What good is sales growth if the supply chain can’t execute? In a recent article in The Globe and Mail, the authors share the great difficulties that smartphone companies are experiencing as they introduce new, very advanced technologies in their phones.
Demand is high, and contract suppliers can’t keep up. It seems that capacity and technical capability have not caught up with the needs to produce and ship product. Many raw materials and parts aren’t available in the volumes needed and much of the technology is stressing production capabilities to meet quality requirements.
How Are These Companies Responding?
Quite typically, they are ramping up capital expenditures, buying new equipment and investing in more R&D. Some companies have decided to bring production in-house, believing they can control production better than companies whose total focus is on that sort of production. Such is the way large companies with lots of money often try to solve problems.
How to Avoid Growing Pains
What could these companies have done to prepare their supply chains to meet the demand they anticipated? A little pre-planning and communication could potentially have avoided this issue in the first place. There are three things companies can do to help support execution:
First, start communicating with suppliers early in the design phases. Many of these companies carefully protect their technology R&D, often cloaking it even from their “trusted” suppliers. If you can’t trust your suppliers, you need new ones. If you do trust them, bring them into the design process so they can prepare their capabilities early on to produce what is needed.
Second, look at several levels of the supply chain. Talk to the supplier’s suppliers, especially of materials that might be hard to get or are on allocation. If design changes are needed to help accommodate demand, early knowledge provides more time to make such changes.
Third, have a rigorous communication and planning process with the suppliers. Sales and Operations Planning (S&OP) should extend beyond the four walls of the company into the supply chain.
They say smart people learn from their mistakes, but really smart people learn from the mistakes of others. Smart supply chain management requires communication and planning to help avoid the kinds of supply problems the smartphone companies are experiencing. If you plan ahead and communicate, you can enjoy sales growth without the growing pains.
© 2013 – Rick Pay – All Rights Reserved.