Written by Mark Bollinger
Agility and quality coupled with market expertise enable the successful supply chain navigation necessary to succeed in today's complex and rapidly changing marketplace. Given the targeted outsourcing strategies, customized turnkey services that deliver precisely these strategic pivot points are in high demand.
The challenge of balancing opportunities and risk: Turnkey solutions.
Mobility has clearly been a supply chain driver for significant growth in the semiconductor and electronics industry, and that is forecasted to continue at least through 2017. Expanding electronic component content in automotive, medical and industrial products offers further opportunities for growth. Yet conservative purchasing and weak consumer confidence, due to the ongoing macroeconomic uncertainties, continue to put significant pressure on margins and inventory management. Hubbing parts for production and service, for example, has increasingly been pushed down to suppliers.
Conservative equipment CAPEX has slowed capacity expansions because of the risks of potentially short-lived demand cycles. In this environment, there have also been a number of consolidations. A notable example is the memory sector where we've seen the number of leading DRAM manufacturers drop from eight to three. Weak manufacturing (supply) and equipment investment trends coupled with very tight inventories and price pressures have made an otherwise challenging end-market all the more difficult to successfully navigate.
Agility and quality in the face of complexity
Market success relies on aligning the best supply chain relationships to ensure quality and just-in-time (JiT) product. This relationship management must be balanced with careful attention to inventory management, storage and fulfillment, pricing variances, sophisticated anti-counterfeiting methods, traceability, and global logistics operations, among other challenges. Managing these types of complexity requires not only agility but also significant experience in our industry's ever-changing global networks, standards, pricing and product knowledge, regulatory mandates, and e-product laws (e.g., importing, RoHS, WEEE, etc.), to name but a few capabilities.
Agility of this nature begins with deep experience and market knowledge by all of those involved, but goes beyond that and requires that a company, or a turnkey service partner, have a unifying system, a framework, in place to cohere the various business practices required to execute strategic market decisions. Uniformity and reliability require codification, which, in turn, ensures transparency and coordination – the key elements that underpin an agile and responsive business framework.
Internal and external collaboration, within and across business functions and/or supply chain nodes, offers a level of precision to quality management that directly contributes to market leadership. Imbuing a culture of quality into every aspect of business function and throughout the business hierarchy is another important pillar to creating agility. A culture of quality that is thoroughly embraced, understood, and followed adds yet another layer of collaboration by unifying the goals of each functional operation, procedure, and process.
Turnkey solutions offer simplicity
In the case of semiconductor and electronics distribution, Smith's comprehensive framework, SmithSecure™, is such an end-to-end, encompassing program from which we are able to strategically represent our customers with leading quality, agility, and market opportunities. SmithSecure is a standardized operational and cultural framework representing the history of knowledge and quality initiatives that Smith has developed to ensure best practices and leadership in every business function. We have combined industry standards for operations and procedures with customizable client requirements into a system that unifies Operations, Finance, Sales, and Purchasing departments to ensure agility while adhering to best-in-class quality metrics.
This framework is the basis for a host of customizable turnkey solutions directed at specific supply chain challenges. These challenges include inventory management for production or aftermarket service and repair, end-of-life components management and excess component inventories, just to name a few. The strength of these programs is anchored in an understanding that turnkey solutions must be tailored to the specific needs of a manufacturer. Truly effective turnkey solutions address all customer concerns – from beginning to end – without disrupting established operations and procedures.
Given the volatility and complexity of the global semiconductor and electronics industry, and the pressures on margin, cost, and lean inventory management, customers both old and new to our industry are relying on agile, expert, turnkey service providers to capitalize on the existing market complexity and come out ahead of the competition. The needs certainly vary with experience in the industry as well as strategic market goals, but the requirements hold striking parallels from our perspective: agility and quality coupled with market expertise enable the successful supply chain navigation necessary to succeed in a complex and rapidly changing marketplace.