The High Tech and Electronics Supply Chain – Maturing and Innovating

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What is the product lifecycle of high tech products and electronics? The lifecycle can be debated based on the type of electronic product, but overall the lifecycle is becoming increasingly shorter and that’s one of the unique supply chain concerns that high tech and electronics companies face. Did you know that for many electronic devices, an estimated 50% of the profit comes in the first six months of their lifecycle? As a result, high tech supply chains need to be flexible and data visibility is a must.

How much they are spending in logistics is key to staying on top in this highly competitive industry

High tech companies such as Apple and HP need to know how to keep their products moving quickly and if necessary, to change them quickly. In addition, they also need to know where their resources are coming from and how much they are spending in logistics. How much they are spending in logistics is key to staying on top in this highly competitive industry. Not only does one need to have visibility across its entire supply chain, it also needs to manage logistics data and costs, all the way down to the modes of transportation to use.

Traditionally, product launches utilize air freight because of the speed it offers. In fact, we can thank Apple’s Steve Jobs for the air freight trend. In the late 1990s, most computer manufacturers transported products by sea, a far cheaper option than air freight. To ensure that the company’s iMacs would be available at Christmas the following year, Jobs paid $50 million to buy up all the available holiday air freight space. As a result, that historic move handicapped rivals such as Compaq that later wanted to book air transport.

High Tech Companies Utilizing Other Modes Such As Rail Freight

More and more high tech companies are utilizing other modes such as rail freight. HP was one of the first businesses to take advantage of the rail network connecting China to Europe. As of 2014, half of its laptops are produced in Chongqing, China and located 2,000 miles inland. Because it has become cheaper to produce and sell its laptops, HP no longer requires air transport and instead will stack up to 50 containers on a train destined for the German city Duisburg.

Compliance Regulation and e-waste

Modes of transportation are certainly important; however technology companies are also facing compliance regulations as countries around the world grapple with how to control the growing problem of e-waste. For many such firms the responsibility for what happens to their products at end of life will rest with them and as such, they must observe regulations regarding material collection, recovery, recycling and destruction/disposal. Many Third Party Logistics (3PL) providers assist companies with these requirements, utilizing their large carrier networks to ship and track the e-waste while the manufacturers can focus on getting new products out into the consumers hands.

Risk Management Processes

Lastly, risk management processes are vital for technology companies. Many of these companies have manufacturing facilities in emerging countries where political risks are high as well as in other countries in which natural disasters are prevalent. The 2011 floods in Thailand severely impacted the global supply of hard disks and resulted in inventory shortages for PC manufacturers.

No two supply chains are the same however, for the high tech and electronics supply chain the need for flexibility is vital for it to continue to provide innovative products quickly and in the most cost effective way. The manufacturers need to also adhere to a growing number of compliance regulations and monitor for any potential risks that may impact its supply chain anywhere in the world. The supply chain and freight data collected by the high tech products and electronics manufacturers will be the deciding piece of the puzzle to help keep them profitable.

 

 

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