From smart phones to Sky boxes, electronic devices have ever increasing capabilities. And their supply chains have to match. This is logistics at the cutting edge. Johanna Parsons reports.
Not only does today’s consumer want to buy things in new ways, but they want them delivered in new ways and faster too, across the board. But for high tech and electronics, the stakes are as high as can be.
Products are typically manufactured from a myriad of complex parts, sourced from multiple locations around the globe, and as high value fashion items their distribution requires tight timetables, exact demand planning, and ultra-secure delivery. And the sector is growing as the latest and greatest tech becomes de rigour.
“More than any other industry, the technology sector is driven by constant innovation, short product cycles and new sales channels,” says said Ken Allen, chief executive of DHL Express and Executive Board Sponsor for the Technology sector. “From a logistics perspective this is a great challenge.”
Phil Skipper of Vodafone agrees, and describes delivery as a key pinch point. “The demand for high-tech consumer electronics such as smart phones, tablets and TVs continues to grow across Europe with consumers demanding faster and more convenient delivery options.
“Same day delivery, flexible pick up points and delivery slots are increasingly becoming a differentiator in the highly competitive electronics retail sector with consumers demanding more choice, visibility and control over these premium services.”
Specifically, he says that the demand for greater flexibility in the delivery process is increasing the pressure on the industry for more intelligent, efficient supply chains that are able to react to consumer demands in real-time.
Vodafone has responded to growing delivery requirements by keeping a closer eye on its products. Skipper is heading Vodafone’s “machine to machine” business development, which essentially harnesses integrated tracking to improve security, and visibility, using Milton Keynes based Isotrak in the UK and Italian firm Infomobility.it to provide connectivity for logistics customers across Europe.
“Companies using Vodafone’s SIM technology and dedicated Global M2M network can implement ‘intelligent routing’ so vehicles can be redirected according to various criteria ranging from the latest traffic information to revised job allocations. This is helping to create a smarter supply chain that is faster, more efficient and able to support increasingly complex fulfilment demands,” says Skipper.
New research from Vodafone indicates that while 12 per cent of transport and logistics companies globally are using M2M technology today, this is set to grow dramatically hitting 86 per cent by mid-2015.
Tracking also improves security, which is a major risk for such a high value supply chain.
“With a pallet of mobile phones, for example, worth over £250,000, security is paramount and the shipper’s security teams need to work hand in hand with the customer to displace crime,” says Colin Hill of Yusen Logistics.
For example, Yusen works with a number of organisations to minimise crime risk, including Interpol, Europol and Local Police Intelligence Units.
Hill explains, “Specific security measures may include: police-checked drivers with airport security clearance, double-manned collections and escorted deliveries, with police pre-advised of route and satellite tracking, as well as on-site initiatives such as air-lock integral unloading.”
But there are other dangers. In such a fast moving environment prone to peaks, massively influenced by trends and marketing drives, a product that doesn’t arrive on time may have missed its one chance of sale.
“You can be at a disadvantage in respect of onward sale if forecasting is out as has been seen on a number of products particularly over launch and Xmas season due to extended lead times and can have a detrimental influence if tied into expensive marketing campaigns,” says Colin Arthur, director of operations at iForce.
He says that in dealing with suppliers at such distances, shipping and forecasting with sea container timings are a key area. Equally, getting the quantities right is a complex equation that must factor in any competitor launches or marketing drives as well as a firm’s own data and plans.
And the sector is increasingly turning to innovative technologies to improve the quality and availability of data. Andrea Brody, vice president of business development at GXS maintains that cloud integration is now essential for the services now demanded. “The high tech industry is starting to use all kinds of SaaS apps… Firms like Samsung and Toshiba are buying SaaS apps for supply chain visibility.”
Managing demand and quality are the two main priorities for the rather individual supply chain of BSkyB. Supply director Giles Harvey says that as their boxes only work with a unique viewing card, security is less of an issue, and that its core products number SKUs in the tens, rather than thousands, “So our core focus is service, in terms of never running out, and the second element is quality so we have a high level of scrutiny throughout the supply chain.”
To these ends, Harvey oversees rigorous risk mitigation strategies that include all aspects of its sourcing, including quarterly analysis of its suppliers on a scorecard mechanism, and an ongoing process of review.
“Embedded S&OP makes sure we’re translating views of the market into an accurate demand line,” he says, as well as using what he describes as a hybrid service from its partner Unipart Technology Logistics.
UTL has had long term contracts with Vodafone, Virgin Mobile as well as a dedicated repair centre for BSkyB, where the recycling operation was highly commended at the 2012 European Supply chain Excellence Awards.
Managing director Claire Walters, says “For us it’s about maximising the value of the products we get,” she explains, and as Harvey says, that means putting an emphasis on avoiding product churn.
“The real challenge is keeping devices with the customer as much as possible, so they don’t lose saved data, like photos, contacts or for Sky, recorded programmes.
“That can mean working remotely over the internet with mobile phones… with Sky we’re working on a new concept of using IT as with mobiles. And we’re working really hard on data wipes… for returns it’s really important to get rid of all data before it goes into a new customers’ hands.”
From manufacture to delivery, returns and re-assembly the standards are getting higher and higher. And consumer demand is driving ever smarter systems to keep up.
Case study: Smooth launch for Samsung
Samsung’s latest smartphone, the Galaxy S4 had staggering pre-sold volumes in the UK, so it took on Yusen Logistics to ensure a smooth launch.
Yusen’s airport-centric inbound supply chain operation took control of the stock arriving from the Far East, and successfully delivered all the volume to Samsung’s UK customer base within 12 hours of arrival into the warehouse.
Such is the success of Samsung’s new innovative range of smart phones, the Yusen Logistics operation is forecast to deliver 50% more Samsung phones than last year.
Samsung and Yusen Logistics have consistently worked together to compress cycle times between UK entry and availability of stock during a period of unprecedented growth.
Ian Ulvmoen, European logistics director at Samsung said: “The demands of the high value business have changed the traditional supply chain and Yusen Logistics have turned conventional day 3 into day 1, providing a dynamic same day solution right from the plane landing, through to direct delivery to customers in the UK.”
Case study: DHL and GXS help semiconductor firm
NXP Semiconductors is a tech firm that reports growing at a rate of 50 per cent greater than the industry. Its products are used in a range of automotive, industrial, mobile, consumer and computing applications, for OEM clients such as Apple, Bosch, Panasonic and Samsung.
The firm wanted to simplify its supply chain for finished goods from Asia. It needed full end-to-end visibility of pack lists from the departure point to the end user.
Data has to be precise, as NX uses an automated customs clearance process for the EU, which requires a 100 per cent accurate registration of each arrived pack list. Its offering for ID chips for passports and credit cards has a zero tolerance for errors. And the firm is also under scrutiny by auditors as it is listed on the US stock exchange.
Consolidating onto a single middleware platform was a challenge, requiring the migration of over 600 B2B interfaces, both B2B sender and B2B receivers exchanging information across a range of message types, message versions and B2B standards.
“GXS has been able to provide us with a very reliable mirrored mailbox solution so that we can thoroughly test and run our systems in parallel as we go through the migration process with each of our customers,” said Maik Bastiaens, integration team leader, NXP.
It now trades electronically with 85 per cent of their customers and have saved around 60 per cent on B2B integration costs.
Regarding distribution, DHL was already handling its intra-Asia-Pacific business, so NXP chose it as its sole provider. The new system links NXP with DHL management in the NXP logistics department.
DHL gives end-to-end visibility, time stamps, e-billing and tracking.
