The world of the electronic supply chain is a succession of crises… There was the MLCC (multi layer ceramic capacitors) crisis, the memory crisis, the logistics crisis, the silicon component crisis, and the next one in sight is certainly a new crisis of memories. Each time the story is the same: a component, central or not, is missing. In itself this component can be an infinitesimal portion of the final product, a grain of sand which seizes the machine, lengthening and complicating production and delivery times.
Against this succession of crises, in recent years we have seen the emergence of great volatility in market needs, which can turn around in a few weeks, with dizzying variations in demand. To take just the example of the Covid crisis, requests for internet equipment have exploded with confinement. From the day the restrictions were lifted, they fell sharply. As production and delivery times cannot keep up at the same pace, the entire chain has come to a halt: overproduction, storage problems, unsold items, etc.
How can we reconcile immutable production constraints and this new market volatility? Is the supply chain of technology companies doomed to suffer and try to catch up with the market? The organizational challenge is, on the contrary, a tremendous opportunity for those who know how to make the most of it. It is an opportunity for companies capable of managing their supply chain in a flexible and resilient manner, practicing operational excellence, to gain an advantage. very competitive.
At the height of the silicon component crisis, it took more than 55 weeks between the principal’s order for a technological product and its delivery to the end customer. Demand could collapse overnight. This glaring imbalance alone would be enough to shake any client. When choosing an industrial partner, to ensure continuity of supply and services, the sponsoring company must look at the agility of the supply chain in the same way as the quality of the product, its design or its cost. With equal supply, this becomes a major criterion for differentiation.
To resist these new market conditions, the solution lies in the quality, shared visibility and temporality of information. In an extremely complex and changing supply chain, the heart of the reactor is the speed and clarity of the assessment of what is really happening on the ground. You must have, at any given moment, a clear vision of the stocks of each component, raw materials and finished products, the capacities of each production line, current problems, supply times, etc.
On paper it’s simple, in reality it can be particularly tricky. Agile management of your supply chain requires great expertise and cutting-edge tools. Information must be accessible in real time. Learning of a supply shortage, full storage capacity, or a line being taken out of service with just a few days’ lag can have a devastating snowball effect on production and delivery times.
The financial dimension must enter into this real-time management. All direct and indirect costs (storage at a given point in the chain, variations in component costs, impact of line underutilization, etc.) influence the final price of the product and/or the margin. Any operational decision can only be good if the time and cost parameters are known, controlled and not assumed. This dual management, operational and financial, in real time, is a determining element in the resilience of a technological company.
Finally, the environmental impact of the supply chain must also be taken into account. Here again, the quality of the information is important. By anticipating the carbon footprint of one road or another, informed decisions can and will have more and more weight. It has value for the planet, it has value for the customer.
By speaking with customers, and depending on the sector, we understand that the quality of a supplier’s supply chain can represent up to 15 to 20% of the customer’s purchasing decision. Today, the company that best controls access to its information flows and is able to operationalize them with agility will be the big winner in the supply chain showdown. It will be best able to anticipate market imperatives and circumvent the obstacles that will never fail to arise on the road.
Jean-François FleurySenior Vice President Global Supply Chain and Operations, Vantiva
Expert opinions are published under the full responsibility of their authors and do not commit the editorial staff in any way.
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