We all know the joke: "I just bought the brand new [insert electronic device here] and it’s already obsolete!" Product life cycles are shortening, consumers are the most educated they’ve ever been, and their expectations are continually increasing. My colleagues in supply chain are scrambling to evolve their supply chains to accommodate the challenges. After several interviews and a few transformational projects, I wanted to share my findings.Five key components of future consumer electronic supply chains can be summarized in the acronym: RAPID. Supply chains of the future will have the following characteristics: Responsive, Adaptive, Proactive, Intelligent, and Delayed Differentiation.
Try as we may, we will never be able to forecast perfectly, so an aspect of our supply chain needs to be responsive. A shift in demand in the northeast requires redistribution of product from the west, or interception and redirection of product from the port. The supply chains of the future -- many are already there today -- will have the visibility and ability to navigate these shifts quickly and effortlessly to respond to the unpredictable.
In addition to a responsive supply chain, supply chains of the future will be able to adapt to changes. Whether it's the tightening of tolerances on ship dates and times, to customers wanting product faster with free shipping, supply chains that survive will have adapted to revolving distribution and merchandising strategies. They'll be able to increase throughput and velocity while lowering cost per unit.
The consumer electronics supply chains of the future will be proactive in their responsiveness and adaptability. We live in a world where consumers can stand in a retail store and have the option to scan, price-compare, and assess supply chain capabilities of multiple channels and competitors simultaneously. The supply chains that survive will be those that have the right inventories in the right places, and can deliver at the right price-points. In the competitive framework, the cycles of supply-chain cost reduction are no longer based in years, but within 90 days of a new product hitting shelves. Several of my customers are bringing supply chain and purchasing people into their product development cycles so that effective supply-chain strategies are designed as part of the new product solution.
Organizations that are not yet having the “big data” discussion should be planning to sell their assets. The advanced supply chain will have real-time access to supplier capacities and commodity risks. S&OP cycles will be automated so that the real effort is spent on the decision cycles and forward-thinking strategies -- not collecting, analyzing, and validating the data. Systems will be integrated and information available in real time to those who need it. Leading indicators will drive most business decisions.
Customer preferences are increasing, and variation is the theme of supply chain. While delayed differentiation tactics have been around for years (think of standard powered units partnering with country-specific power cords in that country's DCs as an example), we’re seeing more and more complexity and accessories being offered further downstream. To prevent the proliferation of SKUs in the upstream supply chain, product designs and supply chains are moving towards modular builds that can be easily assembled in distribution centers or even at home by consumers.
Now, before you call a staff meeting and rethink your five-year plan, consider that the above list is a consolidation of best-practices that we’ve seen across multiple supply chains in multiple industries. While there are some fantastic supply chains out there, we haven’t seen one that sets the pace for everyone…yet. Now go rethink your five-year plan, so yours can be the first.
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Posted by Derek Browning
As a Director of Consulting services, Derek directs a portfolio of end-to-end supply chain projects for companies in a wide array of sizes and industries. He's trained thousands of professionals in lean, six-sigma, leadership, and supply chain through LeanCor and leading education partners. Derek complements his experience with an MBA, a bachelor’s degree in marketing, and several professional certificates.Facebook LinkedIn Twitter Google+