I followed with interest recent news regarding the transfer of Apple’s iOS device chip production from Samsung to TSMC. Changes to supply of this scale are hugely complex, representing billions of dollars of annual spend.
Companies with significant influence can also use deals strategically: Apple’s need and buying power for high-quality mobile device components like IPS touchscreens is so great that their sourcing decisions and contracts have implications for the whole market.
At other times, supply chains are shocked by unpredictable events. Natural disasters in South East Asia, for example, have had knock-on effects on the availability and cost of memory.
The cost of components is a vital factor, but not the only factor. A more expensive, higher-quality component may increase total unit cost, but also make a product more functional and
desirable, justifying a higher margin. And, in a connected world, reviews from official sources and social media will flood in immediately after release, and need to be monitored and understood.
Innovation through understanding
Problems with a single supplier can currently affect whole product lines. The future of sourcing lies in highly flexible networks, able to assign orders and judge the capacity to fulfil them according to real-time inputs. These networks can be constantly monitored not only for availability and supply issues, but also for cost variation.
To do this takes detailed and accessible knowledge – of one’s own needs and supply levels, and also of the available supplier options. SAP’s Analytics solution, especially when paired with the speed and power of HANA’s in-memory computing, is able to build that picture – analysing and processing the huge amounts of data representing a high tech company’s procurement options.
The other piece of the puzzle came with SAP’s acquisition of Ariba, the world’s largest business commerce network. Ariba connects to more than 1 million companies, along with tools for supplier discovery, negotiation and bidding. Component need and supply can be analysed in real time, suppliers vetted, prices negotiated and issues routed around.
So, how does this translate into innovation? A smarter supply chain is only one part of the journey. In future blog posts, I will explore the “High Tech Value Map” – the map of how SAP solutions for high tech business can add value across the whole business cycle – from Product Innovation through to Marketing and Customer Service.
Where – and how – are you finding and driving innovation? Leave your comments here – or join the conversation on Twitter, with @SAPhightech.