Closing the Circuit

That never-ending wave of electronic gadgets we use (or buy just to brag about) requires a seemingly never-ending supply chain. But the inherent complexities of the electronics industry have sparked its move toward automation.



The Tubes Are Warming Up


Schlumpf goes on to say that, even though supply chain management of every stripe holds a lot of utility for electronics manufacturers and those technologies have been embraced by manufacturers, there is still a fair amount of work to be done. I think most organizations are pretty far behind the ability of the technology to help them and haven't really wrestled to the ground the value proposition associated with it. In addition, many organizations have been operating in a decentralized mode. (Understandably so, given the far-flung nature of electronics manufacturing.) Schlumpf explains, You're not only changing individual work patterns, behavior and activities, you're also changing executive leadership opinions and attitudes and supplier relationships.


In addition, there are problems sharing information with trading partners' systems and even managing in-house data. Very few people know enough about their own operation to make complete use of these kinds of tools, Schlumpf says.


Wired for Business


If those problems can be overcome, however, Schlumpf agrees with Bittner that there is tremendous opportunity for improvement, particularly in the ability to connect electronically with your suppliers throughout the supply chain, provide them with forecast and change visibility, and be able to respond and react to shortage situations.


In terms of marketplace strategy, whether to use a public or private marketplace, Schlumpf believes that the smart companies are taking what he terms a portfolio approach, staying flexible and reacting to what opportunities the business climate might present. He's especially skeptical of the huge industry consortia, saying that it goes against the competitive nature of business. There's something intuitively wrong with the concept that says, For the last 25 years, we've been telling our clients that they're going to compete on the basis of competitive advantage in their supply chain, and now we're all going to do that together in a big group.' I just don't get it.


Give Me a Million of These


So what segment of the industry stands to benefit the most from enabling its supply chain? Todd Thibodeaux, vice president of market research and senior economist at the Consumer Electronics Association, says that the potential lies in the subcomponents (those Einsteinian electron tubes, capacitors, etc.) and commodity components area, as well as in the area of companies that sell finished products to smaller retailers. The subcomponent and commodity components gain in their ability to do what Thibodeaux calls positioning themselves as equal players in the logistical sense. Larger companies with proprietary systems no longer have a huge advantage over smaller competitors.


In regard to the companies that are selling to smaller retailers, Thibodeaux says technology now allows for more profits to be wrung out of a low-margin area. [The selling companies] can more easily manage those accounts with dedicated extranets for smaller customers who, under current systems, return little but cost a lot to maintain.


Thibodeaux goes on to point out that the electronics industry also stands to benefit in more ways than cost savings per part. He is especially impressed by the ability to mass produce mass customization. If a manufacturer can spool up production of crucial components on an as-needed or predicted basis, rather than pumping them out until there's a warehouse full of parts eating up storage space and weighing on the books, there are savings all around. He explains, The ability to have the correct store of product on hand for assembly or final sale and the ability to mass customize have the most important impacts and results. Which is so slick a concept it's almost Einsteinian itself. 

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