Although the rise of outsourced manufacturing dominated industry discussion in 2006, electronics companies were also faced with the implications of growing global competition, shortening product life cycles, distributed operations and volatile demand. All of those phenomena have made the supply chain an increasingly influential part of a company's success. So while there is an escalating acknowledgement and appreciation for the role of supply chain management, many would argue that the job itself has never been more difficult.

While the challenges are many, leaders in the space are distinguishing between "what's in and what's out"--what used to work vs. what companies need to do now to remain at the forefront of supply chain innovation and enablement. The practices that companies in the industry should expunge, and those they need to embrace for future success, can be best examined from the perspective of various operating segments.

Demand-driven supply chains

IN: Responding to demand

OUT: Forecasting demand

In the volatile electronics environment, the alignment of demand and supply is an increasingly difficult challenge. Companies spend a great deal of time and resources trying to predict customer demand.

Yet, despite the significant investment, forecasts are habitually inaccurate and often fail to add real value in the short term. The consensus is that, given today's level of volatility, planning has become less effective. The key capability now for organizations is to be able to rapidly respond to what is happening at the moment. Projecting what might happen, via a static forecast that is often out of date within hours of its creation, is simply not effective.

As such, organizations need to transition from a forecast-based supply chain to a demand-driven one. To do this, companies must establish a response-management competency, whereby action teams throughout the supply chain are empowered with the right tools and technology to quickly and effectively respond to demand changes as they happen--leading to such benefits as more accurate order promising, lead-time reductions and lower inventory levels and risk.

Visibility

IN: Actionable visibility

OUT: Static visibility

According to a survey by the Aberdeen Group, the most important challenge facing supply chain professionals is supply chain visibility. But achieving visibility solves only a portion of the fundamental problem. Many of the "visibility" solutions touted in the marketplace offer limited access to a subset of data. With separate, fixed views of information that cannot be integrated or manipulated, this type of visibility is far too passive.

What's required is the ability to leverage visibility to make decisions and take action. Providing information does little good without the capability to do something with it. Information, in this context, is powerful only when it can be:

• consolidated for a multienterprise view across the complete supply network;

• analyzed using real-time ERP analytics and data modeling for "what if" scenario simulations;

• shared and collaborated on with parties internal or external to the organization.

Real-time data analysis

IN: Instant data insight and analysis

OUT: Daily or weekly ERP reports

Traditional ERP/SCP technologies were designed for longer-term planning for a single enterprise. Hence, their approach and architecture are based on a linear makeup; batch sequential-processing and cycle times are measured in days and weeks. The mass of complex analytics requires several hours to regenerate, so ERP updates are often run overnight or on weekends. This time lag is no longer acceptable or appropriate when supply chain participants are looking for immediate information and answers.

The shortcomings of such solutions are only magnified when you account for outsourcing, where they offer very little in terms of visibility across multiple partner sites and data systems. These factors only add to the complexity and the lag. When issues arise (demand change, order drop-in, supply disruption and so on), as they always will, there is no time to wait for ERP reports, dig for data among multiple sources or perform ad hoc analysis using spreadsheets. It is a time for rapid decisions and action.

Companies must empower front-line staff with improved speed and flexibility in analysis capabilities, through immediate access to information that spans all layers of process and all tiers of the supply network, along with real-time manufacturing analytics for comprehensive data analysis.

Collaboration and coordination

IN: Collaborative decision making

OUT: Single-silo decision making

As organizations become more complex, effective collaboration becomes a strategic imperative. No organization works within four walls--least of all electronics companies. The electronics industry today is made up of virtual enterprises, where brand owners, contract manufacturers and suppliers are interconnected partners in coordinated operation. In such an environment, one person's actions will affect countless others. As such, decisions cannot be made in isolation; they require consultation and input from all those that can influence or be influenced by them.

When effective and efficient collaboration can be established, all parties can explore the options, wrestle with the trade-offs and develop a shared understanding and mutual commitment to the resolution. Collaborative decision making can empower the brand owner and contract manufacturer partner relationship, and drive the ideal behavior quickly.

Responsiveness as a differentiator

IN: Competing on responsiveness

OUT: Competing on product, price

In this hypercompetitive marketplace, electronics companies are realizing that the factors upon which they compete are changing. With countless competitive options and endless consumer resources to research and compare products, no company will survive with an inferior product or unwarranted price.

There is a leveling of sorts happening in the industry, given the transparency across the growing competition that offers little leeway for companies to differentiate themselves on the traditional aspects of product and price. So, in an industry characterized by cutthroat competition and impatient, fickle customers, a company's success rests on its ability to meet the aggressive wants of its customers before the competition does. To do so demands a responsive supply chain.

As such, establishing a strong response-management competency can become a key competitive differentiator. Having the process and technology in place that can demonstrate a company's ability to offer superior responsiveness and, therefore, superior operations performance and customer service is a compelling value proposition.

Consideration for software ROI, TCO

IN: Subscription or on-demand software

OUT: Perpetual software licenses

IN: Service with rapid ROI

OUT: Large IT projects with uncertain ROI

Long gone is the IT spending heyday. Today's mantra? Consolidation to a single platform. With much of the focus on keeping ERP running, IT departments have little interest in exploring uncharted projects that require precious resources.

A paradigm shift now under way is changing the way companies acquire, deploy and use software, so companies can continue to benefit from solutions that can serve a unique purpose and offer capabilities beyond what's available in-house. The future will be all about software as a service (SaaS).

Unlike traditional enterprise applications, SaaS or on-demand services require no user-owned or managed infrastructure (software or hardware), reducing risks and costs by obviating up-front capital investments and ongoing IT resources for maintenance and management.

Instead, this monthly subscription service is an operating expense that is much more man- ageable and aligns costs with value. And with a simpler deployment process that requires less time and resources, customers are able to realize a compelling time-to-value.

Randy Littleson is the head of marketing at Kinaxis Inc. (Ottawa). He can be reached at rlittleson@kinaxis.com.

    See related chart