By Dominik Erlebach, Solution Manager High Tech
A decade ago, the supply chain goals of high-tech companies were primarily focused on achieving operational excellence. But with the dawn of the digital economy, supply chain teams find themselves in the very heart of their company’s strategic operations. To succeed, high tech companies need the ability to navigate complex, volatile demand and supply scenarios in a high-velocity buyers’ market.
Read this blog to learn how high tech companies can gain a competitive edge and reap the benefits of the digital economy before others do it.
Adjusting the role of supply chain departments
A decade ago, the supply chain goals of high-tech companies were primarily focused on achieving operational excellence. We wanted to run lean, drive down costs, and operate efficiently. In hindsight, those seem like simpler times. Supply Chain planning has evolved from a cost saving and execution organization towards a business shaping keystone in the very heart of the company’s operations. It has become instrumental in achieving the company’s strategic goals like innovative pacemaking, stellar customer service, profitable growth and operational excellence.
Today, high-tech firms face complex, volatile supply and demand. Many products have become commodities, with low margins and largely interchangeable components. In this buyers’ market, customers can easily compare prices and source goods globally. As consumers and B2B customers have increasingly gained purchasing power, their loyalty has faded. Manufacturers and OEMs who fail to deliver products with the right quality or at the right time can expect to watch customers take their business elsewhere.
In this precarious position, high-tech companies cannot afford a lack of insight into demand, market trends, B2B patterns, the supply network, or internal operations. They need sophisticated business solutions that help them operate at high velocity so they can respond to the rapid pace of change. Firms also need a scalable, resilient planning foundation that can scale up or down and pivot to respond to market shifts and help protect top-line revenue.
The Supply Chain department is just the right place to look for the remedy.
Building flexible plans
Legacy sales and operations planning software isn’t designed to meet these needs. Instead, companies need integrated business planning solutions that can provide the tools required to navigate the complex high-tech market.
These tools offer visibility into demand, delivering an early warning about developing market trends. By helping planners sense, analyze, and understand events that can impact demand, supply, and manufacturing capabilities, integrated business planning solutions can help convert data into actionable insight. The tools provide decision support information, so companies can assess their options, perform simulations, and create planning scenarios. Once executives make their decisions, the tools help high-tech firms execute their plans and measure results.
What’s more, high-tech companies can use integrated business planning solutions to ensure that all operations are executed using the same cadence or clock speed. For example, some firms receive supply chain information daily, but they can only update their tactical plan monthly. In between planning sessions, market conditions change multiple times. With real-time insight into business operations and evolving trends – and the ability to act on that knowledge – organizations can adjust their plans to take advantage of new opportunities and avoid unnecessary risks.
Creating a unified, granular view
With a complete integrated business planning model that spans demand, finance, and supply chain planning, and granular information on operations, high-tech companies can bring all key planning stakeholders to the table at once. Planners can view the same information, anticipate potential disruption, and agree on best steps for moving forward.
They can align operations vertically, from the highest level to the most detailed sales order, planning and replanning as conditions change. This granularity helps high-tech firms identify root causes on the transactional level, which can have a significant impact on profitability.
Think of a manufacturer that has 500 components of excess inventory in one plant and 500 too few components in another operation. From a high level, it appears that the company has the right number of components to meet anticipated demand. Without a more detailed view, planners would be unable to see that the first plant is about to lose money on aging components and the second operation will soon miss out on an opportunity to sell additional goods due to a lack of inventory. Data aggregation destroys the value of the information. Firms need an integrated planning system that includes all transactional data to get the insight they need to succeed.
To differentiate themselves and support innovation, high-tech companies need solutions that can help them engage key stakeholders in an efficient, integrated planning process that profitably aligns demand and supply. Is your high-tech organization ready to meet the challenges of a volatile market head-on?
To learn more about how integrated business planning solutions can help high-tech companies transform themselves, check out the following sources:
Dominik Erlebach, IBU High Tech