When the business migration movement began in the electronics sector, there was a fairly clear-cut disaggregation of product development and production — design in one location and manufacturing in another low-cost, developing region. As domestic demand in emerging economies has grown, manufacturers are increasingly looking to design products specifically to meet niche local customer requirements. Often, this means setting up satellite development centers in these regions with their own design and supply chain strategies.
This is a natural evolution of the electronics supply chain's penetration into emerging markets, and it clearly makes economic sense. The problems begin, however, when OEMs fail to maintain the integrity between the engineering and new product introduction disciplines among their regional operations.
We are seeing an increase in incidences where an OEM designs a product in one region, and when it is transferred to another region for production, the local design team will decide to tweak the design. This may be done to incorporate a less expensive component or alter the functionality to better suit the domestic consumer, but these intended improvements could end up adding cost and delaying new product introduction.
What these design teams fail to consider is that, when a new design is finalized, it is not just the product itself that is approved, but also the materials and production strategy. When even a slight modification is made to that design, the entire new product introduction (NPI) program is impacted.
For example, when Avnet works with a customer on a new product design, we will advise them of the life cycle stage of components that are being considered, so that they can make the most informed performance/cost/availability decisions. When the design is complete, we will immediately begin establishing a pipeline of materials to support the manufacturing process. Sometimes these components are NCNR (non-cancelable, non-returnable). If a redesign occurs, the substitute component may have a long lead time, which could impact the OEM's production schedule, causing a costly delay in time to market.
Clearly, an appreciation for and understanding of the nuances of the culture for which a product is being produced is critical to its success, but if teams from different regions are to work on the same design, the OEM must establish processes to make the collaboration effort as efficient and effective as possible.
In addition to more traditional forms of communication and collaboration, such as videoconferencing and instant messaging, best-in-class companies today are increasingly employing various social media tools and platforms to connect dispersed product development teams and their supply chain partners. For example, many-to-many content collaboration can be enabled through wikis, blogs, microblogging (Twitter-like updates), intranet or software-based ideation sites (like SharePoint), and “jam” social networking sites, according to a 2012 report on product development and innovation from Accenture.
OEMs looking to decentralize their design and development activities should take a page from the book on offshore manufacturing. Open communications and collaboration are key to enabling OEMs and their supply chain partners to best deploy their global resources, and therefore key to achieving the desired cost savings and competitive advantage targets.