In the vocabulary of today’s digital economy, “high tech” and “innovation” are virtually synonymous. This emphasis on innovation has driven a dramatic expansion in the definition of what high tech as an industry delivers to customers.
Today, it’s not just the computer on your lap and the phone in your pocket. It’s also the car you drive and the gadgets that control your home. It’s appliances with touch screens, shoes with sensors, watches with GPS. Across an ever-increasing range of possibilities, the high-tech industry prides itself on delivering products that change the way we live and work.
Innovation is so deeply ingrained in the high-tech industry that customers expect it. Innovation has become the norm – a commodity in itself. This, in turn, is making customer experience and service into an increasingly important differentiator.
Yes, coming up with the next big product is essential to staying relevant. But at the same time, the pressure is relentless to drive down costs, increase efficiency, and maximize ROI across all areas of operations – even in the face of ever-growing infrastructure, development, and research efforts.
Differentiation, in other words, is not exclusive to product innovation in the high-tech industry. It is also increasingly dependent on excellence in areas such as manufacturing, logistics, and supply chain management – and one of the keys to success across all of these areas is to develop an integrated business planning platform that helps tie all relevant activities together.
Platform considerations
For brand owners in the high-tech industry, you have to start somewhere – and this somewhere is typically a demand forecast, which becomes the drumbeat of your extended supply chain network. With expensive critical components and long lead times, even the smallest change in the demand picture can wreak havoc in the high-tech industry – particularly when there’s significant lag time between the actual change and the detection of it. And in an industry where demand is volatile and fluctuations are the norm, the ability to respond to short-term changes is critical.
Leading brand owners and manufacturers, therefore, put a premium on platforms that facilitate the ability to detect demand changes in real time and then respond effectively. Such platforms help you standardize and integrate supply chain processes, not only for demand and supply planning but also for collaboration with partners such as contract manufacturers, critical component and commodity suppliers, distribution partners, and customers. With the integration of disparate systems and the ability to handle the big data volumes associated with a global supply chain, you can realize the operational and planning efficiencies that help to drive down costs and improve performance.
A platform up to the task for high-tech brand owners and manufacturers should support the following:
- Collaborative sales and operations planning (S&OP): Today, S&OP needs to move from an insular process executed within planning silos to one that reaches out to include all planning constituencies on a more continuous basis. A robust platform helps to pull all relevant partners – inside and outside of the organization – into the planning process where quick collaboration can happen based on a single source of trusted data.
- Response and supply planning: To respond more effectively to demand fluctuations and supply disruptions, platforms should allow you to mix multi-level demand and supply matching and rough-cut capacity planning with embedded analytics and exception management – including the identification of gating factors. This can help you better prioritize demand, generate effective allocations based on promises to deliver, and improve response management.
- Inventory optimization: A platform that supports multi-echelon inventory optimization can drive down working capital investments and drive up service levels by helping you plan more effectively regarding inbound raw materials and finished goods in distribution centers. For outsourced manufacturing, this can also drive down off-balance-sheet liabilities. Support for demand-driven material requirements planning (DDMRP) with advanced analytics also makes it possible for you to develop better profiles of decoupling points and related buffer stock positions while generating a continuous flow of goods – thus reducing the MRP nervousness that is prevalent in the extended supply chains of the high-tech industry. This can help reduce the risk of stock-outs, optimize inventory carrying costs, and reduce the dependency on forecasts that are never perfect.
- Demand planning and sensing: By mixing data on historical trends and seasonal patterns with, say, live data from sell-in and sell-through data (even down to point-of-sales systems), you can sense shifts in demand in real time. Statistical models can help you develop accurate mid-term forecasts, while demand-sensing capabilities enable you to react to near-term demand changes as they occur. You can also use machine learning technology to identify correlation patterns and automate the detection of demand changes.
- Multi-tier supply chain collaboration: Most high-tech supply chains rely on multiple tiers of trading partners that need to be aligned effectively. As opposed to regular physics, information in supply chain networks typically flows easier upstream than downstream. So, next to communicating forecast and demand information upstream to multiple tiers of manufacturers and suppliers, it is important to also obtain more real-time information of manufacturing status, inventory on-hand, and on-order positions of trading partners to make better and more informed decisions. Highly effective companies leverage the power of business networks to achieve scalability and lower the hurdle of onboarding or switching suppliers – thereby increasing resiliency and automation.
- Real-time monitoring: To help tie all activities together and monitor events in real time, you also need some sort of visibility layer – a dashboard, cockpit, or control tower. Such a layer should enable you to not only track critical KPIs but also drill down into the details without having to jump over to separate systems. From such a monitoring environment, you should also be able to manage alerts, run simulations, and even collaborate with partners as needed.
As high-tech brand owners and manufacturers continue to seek out ways to compete more effectively in crowded markets, the ability to execute on business plans and respond with agility to changing market dynamics is becoming an increasingly valuable point of differentiation. A proper, integrated business planning platform that helps you consolidate your view of all relevant data and act on that data with confidence can help you improve decision-making, speed your execution, and – ultimately – enhance the customer experience with quality products that meet demand.
To learn more about best practices for integrated business planning in the high-tech industry, download the IDC report on digital business planning.
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