Until recently, many high-tech manufacturers – especially small and medium-sized businesses – have been able to survive by applying 80% of their operational focus to 20% or less of their critical customers and suppliers. That was then. The new mandate from channel masters is for more intense, collaborative relationships with fewer suppliers.
Asserting Control, Seizing Opportunity in High Tech: Five Critical Success Factors Executive Brief Industry Directions Inc. Spring 2006 www.industrydirections.com Perhaps more than any other industry, high-tech manufacturers have abided by the rule that there are only two kinds of companies: the quick and the dead. This industry's manufacturing practices have pushed the envelope of innovation, competition and commoditization. Without a doubt, the globalization of high-tech has changed how supply chains operate and compete. On one hand, global operations stretching from Mexico to Eastern Europe and throughout Asia have enabled high-tech companies to outsource operations to low-cost, skilled providers, strategically located for emerging markets. Meanwhile, the extended supply chain has made high-tech companies more vulnerable to the impact of political events and the competition for resources, which only add to the operational volatility and uncertainty in gauging demand. Yet, even in a growth cycle, high-tech manufacturers must not only face the risks of their markets, but they must also keep a tight rein on costs and process integration if they are to assume control over their supply chain participation, and also gain visibility into opportunities so they can act on them. Until recently, many high-tech manufacturers - especially small and medium-sized businesses - have been able to survive by the 80/20 rule, where they applied 80% of their operational focus to 20% or less of their critical customers and suppliers. That was then. The new mandate from channel masters is for more intense, collaborative relationships with fewer suppliers. They are driving to a new demand-driven value network. In this environment, suppliers must increase performance in product development, lifecycle management, quality and total cost of ownership. To succeed, manufacturers must shift from a reactive posture to a proactive one. By embracing cost-efficient business practices that will make them more adaptive to market shifts, companies can gain control and seize market opportunity. These practices are based on five Critical Success Factors (CSFs): . Dynamic market responsiveness . Value network collaboration . Product lifecycle management . Value-driven performance . Sustainable cost controls These factors are interdependent, as are the enterprise activities required to achieve them. In fact, integrated business processes are the key to achieving these five CSFs. And sustaining the revamped business processes will require a unified view of the extended Compliments of
ASSERTING CONTROL, SEIZING OPPORTUNITY IN HIGH TECH: 5 Critical Success Factors MANUFACTURING SERIES enterprise. To stay in control and capture new opportunity with speed and confidence, high-tech manufacturers need integrated enterprise systems to sustain their process improvements and control profit margins. The Five Critical Success Factors Most high-tech sectors - whether Original Equipment Manufacturers (OEMs), electronics manufacturing services (EMSs), suppliers of systems, components or semiconductors - all share a common set of characteristics. These include rapid technology changes that challenge accurate production planning, an increasing number of products and components for varied and global customer segments, competition for global supply and demand sources, and well-established production outsourcing for chips, boards and systems. The five CSFs not only help manufacturers retain control over their role in the ecosystem but also enable them to identify and act on opportunities amidst the market's cyclic ups and downs. 1. Dynamic Market Responsiveness
Today's high-tech manufacturers must have multi-tier visibility into supply and demand chain activities to gain first-to-market advantage. Agile response cannot be the domain of a single department. While marketing or sales may develop a new application area, design, procurement, inventory management, manufacturing, distribution, suppliers and outsource partners must coordinate their efforts nearly instantly to capture a leading position. Inventory must flow rapidly and responsively through the entire supply chain. Pull-driven demand replenishment such as Just-in-Time (JIT) and Vendor Managed Inventory (VMI) is critical to prevent untimely stock-outs or product obsolescence. 3PL Another key element for agility is the Contract Spot abilit... [download for more]
