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What Engineers Must Know About the Supply Chain, Part 1

Accenture and others have reported that company stock prices can drop anywhere from 7.5 to 12 percent following severe supply chain disruptions.

PriceWaterhouseCoopers estimates this drop at 9 percent and says that, for two-thirds of those companies, stock performance will still lag competitors a year after the disruption.

If this is the case, why do we let electronics designers (experts in volts, amps, and nanometers) have such a strong influence on supply chain design (cost, agility, and risk)? Their architectural and technology platform decisions certainly impact the security of supplies, and they play a major role in setting lifecycle costs.

For many years, companies have tried to bring operations and technology together (with varying degrees of success) by placing supply chain people on development teams. But the fact remains that, the majority of the time, designers select the manufacturers and vendors that make it into their supply chain.

Command and Control

Design engineers are making the big decisions, often leaving supply  chain professionals rearranging the deck chairs on the Titanic.

Design engineers are making the big decisions, often leaving supply
chain professionals rearranging the deck chairs on the Titanic.

The problem with designers
The designers are making the big decisions, often leaving supply chain professionals rearranging the deck chairs on the Titanic. Perhaps this is an overstatement, but it contains more than a grain of truth.

I believe that there is great potential in driving change through education. Supply chain professionals could benefit from a better understanding of accounting and technology; designers could benefit from better insights into the supply chain.

To this end, I have started writing a whitepaper for designers on supply chain basics, and I will be giving a talk on the subject at Design West in San Jose, Calif., next month. In preparation, I have been giving thought to what designers need to know about the supply chain to help them make better overall decisions.

I will outline six of my thoughts in part 2 of this series this week, but first I want to share some impressions I have about electronic product designers. They are smart, well-intentioned people who fall into three categories:

  • Solid citizens (70 percent)
  • True geeks (20 percent)
  • Ambitious, high-potential leaders whose career plans include running companies or at least holding positions of significant influence (10 percent)

All three types are important and necessary, but the true geeks and high-potential leaders are the ones making the supply chain decisions. They are the ones we need to influence. Designers are focused, energetic, inquisitive people, so they are open to acquiring knowledge — particularly if we can make it interesting and relevant.

Proper supply chain design can affect time to market, stock price, and the optimization of cost through benchmarked negotiations — 10 percent or more, as I see through Freebenchmarking.com's Component Cost Estimator (registration required). That should be enough to capture the designers' imagination. Careers can be made on such gains.

In part 2 of this series, I'll describe the six things I want top designers to know about supply chain design.

9 comments on “What Engineers Must Know About the Supply Chain, Part 1

  1. Eldredge
    March 18, 2013

    @Ken – I hadn't considered your point previously, but it is a valid one. It would be a tremendous benefit if designers understood how their component choices impact the ability to acquire hte needed components and deliver the end product.

  2. t.alex
    March 19, 2013

    I think this article raises a valid point too. Perhaps supply chain professionals should participate in the design process too so they can provide instant feedback to the designers. 

     

  3. Taimoor Zubar
    March 19, 2013

    Very interesting post, Ken. Having worked as an engineer myself, I do agree that design engineers do not factor in the supply chain aspect of the components while preparing their designs. However, they do not have a holistic view of the supply chain so they can't really be blamed. I think what you need to have is procurement experts in your design team who should a) possess a deep understanding of components and know about the substitutes of each, b) a thorough understanding of the firm's supply chain so they know which component takes how long to procure and what are the associated costs. These experts can form a liaison between the design team and the procurement team so that the supply chain fluctuations can be kept to a bare minimum.

  4. Taimoor Zubar
    March 19, 2013

    It would be a tremendous benefit if designers understood how their component choices impact the ability to acquire the needed components and deliver the end product.”

    @Eldredge: I agree. I think this is something that should be taught as part of the curriculum in engineering universities. This will help the engineers make better decisions when it comes to selecting components and their selection will not be restricting to only the performance aspect of the components but would encompass a more holistic view.

  5. SP
    March 19, 2013

    nice article and quite agree on the point that designers calls the shots. But why wont they because if design doesnt work or doesnt work to expectations, they are the ones who get questioned. Many designers and if they are really good completely understand the supply chain issues and are if possible ready to change the design if there is big suppl chain issue of any component. In a healthy work environment there are good meetings where designers and supply chain team leaders meet and discuss.

  6. Anand
    March 19, 2013

    designers could benefit from better insights into the supply chain.

    @Ken, thanks for the post. I totally agree with your opinion. If designers have better insight into the supply chain then they will chosee the design components wisely considering the impact of the component selection on supply chain.

  7. hash.era
    March 20, 2013

    @anadvy: Why do you think or what areas do you feel blocking the designers gaining a better view of the system ?     

  8. Roberto Varela V
    June 4, 2013

    @KEN I would love to get a copy of the whitepaper !! I agree with you 100%

  9. hash.era
    June 10, 2013

    Is it available on the net ? Can we download if so ?       

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