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Digital Transformation in the Electronics Supply Chain

2017-03-08 user ico Iczoom eye 92

The digital supply chain is moving into a maturation phase and bringing real shifts to how business is conducted; not just through internal IT operations and business processes, but inter-organizational shifts as well. Corporations are now leveraging their digital business processes to improve operational flow, automate transactions and gain visibility into not only their own organizations but also their partners’. Visibility and transparency, therefore, have continued to rise as key capabilities and requirements for leading supply chain partners.

Digital Transformation in the Electronics Supply Chain

In the electronics and semiconductor sector, there is a focused shift from cost management strategies and improvements to innovative new growth, according to Virginia Howard, Supply Chain Research Director, Gartner Research. The new growth wave is significantly different than previous solution strategies; they demand innovative, solution-centric offerings that are too broad to be met by single corporations. Among Howard’s findings are these core shifts informing the trajectory of change:

[…] high-tech companies are moving beyond traditional corporate silos and leveraging co-opetitive ecosystems underpinned by solution-centric supply chains as a new means to create and capture value.

Ecosystem business models are redefining the span of control, partner relationships and capabilities required of high-tech supply chains.

The co-construction of these new ecosystems is driving pervasive shifts along the global supply chain. Not only is the industry moving from competitive to more co-opetitive relationships, business processes and solution innovation are also changing and driving supply chain-internal shifts.

The new era of Solution-Centric Supply Chains, or SCSC as coined by Howard, address the more complex solution demands from customers by leveraging the now mature digital business infrastructure, as EPS discussed in December. Not only are companies leveraging these internal assets and linkages, as Howard explained, complex solution innovation is interconnected with the ecosystem development that is occurring. Supply chains as we knew them were not conducive to the agility and innovative collaborations demanded today.

“We think of solutions and customers and working with partners to deliver differently [than before],” Howard commented. “Companies are not so complex and vertically integrated [any longer; instead, today they] can influence and manage via a more federated approach to supply chains. Truly that is where more profitable growth comes from. [Companies now] develop ecosystems that are focused on the customer and build [upon] the management of collaborative relationships.”

Electronics distribution has long left the simple buy-sell and just-in-time delivery paradigm. Solution services are de rigeur: markets are both complex and idiosyncratic, and hence solutions must be as well. Digital distribution is part and parcel of the evolving, federated ecosystem that is taking the place of traditional, linear supply chains. Not only does global economic power shift as it moves from globalization into a multipolar era, there’s a trickle down into co-opetitive partnering to leverage core strengths and reset the power among supply chain partners for the shared goal of growth.

Enabling transparency

One example of how companies are making this shift is e-commerce leaders such as electronics distributor Verical.com that have recognized the multipolar shape of today’s supply chain. Based in the U.S., Verical.com can ship components from wherever they reside on the globe directly to the point of customer consumption. What Gartner calls a “federated supply chain” requires significant automated data-sharing from the source of supply through product delivery.

In the face of rampant electronics counterfeiting, original component manufacturers (OCMs) have made their products traceable back to their factory floor. Verical’s guarantee that the parts it sells are OCM-verifiable requires the data associated with those products to be seamlessly transferrable and completely transparent. When components are listed for sale, pricing is completely visible to seller and buyer, further eliminating guesswork from a highly-automated purchasing transaction.

Marketplaces such as Verical’s also embrace “co-opetition” by selling components that reside on other distributors’ shelves. Unused inventory benefits no one in the supply chain; Verical provides a frictionless venue for companies that are looking to buy or sell authentic parts. OCMs, distributors and customers all benefit when components are sold rather than scrapped or aging until the parts become obsolete.

Growth, like solution design, is no longer the result of a corporate, top-down strategic plan. Customers’ demands are woven into collaborative solution sets that leverage the now highly agile components and sourcing possibilities. Connecting disparate corporations through their digital business platforms not only enables component delivery where and when it is needed at optimal pricing; it caters to the additional, unique requirements by customers.

Leading distributors today are providing transparency, visibility, and automated procurement to their customers in ways that were only dreamed of previously. The ability to leverage digital business solutions across the enterprise and strengthen service offerings by coordinating innovative and agile solutions has propelled the role of distribution to far more strategic positions within the supply chain. Not only has the industry seen the growth of complexity in customer solution demands and the expansion of procurement officers’ strategic responsibilities; it has also seen the complexity in new supply chain relationships that deepen and broaden business relationships.

Top-down, tiered business hierarchies have no place in the federated ecosystems that are driving the innovative solutions of today and tomorrow. Business partnerships and solution design have new meanings and with that, distributors have moved into a newly central position in corporate strategic growth plans along the electronics supply chain.


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