Since last year, the focus of the global semiconductor market has been the “chip shortage” problem. Serious shortages have disrupted normal production rhythms and continue to plague all walks of life, from automobiles to smartphones, game consoles, PCs, and smart security. This wave of core shortages, which has spread to the whole world and covers the whole industry, has caused many companies to maintain a difficult balance between the surge in market demand and the tight supply chain. Coupled with the recent deterioration of the epidemic situation in Southeast Asian countries, it is even worse for the semiconductor supply chain, which is very likely to exacerbate the global chip shortage problem. In the face of the core shortage crisis, the importance of supply chain security and stability has become increasingly prominent.
Not only that, but from the perspective of the entire life cycle of the product, the supply chain is also crucial. When we think about what drives the success of a new high-tech product or service, the first thing that comes to mind is the underlying technology that differentiates the product or service: component selection, board configuration, and whether the packaging Optimized to meet expectations for performance metrics such as processing speed, battery life, size, weight, durability, ease of use, and more.
Suppose this is the case. The design team has successfully transformed ideas, designs into viable products. This is a remarkable achievement, and in real life, many great ideas fail to get this far. But at this time, the commercialization of the product to the market has just begun, and it is full of various possibilities. Ultimately, whether it sets new benchmarks in performance, price, customer experience, market penetration and revenue generation, or is plagued by cost overruns, missed time-to-market windows and disappointing returns, depends largely on the supply chain’s Design and execute.
The main challenge in this process is that businesses that excel at product development and technological innovation often do not have the same strong expertise and experience in the processes and operations to bring products to market. Even Elon Musk, who really changed the field of rocket science, had to admit in a 2016 interview: “The supply chain is tricky.”
Of course, tricky is just an understatement. Throughout a product’s end-to-end lifecycle, companies must rely on dozens or even hundreds of trading partners for various parts and services. Not only are these businesses very geographically dispersed, but their business experience, technological sophistication, and financial capabilities may also vary widely. Add to this the interplay of simple human error, disruptions from risks such as global economic volatility and natural disasters, and the growing need for active social and environmental management from consumers and capital markets, as well as the occasional black swan event. , The intricate, multi-layered supply chains of modern, multi-regional supply chains are obviously incredibly complex.
Supply Chain: Beneath the Iceberg, Hidden Mysteries
But many companies tend to underestimate the value of their supply chains. This is because, in most cases, they simply don’t realize they don’t understand strategic supply chain management. One of the ways to understand the complexity of a supply chain is to think of it as an iceberg — it’s much bigger than what people see.
Above the water, for example, is the relatively straightforward part of placing an order, removing the product from the shelf, packaging and shipping it to the production facility, etc. But lurking below the surface are a myriad of logical, physical, digital and financial elements that businesses must consider and address to ensure the optimal flow of products, data and capital. These tactical and tactical variables include value-added programming and kitting, master data management, trade compliance, warranty servicing, working capital management, multi-level visualization, supply chain finance, production planning, alternate supplier selection, and physical and cybersecurity. If these factors are not professionally managed and coordinated, the risk of supply chain disruption and the overall cost will multiply.
Working with partners to solve the complex problems of supply chain
If supply chain strategy and execution is not a core competency of your business, then you may be wondering what you don’t know but need to know: how to choose a partner that can help you manage as seamlessly and cost-effectively as possible This highly fragmented network of product and service providers.
Many third-party companies offer a range of practical enabling technologies, platforms, consulting services, and more to handle various elements of supply chain processes, from BOM assessment and planning to forecasting, risk mapping, and logistics services. The challenge here is not to add more complexity to your supply chain with fragmented supplier assortment. Each vendor has its own focus, and they may or may not ultimately align with your strategic and financial goals.
Trial and error is often not a winning strategy due to the invisible pressures of shortening time-to-market, budget constraints and ever-increasing customer expectations. When seeking to work with a strategic supply chain partner, consider the following:
The supply chain of an enterprise runs through the entire end-to-end life cycle of a product, so it needs a partner who has a deep understanding of the market dynamics that affect supply and demand. Lifecycle expertise.
As digital technologies such as the Internet of Things, cloud computing, machine learning and artificial intelligence permeate enterprise IT and operational technology, companies need a partner who can skillfully integrate these advanced technologies and complex physical supply networks to ensure they have the ability to sense and respond to the market Visibility required for changing conditions. Fluency and expertise are essential when deploying intelligent automation technologies such as robotic process automation and process mining.
· Should focus on the total cost of ownership. Like many brand enterprises and OEM manufacturers, component suppliers generally aim at technological innovation and development of new products or services. Few companies make supply chain agility and responsiveness a core competency. Therefore, while a business can enjoy favorable prices for purchasing directly from a component manufacturer, its “total cost” calculation should include additional costs that may arise from expediting, late payment penalties, missed production windows and other order fulfillment disruptions .
·Supply chain management is ultimately a team “sport”. Businesses need a partner to help break down strategic and technical barriers with external trading partners and eliminate silos between key stakeholders such as engineering and procurement teams. From design to supply chain, better collaboration and coordination can ensure that parts are selected to meet key brand goals around time-to-market, user experience, and factors such as environmental sustainability, ethical sourcing and recyclability.
· Partners should act as an extension of the business, facilitating the flow of products and information between the business and various trading partners. If a business feels that its current partner is more of a gap between it and its supplier network, it should start looking for a new one.
· There is no one-size-fits-all supply chain model. Look for a partner who is willing to take the time to understand the specific challenges and priorities of the business, and that partner must also be able to build a business that best meets the needs of the business (from standard fulfillment and inventory management programs to complex supply chain-as-a-service solutions) mode.
Trust: The Foundation of Supply Chain Excellence
Finally, businesses need a trusted partner. While this should be self-evident, trust can be a rather vague concept, so this next article will explore what trust in a supply chain is.
Continued shortages of key technologies in the high-tech sector have sparked talk of a shift from “proper” inventory to a “just in case” inventory strategy. As the world’s leading technology distributor, Avnet is undoubtedly able to provide customers with buffer stock, but “stocking for stock’s sake” takes up valuable capital and can increase potential obsolescence risk if buffer stock ends up unused.
Furthermore, assuring supply is only one element of an effective supply chain resilience program, agility and visibility are also critical. Avnet is working closely with customers and suppliers to facilitate a more open exchange of capabilities and needs, through the optimal integration of resources to achieve our common goal of meeting market needs in a timely manner at the right price. Avnet uses technologies such as scenario planning, value-at-risk calculations, deep supply chain blueprinting and alternative product identification to help supply chain partners more quickly and cost-effectively avoid threats and avoid disruption to business continuity.
In a world where technology is commoditized, it is increasingly difficult for companies to differentiate themselves from the competition, and supply chains and operations have become the new frontiers for differentiation. Businesses today cannot rely solely on the technological advantages of their products or clear price advantages to remain competitive. Sustainable growth and profitability can only be achieved by delivering differentiated, high-value customer experiences throughout the product lifecycle, which requires leading technology and best-in-class supply chain execution.