Delving into the complex and multifaceted mechanics of the supply chain, Rob Horgan asks the channel what challenges it faces when getting a product to market and what is being done to overcome them in 2017.
For a product to get to market it must first pass through a meticulously thought-out supply chain. Designed to be quick, efficient and as painless as possible, the chain connects vendors, distributors and retailers alike. And with the race against the next tech innovation always at the forefront of the industry, any one glitch in the route to market could spell disaster for a product’s chances of success; potentially losing money for the retailer, distributor and vendor in the process. Here are, in order, the top five challenges facing the chain, as chosen by the channel:
1 – Time management
With technology developing at a rate knots, companies are constantly grappling to move products before they become discounted, marginalised or obsolete. Ben Allcock, commercial director at TP-Link, highlighted time management as the biggest challenge to creating a successful supply chain. “Consumers are hungry for the latest technology and this is only accelerating,” he said. “Vendors need that first-to-market advantage on new products and resellers/ retailers need to be stocking the latest products to attract the customer.”
Westcoast Retail managing director, Carl Oxley, added: “The ability to adapt to a changing market is important. Collaborative planning and forecasting enables a reduction in stock held in distribution centres, improving supply chain efficiencies.”
2 – Relentless cost pressure
Getting more bangs for your buck is pretty much essential to any successful business model, and the technology sector is no different. As Oxley explained: “Distributors must work closely with manufacturers to understand lead times on products to enable them to forecast deliveries and create a supply chain that is as efficient as humanly possible.
“A close relationship between the distributor and retailer is also crucial, as the rate of sale must be factored into forecasts. Vendor and retailer input can then be combined with knowledge of the particular market conditions to ensure the right volume of stock is in the right place at the right time, reducing working capital and therefore cost pressure.”
One way that many companies are combatting the financial pressure is by consolidating the market through mergers. In recent years we have seen the merger of Dixons and Carphone Warehouse; Sainsbury’s buying up Argos; and Hilco acquiring Mico.
3 – Shrinking product cycles and ‘big bang disruptors’
Product lifecycles in the tech sector have shrunk to months, as new technology is rolled out at an unprecedented pace. Ashley Watts, Westcoast emerging vendors and accessories director, believes this environment leads to a ‘commoditisation of the market’, whereby ‘price is driven down by the need to move stock on’.
Allcock added: “Vendors need to find the right balance between sustainable longer term run rate product and driving new technology/innovations to fulfill demand. This is why successful organisations reinvest a large percentage of sales back into R&D to find that next big thing and keep ahead of the game.”
4 – The Internet of Things and rise of robots
With robots becoming smarter and machines communicating with each other, technology itself could be a threat to the supply chain’s efficiency. Ian Parker, professional services consultant at Axians UK believes that the Internet of Things can be a good thing for the supply chain, if (and it’s a big if) used correctly. “Using internet-connected devices in business safely and correctly will provide considerable advantages to productivity, communication, operation and visibility,” he said. “However, the Internet of Things is only as secure as you make it. It is therefore up to the business to ensure these devices – which are essentially remote controls for the world to operate – are secure.”
5 – Security
The threat of cyber-security breaches is a growing concern to governments, consumers and technology firms alike. As Axians MD Russell Crampin explained, security is ‘crucial to maintaining confidence’ both inside and outside of the
“Customers must be reassured that their data is secure and that if something does go wrong, the organisation has the expertise to quickly address the issue at no cost to the end-user,” he added. “With threats becoming more sophisticated all the time, businesses must use the latest technology to protect their employee and customer data.”