Analyst Insight: As high-tech companies move forward into 2011, it is critical to develop a list of supply chain priorities for the year. Topping this year’s list is a renewed focus on logistics and manufacturing outsourcing and an increased sense of urgency in developing the Chinese consumer market for new revenue. In addition, there is a growing need to create additional value from an often under-appreciated source – the service supply chain.
–Greg Hazlett, principal at Tompkins Associates
The past year’s challenges have left high-tech companies with a new set of significant priorities for 2011. Below are the top 11.
Logistics and Manufacturing Outsourcing: Flexible organizational processes, technology and resources are becoming extremely important. Outsourcing provides the opportunity for high-tech companies to maximize results by focusing on core competencies, while delegating non-core processes and activities.
Globalization - China as a Consumer Market: Global business is looking to China not only for sourcing and production but for growth. Companies around the world are gearing up to begin selling or further ramp up sales capabilities into China’s growing consumer market.
Reverse Logistics/ Service Supply Chain: The service supply chain helps companies differentiate themselves from their competitors while reducing costs and improving residual value recovery from their returned products. Transforming high-tech service supply chain organizations into profit centers will be a game-changer for companies in this industry.
Uncertainty: Today, uncertainty is certain. High-tech organizations must accept uncertainty and implement agile processes that allow them to move forward. The best strategy is to respond to uncertainty and make it an ally in achieving profitable growth.
Maximizing Supply Chain Flexibility: The primary factors driving this industry – frequent new product introductions, short product lifecycles, speed to market, new distribution channels, and changing consumer preferences – require more flexibility in supply chains than normal. Agility is an absolute requirement, while maintaining operational excellence.
Global Trade and Risk Management: Automating global trade processes will help high-tech companies enhance supply chain performance. Furthermore, effective global trade and risk management must address margin protection, brand integrity, and customer satisfaction.
Sustainability: In the U.S., nearly 70 percent of heavy metals in landfills comes from discarded electronics. Companies are fighting to be environmentally friendly and keep the costs of recycling, de-manufacturing and scrap at a minimum.
Tax-Effective Supply Chain Management: TESCM is the process of integrating tax planning into the overall management of the company’s supply chain and is an important priority to be considered.
On-line Digital Content to Drive Product Innovation, Acceptance and Obsolescence: Audiences today can stream almost any digital content they want, at any time. Enhancements in digital delivery and usage, including cloud computing and mobile phone applications, are indications of market acceptance. How high-tech companies respond and innovate will determine what audiences embrace or reject.
Inventory Working Capital/Sales Optimization Planning: With demand returning, the “people, processes and technology” of Sales, Inventory & Operations Planning must be brought to a new level to enhance inventory turns while improving customer service.
Strategic Market Planning and Growth: M&A activity for technology companies is rising, due to recession pressures that created bargain prices for various technology companies. But risks persist, and success comes from gaining a leading and sustainable position in the served markets.
With these top priorities in 2011, high-tech companies have their work cut out for them. However, it is not as simple as completing one task and moving forward. High-tech companies will need to ensure that each of these areas are included in their continuous improvement strategies.