High Tech Supply Chain
Keep Pace with Changing High Tech Industry Demands
High tech suppliers and manufactures have a unique relationship with inventory. On one hand, high customer service is important — shortfalls either directly to distribution/consumers or the VMI parts bin quickly result in lost sales when the customer grabs a competitor’s product instead. On the other hand, the high pace of innovation means slow-moving inventory quickly drives down margins as obsolete products are heavily discounted or scrapped. And EMS companies are really hit hard by the bullwhip: they rely on error-prone and overly optimistic customer-produced forecasts and are forced to pass these extra inventory costs directly back to their customers in the form of higher prices.
Long lead times from globally sourced materials and components, common materials shared across significant numbers of SKUs, and variable process yields have combined to form a predictable outcome in many supply chain strategies: the traditional response at high tech companies is to pile up raw materials, innovate quickly, plan obsolescence, and accept inventory write-downs as the cost of doing business.
Today, leading high tech companies are exploring ways to execute more efficiently. They analyze customer forecasts for error and bias, and use the resulting fact base to begin a discussion with customers to share the cost benefits of eliminating unneeded inventory. They create flexibility in their manufacturing processes, and understand postponement strategies in die-banks, assembly, and distribution. They take a more analytic approach to raw materials, incorporating true lead times and variabilities into their planning, and taking advantage of increased supply chain visibility whenever possible.
How should your high tech company develop inventory plans which balance financial and operational constraints unique to your business?
Discover Inventory Planning that Thrives on Change
With SmartOps Enterprise Inventory Optimization (EIO), your high tech business will calculate and understand how much inventory to carry why, where, and when. This empowers you to address common challenges that once inhibited improvements in supply chain performance. With SmartOps EIO you can:
- Cope with Supply, Production, and Demand Uncertainties. Uncertainties, disruptions, and variability in the supply chain make it hard to confidently decide how much inventory of each item should be kept at any point in the network, at any time, to meet demand. To hedge against supply constraints, lead-time variability, production and testing yields, and forecast errors, you may rely today on rules of thumb and basic spreadsheet decision support.
SmartOps EIO offers a better way. EIO analyzes comprehensive data at a granular level to manage safety stock and other reasons for carrying inventory. SmartOps uses optimization algorithms to manage data uncertainties and gain visibility into your inventory drivers — at a granular item, location and time period — and keeps them coordinated. - Address the Planning Challenges of Multistage Supply Networks. Your business’ multistage complexity can’t be addressed effectively through single-location or sequential planning. But SmartOps recognizes your supply chain nodes and echelons are interdependent. We understand your plans for each stocking location must be calculated simultaneously, to accommodate all the variables that impact your inventory targets.
That’s why SmartOps EIO coordinates your total chain inventory deployment plans — from raw materials to in-process and postponement stages, and from inventory-planning-distribution-retail to retail channels. - Keep Pace with Increasing Customer Expectations. Customer expectations have been raised by competitive inventory-planning-distribution-retail dynamics. The industry’s top performers have elevated them even more. And in turn, you find increasing customer service demands pressing down on your technology business.
SmartOps EIO offers a unique solution to keeping your inventory plan better aligned with your business strategy. Target the customer service level that supports your business strategy, and then determine the best placement and inventory targets across the supply chain, at the lowest total cost. You’ll gain new visibility into the trade-offs associated with different levels of service, and scenario planning will help focus your efforts on further improvements to where they will have the most impact.
The SmartOps Enterprise Inventory Optimization (EIO) solution gives high tech manufacturers a way to fill a critical missing piece in their enterprise planning systems and processes — the ability to frequently and dynamically generate optimal inventory planning parameters:
- Across all components and finished goods
- At all locations
- For each planning period
- For the reasons you might need to carry inventory (safety stock, cycle stock, pre-build inventory, in-transit/pipeline stock)