The holidays are here, and consumers are scrambling to find the perfect gifts for friends and family. They’re hurried in reading reviews, comparing pricing and finding the courage to click buy. Then, the purchaser crosses his or her fingers, checks the tracking status a few times, and if all goes well, the product arrives on the doorstep of the recipient with time to spare. The last mile is relatively invisible to the consumer, as it should be. They order, the goods arrive. But the more visible the journey is to those involved in the supply chain, the better, as the intricate process that connects consumer with purchase begins well before the consumer ever sees the product.
In actuality, when the consumer clicks buy, the product is already nearing the end of its journey. The process kicked off up to 12 months in advance, and there are many steps in between then and the purchase that need to happen smoothly to ensure a desired electronics product can even be sold in time for a holiday purchase.
Forecasting Success
Let’s take a look at the journey a desired electronics product takes. Six to 12 months in advance, the forecasting and planning process is already in motion. At this point, the electronics company considered volume forecast and is exploring market demand. They’re determining capacity at factories and working with vendors of long-lead-time materials to decide if they have product ready and can commit to the timeline.
Electronic products in particular are complex—their intricate parts most likely have multiple origins. Advanced planning and scheduling play a critical role during this stage because, although the product team may know what they want to do—such as build 100,000 cameras—advanced planning tools help determine when and how many products need to be assembled, what colors customers may demand and which countries to supply. The more detail that can be added to the forecasting plan, the more success the product team sees leading up to the execution date.
In some cases, products are fully assembled 12 months out, a pattern that the industry needs to break in order to keep current and offer the best, most current technology possible. It’s too dangerous to commit to resources that far in advance with risks of product surplus dangling revenue loss over your head.
By implementing constant feedback through dynamic forecasting of market demand, raw material availability, and shipping and warehousing capacity into the supply chain, product teams can keep apprised on what they need, when and where they need it, without having to commit to orders a year in advance. This switch to just-in-time production schedules that can fluidly adapt to market fluctuations, recall orders and upgrades to existing products helps shorten production lead times.
All about the Details
By developing a comprehensive forecasting plan, product teams can work with supply chain professionals to secure manufacturing assets as well as materials availability well in advance. Then, three to six months before the customer clicks buy, your product team already began ironing out the more granular details. Teams are collaborating with suppliers at this point to narrow down model numbers and determine product specifications, such as screen size and touch-screen capabilities. During this step in the path, enough consumer demand forecasting information detail must be secured to ensure the right capacity is in place to deliver enough product right when consumers are looking to purchase.
From Factory to Warehouse
In the next phase (one to three months before), forecasting is done, details are decided on, and the product is in route to the warehouse where any short-lead-time materials and region-specific items are purchased. Based on forecasting and regional demand, appropriate languages are added to the product in this stage as well.
By this time, companies should have worked with their shipping partner to leverage available services in advance, booking ahead when available. If you’re shipping 500,000 units from Hong Kong to the U.S., for example, by knowing the freight and distribution requirements well in advance and working closely with your logistics partner, you can better prepare in the event disruptions occur. Without a plan in place that can be easily adjusted, sky-high costs due to last-minute adjustments can derail your budget if you suddenly have to airship product because of a production delay that otherwise could have shipped by sea.
Now, it’s time. Two to four weeks out, the product is assembled and ready for distribution, traveling from the warehouse or store, if applicable.
In this phase especially, continuous feedback about demand from your sales team, as well as available capacity from your shipping and warehousing solutions providers throughout the entire process can ensure that models are able to shift based on need. Real-time calculations can be the deciding factor on whether a product makes it to the final pick and package point in time, or faces severe delay, resulting in revenue loss.
Now the Clicking Begins
When a customer selects his or her product of choice, and adds it to his or her online cart, after selecting a few preferences that are factored in further down the chain and imputing payment information, the anticipated confirm order button appears. From there, the order transfers to the fulfillment center for final packout and distribution.
Preferably, inventory is checked before it makes it into the customer’s online cart. If a shopper is able to put an out-of-stock item in their cart, purchase it, and then has to face disappointment when it cannot be delivered in a timely fashion, customer satisfaction ratings are on the line and you risk losing that customer for good. Customers are more educated when making purchases than ever before and very willing to shop elsewhere if the product is unavailable on your site, handing your profit, as well as the potential for a lifetime customer, over to your competitor.
Depending on customization preferences, the product can take one of two paths from here. If no customization is needed, the item is then pulled from the warehouse, labeled with details including name, address and tracking information, and then moved to a shipping area. If the product is to be customized, then after production the unique attribute can be added, such as a name or engraving—and then the piece is moved to shipping. With a visible supply chain, the customer receives updates based on his or her preferences, sent directly to the email inbox or cell phone, updating him or her throughout this last mile of the journey.
Importance of Constant Communication
In the end, even though your plans seem bullet-proof, a catastrophe can still strike. Factory strikes, port strikes, a container lost overboard or natural disaster—these are all unavoidable events that can derail the most fluid supply chain. The key to overcoming a catastrophe such as these is immediately mobilizing and enacting your disaster recovery plan. With a proper plan and resources in place, your products can still be on their way to consumers vs. stuck at a port. A flood in the Netherlands isn’t a life sentence and doesn’t automatically give your competitors an opening to close in on your profits. Instead, your product could be moved to another location, such as the Czech Republic. By constantly updating your disaster recovery plans, you can be adaptable.
Throughout the full journey, products jump many hurdles to ultimately appear in an online cart. Communication is key to ensuring a visible supply chain throughout the entire process. A stable supply chain partner can smooth the journey, bringing the desired product from a pile of parts right to the front door of your customers.
John Boucher is president and CEO of ModusLink Global Solutions, bringing more than 30 years of supply chain management leadership and expertise to the company. Through his operational experience in many of ModusLink’s key target markets—including consumer electronics, PCs and IT infrastructure—Boucher provides the company with a deep understanding of global logistics challenges and opportunities, and a proven record of building successful customer relationships.
