Poor Data Clouds Supply Chain Visibility

My perspective on supply chain comes with a strong semiconductor technology bias, a partiality for supply management and an appreciation of operations with the processes that surround it. Coming from the semiconductor and telecommunications industries, I have seen the need for innovation, quality and cost management. Being an engineer, I like data; having worked in Operations, I see its importance and having managed failure analysis and quality groups, I know it is vital to understanding what is going on and...

Supply Chain Security & Maslow’s Hierarchy of Needs

Security of supply is one of the most critical priorities of any supply chain; cost and compliance are the other top ones. Given how critical security of supply is, I am often surprised by how inadequate many due diligence programs are at getting to the heart of risk or ensuring that adequate agility exists to meet user needs. The problem of ensuring adequate security of supply parallels behavior motivation as expressed in Maslow's hierarchy of needs. In Maslow's model, the...

What Engineers Must Know About the Supply Chain, Part 2

In part 1, I talked about the influence design engineers can exert on procurement and the supply chain. This is often a negative influence that comes without proper education or information. What do I want top designers to know about supply chain design? Leverage Leverage is a critical factor in negotiations. Without it, you take what is being offered; with it, you obtain amazing deals. Designers have tremendous leverage when selecting vendors for new products. Designers should not award a design win...

What Engineers Must Know About the Supply Chain, Part 1

Accenture and others have reported that company stock prices can dropanywhere from 7.5 to 12 percent following severe supply chain disruptions. PriceWaterhouseCoopers estimates this drop at 9 percent and says that, for two-thirds of those companies, stock performance will still lag competitors a year after the disruption. If this is the case, why do we let electronics designers (experts in volts, amps, and nanometers) have such a strong influence on supply chain design (cost, agility, and risk)? Their architectural and technology...

Supply Chain Accounting 101

Most supply chain professionals would benefit from some training in accounting. I am surprised by the number of times I encounter people holding positions of responsibility who just don't understand the numbers well enough. I must admit that accountants don't make it particularly easy. Take cashflow calculations as an example. There are two ways of doing it: the accounting way and the way that makes sense, which is how everybody else does it. Everybody else looks at the cash in...

Single Source Premium: Unnecessary Cost

The results are in from the EBN poll on the Price-Supplier Equation. Fifty-five percent of respondents believe that the premium paid for being single sourced is greater than 10 percent, and more than half of these believe it is greater than 15 percent. This is a significant hike on cost and an unnecessary supply chain risk from single sourcing. This level of premium is directionally consistent with what I see in Freebenchmarking.comdata. There is, in most cases, a premium. For...

Purchasing: Risks in ‘Virtual’ Second Sources

I am a believer in using second sourcing as a primary security-of-supply strategy. I know some believe that close relationships with a single manufacturer can yield better overall value and better supply security, but I am not of that school. My position is that two sources provide leverage by creating competition, which is good for pricing and provides a ready alternate supply option if there is any kind of short- or long-term interruption. The favored situation is for second sources to...