The globalization of today’s supply chains is presenting new challenges to operations managers, purchasing professionals and many others involved in design and production. Distributors play a large part in the process, offering the products, technologies and services those professionals need to develop leaner and more productive supply chains. Global Purchasing asked Lalit Wadhwa, vice president, global supply chain operations for Avnet Electronics Marketing, to talk about some of the greatest challenges facing supply chain professionals today and how companies can work together to mitigate risk and develop more resilient global supply chains. Wadhwa is a 20-year Avnet veteran who specializes in seamlessly moving supply chain operations from one region of the world to another across multiple sites. The following are excerpts from our conversation.
Global Purchasing: What are the greatest challenges facing operations executives today when it comes to supply chain visibility?
Lalit Wadhwa: There are four or five things happening for high-tech companies. You have globalization, as most companies are now engaged in manufacturing products in different parts of the world. This is not limited only to the supply chain or the manufacturing piece of the equation; we are now seeing design being done in different parts of the world. So now you have multiple companies attempting to collaborate to create a product; and they are operating in different parts of the world, on different systems and in some cases in different languages. This introduces new challenges.
There are also things like the rate at which demand changes for a product when it’s launched. We must also look at things like shrinking product lifecycles and rate of obsolescence. These issues also present new challenges. And I would say one additional criterion that creates challenges moving forward is sustainability and concerns around regulatory issues. Addressing these challenges adequately requires visibility across the entire supply chain.
Global Purchasing: How has globalization complicated supply chain management and what other, similar factors must operations executives take into consideration?
Wadhwa: Beside the points that I just shared, there are a couple of other things. The first is extended supply chains, multiple partners and there is an explosion of data. … What to do with this data is something I don’t think too many companies in the high-tech arena are aware of. This explosion of data continues to be a significant challenge and complication of the globalization.
[Design challenges are also an issue.] It’s an understated but very critical fact: How you design your product ends up affecting your supply chain. Design chain has a very significant impact on your supply chain. I’m not sure if everyone looks at this in a very careful manner. We can have customers who are choosing components from manufacturers or who are choosing components for their new products and the components are at the end of their lifecycle. By the time the design is complete, they may face problems sourcing some of the components if enough focus hasn’t been put on the component availability and the manufacturer’s roadmap in the design chain. I think there is some room for improvement here in the industry.
From a design chain perspective, our focus is to share data with customers—share with them where in the overall lifecycle that product is, and provide predictions for future pricing and availability; and also to provide information on alternate or equivalent products that can be used if that product really goes EOL [end-of-life].
Global Purchasing: What technologies and solutions are available to help companies proactively manage their supply chain risks?
Wadhwa: From an Avnet perspective, this is something that we have been doing actively over the last decade … Loosely, I’ll refer to our current set of solutions, which are very widely adopted by our customer base. I’ll refer to them as legacy solutions. In the legacy category, what we continue to do is provide customers access to a secure Web portal into their supply chain that links back to Avnet. What that fundamentally means is the customer can log into a Web portal and extract information from Avnet’s Web portal … They look at data points such as what inventory Avnet is holding [for them] and in what parts of the world, what is its age, what is the backlog. And they can ask, “What is my cost across different parts of the world? Do I have excess inventory in one part of the world and do I have it somewhere else?” These data points have been made available to customers through Supply Chain Central, our secure Web portal.
Customer needs have become far more complex. In the evolving set of solutions, what Avnet has done is partner with [cloud-based software solutions provider] E2open and created solutions which are cloud based; these solutions bring together all partners in the supply chain … on a single cloud-based platform. So, theoretically, you have information across the supply chain in one single system.
These are some ways we are meeting the complex demands of our customers.
Global Purchasing: What benefits should companies expect from investing in increasing their supply chain visibility?
Wadhwa: First, look at the strategic benefits: supply chain visibility across an extended supply chain that circles the globe. For many of our customers, this is the fundamental building block for driving supply chain maturity. Once you have that ability, companies can take up things like cost-to-serve analysis, cost-to-serve optimization, risk identification, risk management, response management and supply chain segmentation … These are things that companies wish to do to improve their profitability and help them deal with risk in the global supply chain. In a global environment, you need to have the fundamental building block of supply chain visibility in place before you can address all these things.
Global Purchasing: What are the next big steps needed to improve extended supply chains?
Wadhwa: Number one, a large percentage of companies have yet to leverage the significant benefits that come into play when gaining supply chain visibility. Getting there is goal number one because the benefits are real, measureable and significant.
Also, identifying the risks in your supply chain, understanding that if an event occurs how do you recover—those are things that a high percentage of companies in the high-tech arena have yet [to integrate].
Global Purchasing: Any closing thoughts?
Wadhwa: The only additional point I would emphasize is that this is not theoretical stuff. The benefits of all of this are very real, very measurable and very significant, so customers will want to take the next leap into building resilient supply chains. Resilient supply chains are essential to growth. You can continue to have non-forecast events. The only way to mitigate risk is to understand those risks. The only way to understand those risks is to understand your supply chain. Our goal continues to be to educate our customers and to help them where they believe they need help—and also by helping them execute their overall plan related to these issues.