August 07, 2014

High Tech Companies Are Pioneering Supply Chain Risk Mitigation & Resiliency

Jon Bovit

High tech companies have historically found innovative ways to make their supply chains agile, flexible and circuit boardresponsive to supply and demand shifts. Still, pain points remain. For example, they are faced with local regulatory pressures, supply chain risk and the rapidly increasing costs of outsourcing in traditionally low-cost geographies. These pain points are compelling electronics OEMs to restructure their global supply chains in order to respond more quickly and flexibly to new threats and challenges.

If history is a guide, the high tech industry might have an advantage in pioneering much-needed supply chain risk management practices. Technology companies have traditionally been at the forefront of tackling significant supply chain issues and achieving a competitive edge in designing best practices that benefit their own bottom lines while influencing how others operate both within the high tech sector and in adjacent industries.

Many of the tech sector’s innovative supply chain practices directly stem from the need to manage short product lifecycles, first-to-market competition, and an ever-changing global supply-and-demand landscape. The high tech supply chain focus on agility and flexibility has made high tech companies faster in responding to changing situations. Tech companies have put in place visibility tools to track, at least to some degree, component shortages, replenishment orders, delivery issues and other related activities. And they are beginning to figure out how to tap into the huge piles of big data being collected, evaluate supply-and-demand trends and get closer to the end customer.

As impressive as these strides have been, however, none of them yet go far enough to mitigate large-scale risks. The floods in Thailand, the earthquake/tsunami in Japan, a prolonged global economic downturn and legislative changes to the sourcing and management of hazardous substances and conflict minerals show how vulnerable the technology industry still is to man-made and natural disasters and disruptions.  

For example, at Resilinc, we tracked 293 global supply chain disruptions – including natural disasters, factory explosions, labor disputes, power outages, chemical spills and geopolitical upheaval – during a 12-month period. Our findings were astonishing. We discovered that roughly one disruption a day wreaks havoc somewhere in the global supply chain. Simply put, this means globally interconnected supply chains will face more risks globally, and any disruption’s ripple effects will touch more companies and more tiers of the supply chain.

Man-made and natural disasters will continue to test the tech industry’s supply chain, so it’s time for tech companies to pay closer attention to the gaps affecting operational and supply chain resiliency. Several pain points are now plaguing high tech companies, including a lack of full supply chain visibility, inefficient ways to track disruptions worldwide, and short-sighted emergency responses leading to a negative impact on long-term revenue and profits.

As a result, we see the high tech industry taking the lead in critical focus areas that could help companies both to initially build tougher supply chains able to withstand and quickly recover from disruptions, and eventually to migrate to more predictive risk-reduction modeling capabilities. Their challenge lies in identifying, mapping and planning for risk; monitoring relevant supply chain events, and implementing measures that protect them against global multi-tier disruptions in hours rather than weeks or months.

Our whitepaper, High Tech’s Next Big Supply Chain Undertaking, provides a more detailed discussion of how to meet the challenge of building tougher supply chains, SCRM, and creating more predictive risk-reduction modeling capabilities. Take a look here.

Topics: supply chain visibility, supply chain risk management, supply chain resiliency management, high tech