We are living in an age where the consumer electronics (CE) market is governed by how the products are placed, bought, and re-ordered. The plethora of features offered by these products also take a toll on the devices, which leads to their life cycles being unpredictable. This in turn creates uncertainties in the re-ordering cycles, which pressurize the supply and distribution networks.
The consumer electronics distribution industry is highly customer-centric, with companies being engaged in a perpetual battle between demand variability and supply variability. Consumers tend to lean towards a product that lures them with features at a given point in time. Beyond this point, it is the service and quality that determines brand loyalty. This coupled with re-ordering ease and lower lead times, make for a regular customer.
Today, traditional demand planning and supply chain planning are no more adequate to meet the challenges of the future, pertaining to the consumer electronics distribution industry. To manage the intense pressure from competition, shrinking margins and difficult-to-please consumers, consumer electronics distributors and traders need to create a supply chain roadmap that expands the scope and role of Supply Chain Management. This scenario calls for smart technology such as a well-equipped ERP software suite that can effectively cater to the dynamic and volatile consumer electronics distribution industry with its industry relevant functionalities.
With advancing technology, smart offices and smart homes are in vogue, where consumer electronics play an important role. Rising disposable income of the people and their shift in preferences towards smart home and office environments are driving the growth of the consumer electronics industry.
The segmentation of the global consumer electronics industry by product type are visual and audio products, television, laptop, speaker, refrigerator, air conditioner, washing machine, dish washer, food processor, microwave oven, iron, major home appliances and the like. These myriad products are placed in three pricing models which are low-cost products, medium cost products and high-end products. These products reach the end user from the manufacturing sites either via online distribution channel or offline distribution channel.
Today’s supply chain business is more challenging than ever. There are endless things to consider, such as how to reduce costs, increase safety in the warehouse and deliver products to customers faster, etc. Although the supply chain is a big business for many companies, the rise in the consumer electronic industry has brought a whole new set of challenges that are unique to its processes, functions, and data requirements. Depending on the industry you work in, the challenges you face could vary.
Despite the bevy of challenges the consumer electronics distribution industry faces, with the right support, stakeholders and distributors can overcome these challenges and gain a competitive edge. Many of these challenges concerning the supply chain can be tackled by deploying an industry-specific ERP (Enterprise Resource Planning) software suite that effectively caters to the dynamic needs and requirements of the unpredictable global consumer electronics distribution industry with its advanced features. Orion™ ERP has emerged as a one-stop comprehensive technical solution which is specially designed and developed to offer industry smart and feasible solutions.
1. Multiple Partners/Globalization
There are many partners involved in a product’s journey from the raw materials to the product being delivered, which means you will need to collect and organize various sets of data. Strong visibility across your supply chain is paramount to ensure that you are not constantly reworking plans and dealing with communication problems between your partners and suppliers as well as yourself. A lack of visibility can also cause you to overlook any existing discrepancies.
To anticipate change and risk, you need a single, harmonious end-to-end network. In other words, you need to capture all master and transactional data with one system, capture details from your partners, and operate from that single source of information. This will reduce the time it normally takes to gather current data and search for any issues that you need to resolve. It will also serve you well to set control limits on international standards, regulated compliances, and customs requirements, among others.
2. Short Product Life Cycles
Short product life cycles create an environment full of risk. There are many changes that happen over the course of the life cycle, and you will need to carry extra inventory to make sure you have enough products on hand to meet your customer’s demands. Unfortunately, this means higher carrying costs and a greater risk to your bottom line if the product does not perform the way you expect.
To resolve this issue, you need to create several supply chain policies that show the changes in life cycle demand. With these patterns on hand, you’ll be able to compare your plans based on changes in prices and customer segments and/or new markets to find the best results.
3. Merger and Acquisition Activity
The slower your data integration process, the slower the pay-off. Mergers and acquisitions are valuable in company expansion.
The faster you can merge data, planning, and analytics, the faster you will reap the rewards of your investment. Your planning solution should be able to incorporate data seamlessly. Once this data is collected, you can manipulate it, analyse it, and reduce your inventory as well as cost risks. With a current set of data, your plans will be more accurate and likely to succeed.
4. Slower Decision-Making
To be prepared to deal with any possible problems that may come your way, you will need to dedicate yourself to finding the right harmony between costs, revenue, and service. For this to happen, proper internal collaboration is required,. It can become a challenge to get internal stakeholders to be on the same page. This inability to balance daily decisions can slow down the decision-making process and hold you back when you need to respond to changes in supply, demand, or capacity.
5. Demand and Variety
Consumer tastes and interests are more customized than ever before, and supply chains face the constant urgent need to create new products to match the changing preferences of customers. This leads to more SKUs and shorter product life cycles. Aspects like product development, sourcing, and fulfilment, are more complicated than ever before. Transportation costs are also higher. The better a company can manage their inventory, the better they can meet these demands.
One should be able to track the movement of the products in the warehouse. This will provide information so that you can forecast which products you need to restock, and which items have lost relevance. With this visibility, you will be able to make better decisions that will save you money and ensure that you are getting the right products to your customers.
6. SKU Visibility and Management
Each component from wires and cables to consoles, devices and accessories has a unique SKU. As new generations of products come out, the variety of these items grows exponentially. Therefore, active SKU management is so important to ensure that the right product is in stock and correctly identified with bar codes to enable high order fill rates and picking accuracy. This active SKU management enhances inventory management and order accuracy.
7. Inventory Visibility and Optimization
With the ability of a consumer to order online and pickup at store, or the ability of a retailer to ship from store, accurate inventory management is crucial. With customers having so many channel options to purchase products, having the right product in stock has never been more critical or challenging.
The supply chain challenges in the consumer electronics distribution industry are sure to create new opportunities for those brands that embrace multi-channel fulfilment strategies. Creating a competitive advantage for their industries with a streamlined, efficient, and lean supply chain will be key.
8. Reverse Logistics & Sustainability
Rapid changes in technology are resulting in the growth of e-waste. With increased regulation around e-waste management, OEMs are being forced to undertake the responsible management of returns. Consumers too are demanding products that have a lowered packaging footprint, lowered used of hazardous material and safe product disposal guarantees as part of sales agreements. There is an economic opportunity in the recovery of components that the consumer electronics industry has sensed. The economic value of Reverse Logistics and Sustainability initiatives will create more stringent methods of evaluating vendors and suppliers.
9. Supply Chain Collaboration
The trend to outsource non-core operations is growing along with vertical integration of core competencies. CE manufacturers and OEMs don’t want to get locked down with assets and are outsourcing non-core operations that have led to the growth in manufacturing as a service. Core competencies in design and innovation that define differentiators are being retained as manufacturing gets commoditized. Simultaneously, collaboration with retailers has become critical. Increased collaboration and integration of data with retail stores in real time is gaining significance to sense and shape demand.
10. Supply Chain Planning
Across the CE industry, the time to respond to market demands and changes is shrinking. The viral effect of social media can create and destroy demand practically overnight. Manufacturers need to be agile and flexible, ready to expand and grow their supply and manufacturing networks in an environment that does not allow accurate forecasting. On the demand side, manufacturers need to adopt an aggressive degree of collaboration with retailers so that they are better positioned to respond to changing demand.
11. Pricing, Logistics and Other Cost Pressures
The competitive global marketplace has benefited consumers because it has brought in the latest and greatest innovations at lower prices. However, for supply chains, this has led to shrinking margins. Manufacturers in the electronic industry must find ways to deal with this downward pressure on operating margins and find ways to save money without
TRENDS & OPPORTUNITIES:
1. Social Media
The growth of social media has impacted the way demand for Consumer Electronics is generated. It has also made it possible for manufacturers to monitor the demand and use social media as a marketing and feedback channel. On the demand side social media has helped fuel demand in new markets and will play an increasingly critical role in supply chain management.
2. Managing shorter product life cycles
Many electronic devices continue to shrink in size, even as they offer more powerful and smarter capabilities.
The unrelenting pace of technology advances is a plus for consumers, but it also increases expectations for ever-improved devices, shortens product life cycles, complicates demand planning, and erodes prices. The moment many electronic products leave the factory, their prices fall at a rate of about 2% every two to four weeks they are in the market.
A company that misses the roughly three-to-six month curve in the product life cycle, during which it can make a profit, may end up selling its goods at a discount. Suppliers of both components and finished goods face this risk.
To address the risk, electronics companies need to carefully manage their inventory. Tools such as dedicated inventory management solutions are generally more robust than spreadsheets and can, for instance, track product and transaction information in a central database from which all departments can draw. Some suppliers can provide sophisticated inventory management capabilities.
Some electronics retailers address the challenge of shorter product life cycles by using the devices as loss leaders, but because they may make little profit on the devices, electronics retailers instead promote ancillary products and service plans.
3. A shift to platform
In addition to correctly anticipating “the right bundle of new features” to include in new products, electronics suppliers need to make sure the bundle they offer is the right platform for the content and services that will run from the devices.
Here’s why: Even as many electronic devices feature more capabilities, they’ve also become commoditized, with fewer consumers showing much brand loyalty.
To counter this, electronics suppliers need to use technology not only to build smarter devices, but also to drive new customer experiences. Ultimately, many suppliers will need to transition away from hardware-only models.
Each interaction between consumers and a device can provide data and insight into their preferences, and that knowledge could lead to new revenue models.
4. Small household appliances: The most popular items during the COVID- 19 crisis
According to a survey, during quarantine, most of the indoor activities that people engaged in daily required gadget or appliance, whether it’s surfing the internet, watching TV, cleaning, listening to music, cooking, talking with family, playing video games, or following the news. Even reading can be considered an electronic activity in the COVID-19 landscape, where it is easier to access eBooks than to order printed books for home delivery.
But this spike in demand for electronics products can also be attributed to the new teleworking routine, which has enabled employees to continue to meet the needs of their job remotely.
This explains the surge in purchases of equipment for teleworking, such as laptops, headphones, webcams, monitors, and printers as well as appliances to replace services that are no longer available, like hair cutting machines for those in need of a trim or washers and vertical irons for consumers who once regularly outsourced their laundry.
Surprisingly, another sector benefiting from the COVID-19 crisis is that of niche kitchen appliances, which witnessed soaring popularity as people across the globe were cooking more at home. These include sandwich makers, rice cookers, juicers, pasta machines, food processors, kneading machines, bread makers and mixers.
5. Navigating supply chain complexity
Along with the consumer electronics devices, electronics supply chains have also grown in complexity, constraining visibility, and heightening uncertainty. As the number of suppliers, distributors, fulfilment centres, and other organizations increases, supply chain data gaps and inaccuracies become more frequent and troublesome.
Companies need other technical tools to provide the robust information required for today’s supply chains.
For instance, some Internet of Things (IoT) devices can feed real-time transportation data to a supply chain planning system, allowing for rapid corrections while products are in transit.
6. Eradicate Supplier Labelling Errors and Optimize Inventory Management
Changes made after the global recession in the early 2000’s helped several electronics manufacturers respond to the disruption caused by the COVID-19 pandemic. They diversified not only their product lines, but their manufacturing sites and supply chain partners. This made it possible to shift production to other locations, source materials from other suppliers and contract manufacture with other partners. Key to the success of these shifts is their ability to adapt labelling operations to new locations and different suppliers. Labelling systems must support the quick on-boarding of suppliers, with browser-based access that extends labelling to supply chain partners, using approved labels and content. Deploying a cloud-based Enterprise Labelling Solution also allows manufacturing and warehousing sites across the global landscape to access labelling content, ensuring that products and materials arrive on schedule and production lines continue to operate.
7. Gain Visibility Over Your Labelling Landscape
Coupled with the need to shift product from one location to another is the need for visibility across the supply chain. With greater reliance on suppliers, contract manufacturer and 3PLs, electronics manufacturers need better insight into what is shipping and when. Standardizing labelling on a central, cloud-based platform eliminates silos of information and improves visibility of what is being produced and delivered to which locations. A globally accessible centralized solution also makes it easier to track and trace goods, aiding in the fight against counterfeiting. Incorporating business analytics that provide information via real-time dashboards and flexible reporting, can provide invaluable information about where products are in the supply chain and which resources are in greatest use.
8. Minimizing counterfeiting and theft
How can retailers and distributors ensure the products they purchase from their suppliers are what they claim to be? To start, transparency is key. Today, there are systems that can track and match every product a customer purchases all the way back to a supplier.
Blockchain can play a role by providing an immutable record of an object throughout its life cycle. No single party can change or append the data without the network’s consensus.
In addition, retailers should work directly with manufacturers and their authorized distribution channel partners. These companies are much less likely to substitute counterfeit goods for the real thing.
The risk of theft for some electronic devices, such as phones and tablets, can be significant, given their high value and relatively small sizes. To address occurrences of theft during last-mile delivery, suppliers can map variations in the rates of theft between different regions. Using this data, they can identify where it might make sense to use alternative delivery and fulfilment options such as leaving items in a storage locker rather than consumers’ front doors.
Flexibility and adaptability have become critical attributes for all players in the electronics supply chain. In addition, suppliers, fulfilment centre operators, carriers, retailers, and others increasingly need to speak up.
Electronics companies, both individually and through trade associations, need to connect with the regulators and legislators who develop policy.
9. Ensure continuous labelling operations
Labelling is a mission-critical operation within the supply chain that requires highly available solutions to support uptime. Yet, as electronics manufacturers expand production to more locations across the globe, remote sites may lack reliable network connections, potentially disrupting operations with a centralized labelling system. Multi-Site capabilities, which enable local processing using standardized data from the central system, support continuous labelling operations without a connection to the central system in headquarters. Transactional data and label content are synchronized with headquarters at a scheduled time, or once the connection is re-established. Enterprise Labelling Solutions with multi-site capabilities, which enable decentralized processing within a centralized system, help ensure supply chain continuity, while maintaining accuracy, consistency, and visibility over all labelling operations.
10. Evolution of smarter supply chains owing to intelligent economy
The big data era has enabled investments in the creation of technologies that enable visibility and virtualization of the supply chain; it has also made pursuing these technologies a vital part of any logistics process. In the 2012 CITC survey findings, 48 percent of executives said that end-to-end visibility is a top pain point in their import/export process. As companies seek to improve that function and other efficiencies by utilizing big data, supply chains will continue to get smarter by enhancing optimization in their logistics processes and technologies. To achieve a smarter supply chain, manufacturers must focus on building more resiliency into their supply chain and logistics plans. Integrated planning, which merges a variety of business and supply chain practices, is becoming more popular and efficient, with a focus on optimization and collaboration. As supply chains continue to get smarter and more effective, companies will be able to better respond to the challenges and opportunities of the intelligent economy.
11. Adoption of digital methods via cloud
The cancellation of business events worldwide has affected the electronics industry, whose marketing strategies depend on the presentation of new products and launches on a regular basis. Leading manufacturers have been flexible in adapting these presentations to the digital environment so as not to miss out on promoting brand awareness or communicating with their network of distributors and consumers.
Another aspect to consider here is the current shift toward a teleworking model for which cloud-based software programs are vital. Now more than ever, electronics manufacturers need reliable and secure systems to maintain their operations, foster communication within their teams and among suppliers, distributors, and retailers, and manage their inventories and product catalogues on a global scale.
Orion™ – Consumer Electronics Business Suite – Gives You the Competitive Advantage and is specially tailored for the consumer electronics distribution industry.
Orion™- CE Business Suite – the integrated IT solution from Azentio Software – is tailored for the global consumer electronics distribution sectors addressing the needs of brand analysis, product listing, pricing strategies, customer loyalty, competitor analysis, online retailing, logistics and distributors. The solution’s high functional product fits the consumer electronics distribution industry and focuses on consumer electronics’ retailer, distributor and warehouse management, customer service, collaborative forecasting, procurement, distribution logistics, financial and business intelligence. The ability to link customer to supplier contracts, to capture and analyse demand at the retail level, and to aggregate this information back to the regional and national level for production and replenishment, can improve national and regional sales performance. Additionally, closer alignment of global supply contracts tied to Forex contracts guarantees margins and ensures that currency cash flows are aligned to purchasing commitments. The Orion™-CE Business Suite is designed to optimize business operations and analysis, helping you to maximize profits by focusing on:
- Increased customer awareness and personalized service
- Optimized warehouse utilization
- Reduced costs
- Improved productivity
- Optimized supply chain collaboration
- Closed loop batch control and ‘best by date’ handling
- Automated decision support
- Enhanced profits and measurable ROI
The Orion™-CE Business Suite is built around advanced customer-oriented functionality that focuses on performance and service. Designed in collaboration with world-leading consumer electronics producers and distributors, the solution meets critical requirements such as processing high order volumes; EDI, XML or Web services communications; and delivery of pallets or cartons in-sequence with extremely short lead-times. The software supports rapid identification of products with supporting specifications and pricing, online availability checking, original manufactures’ recalls, and product sales restrictions – translating sales demands directly to suppliers’ products. All applications support multi-language, multi-currency, and multi-company.
In a gist, Orion™ ERP provides customers of the Consumer Electronics Industry – Distribution and Trading with global reach, local touch solutions to assist them with enhanced product value chain, optimized logistics processes as well as a means to explore new markets.