Supply chain complexity is costing high tech manufactures dear

Their ‘High-Tech Manufacturing Supply Chain Survey 2009’, conducted by US-based KRC Research among manufacturers in Germany, Japan and the US, finds half of CIOs and vice presidents and a full 65% reporting supply chain disruptions that are not reported by their systems for hours or longer. “The economy may be down, but the number of products, suppliers and geographies that high-tech manufacturers have to manage has gone way up,” explains Tyler Bryson, general manager of US manufacturing and resources sector at Microsoft. “This complexity has made it difficult for firms to discover disruptions and act quickly, and this is becoming an increasingly serious industry issue.” Indeed, he suggests that supply chain disruptions can damage income by more than 100% for up to two years after an incident occurs. And the reason is that, according to the survey, 29% of high-tech manufacturers produce more than half of their manufacturing output through third parties and contract manufacturers. At the same time, numbers of SKUs have risen an average 66%, geographies covered have grown 63%, suppliers are up 62% and production locations have increased by an average of 59%. “Complexity of products, suppliers and geographies is one issue, but supply chain professionals often have poor visibility across the enterprise and its trading partners, and lack the tools to make informed decisions and manage performance globally,” comments Sanjay Jalona, vice president and US head of manufacturing at Infosys Technologies. “Data that’s still captured manually or is scattered across multiple systems must be gathered together and manipulated in order to gain real, actionable insight that these professionals can act upon quickly,” he adds. While high-tech manufacturing professionals currently use technologies ranging from Excel to full-blown ERP systems to manage supply chains, the survey suggests there will need to be increased use of collaboration tools by 2010 – ranging from web conferencing to IM, unified communications and business intelligence and analytics. “Due to the critical need to communicate in real time along the supply chain, the industry will begin to adopt more collaboration tools, such as instant messaging, social networking, VoIP and more,” suggests Drew Gude, US high-tech and electronics industry solutions director at Microsoft. “However, the key will be managing these tools in a secure way while still allowing real-time collaboration to occur among trading partners and across geographies.”