How the tech supply chain makes the world’s gadgets

I recently read an interesting article published in the Wall Street Journal that I wanted to share as it illustrates the ripple effect on the supply chain from dramatic demand changes.

The further down the supply chain, the less visibility and therefore the greatest impact. Although there has been a lot of talk over the last year due to the drastic contractions in the electronics industry, this effect is not new. Regardless of times, demand planning and supply chain strategy need to be managed thoughtfully as the pipeline requirements are turned up or turned down. Suddenly shutting off the pipeline has caused significant problems for many suppliers in this last year. Initially, excess inventory was the issue and more recently it seems that lack of inventory availability is becoming a problem. Considered an industry overreaction, turning the demand back on may not be as easy.

I would suggest that operations and supply chain professionals not continue to “wait and see.” It is imperative to structure a robust and tightly integrated end to end model to optimize responsiveness. This will translate into significant cost avoidance by minimizing inventory exposure, maximizing the speed of order fulfillment, and optimizing logistics to highlight a few.

The following diagram provided by the Wall Street Journal depicts the life of a DVD player and all of the dependencies within the supply chain. Each link adds a layer of complexity.

How the tech supply chain makes the world