Technology companies operate in a particularly demanding supply chain environment. The sophisticated components that make up today’s mobile phones, laptop computers and IT infrastructure are sourced from specialist suppliers spread right across the world. Technology companies also have to contend with product life cycles measured in months rather than years, and with highly volatile consumer demand. Their markets are prone to disruption by new products, new product categories, and new market entrants. Cost pressure is relentless too, with customers expecting products to get cheaper even as they become more powerful and feature-rich. Finally, sales channels are getting more complex. Companies must serve customers online, through traditional retail stores, and increasingly through hybrid routes such as “order online, collect in store” services.
In such a fast-moving and highly competitive market, technology players have sought to improve their responsiveness by reducing inventory levels wherever they can. Inevitably, however, this strategy increases their exposure to delays and disruption in the supply chain. As a result, leading technology firms have made the management of supply chain risk a strategic priority. To avoid supply chain disruption, they are looking for more effective ways to promptly predict and identify any changes and irregularities in the supply chain and the external environment.
Technology companies are also planning ahead, establishing priorities for the management of different types of risk. To better predict risks, some companies are starting to use Internet of Things (IoT) capabilities that enable a new level of self-awareness and communication between technology devices and their ecosystem. To respond to issues that do occur, technology companies are working to improve collaboration, risk sharing, and value alignment with all supply chain partners. They are trying to establish flexible supply chain networks, too, a strategy that also helps to speed new product introductions and meet spikes in customer demand. To make these strategies work, they need tools and processes that show the exact status of materials and products in the end-to-end supply chain, and enable multichannel forward and reverse flows.
As they build the capabilities to meet their existing challenges, technology companies face new ones, too. Stringent end-of-life reuse and recycling regulations, for example, can lengthen the supply chain many years beyond the point of product delivery. In addition, technology companies are now required to collaborate with customers to protect products and services from cyberattack. Malicious hardware and software cannot be allowed to enter the supply chain at the materials, manufacturing or transportation stages. This can broaden the supply chain risk management challenge to encompass customers as well as suppliers.