—and if the logistics systems and companies have international presence, they will also have electronic documentation flows that expedite the customs process, which makes serving new markets easier.