Universal supply chain truths

Supply chains are all-encompassing, ever-evolving systems that require thousands — if not millions — of people to work together to deliver premium products to market. Any organization that sells products to consumers or businesses participates in the global supply chain ecosystem, from single-person Etsy stores to international tech companies. Despite their differences in market, size, and sophistication, all businesses must contend with a handful of universal supply chain management truths and challenges.

In my experience, there are four areas that are often overlooked even by premium brands and can prevent companies from running their supply chain optimally. Below, you will find out what those areas are and how to address them.

#1: Cross-industry learnings are valuable

It’s easy to get wrapped up in the differences in size, market, regulations, and location of businesses and assume supply chains are unique to every business. That sentiment is accurate but misleading. Each organization has its preferred design, supplier, and management preferences, but those are often refinements to an overall supply chain strategy rather than a cause for significant changes.

As the preferred manufacturing partner for hundreds of premium global brands, Flex can take this a step further and apply lessons we learn from one industry to another. The automotive industry is an excellent example of this cross-pollination in action.

Everyone knows that the auto industry has integrated technology into every car model; even basic vehicle models are equipped with more computing power than the first rocket that went to the moon. However, would it surprise you to learn that 40% of a car’s price is attributed to electronics today? Tech-powered amenities and sensors have come a long way in a short amount of time to improve the driving experience significantly. We’ve taken our deep expertise in consumer devices, communications, and cloud industries to help cutting-edge automakers build exceptional vehicles for their customers.

#2: Data-enhanced transparency is vital

In the latest ASCM Economist Intelligence Unit report, researchers found that over half of businesses worldwide lacked end-to-end visibility into their supply chains. This deficiency was attributed to the fact that these organizations overwhelmingly rely on internal data to build their insights into the supply chain. The costs for this lack of visibility are both immediate and immense. In that same ASCM report, 88% of businesses admitted they had lost orders in 2020, and a quarter of these respondents admitted they “really don’t know how many orders they are losing.”

Supply chain theory evolved throughout the years, but technology has taken it to another level. The availability and granularity of information changed the supply chain positively. Forecasting is much improved and Flex can tap into its global supplier network to quickly and effectively solve our customers’ biggest challenges, no matter our clients’ manufacturing location. Many industries are rethinking their supply chain operations and management due to chip and semiconductor shortages, so transparency empowers us to adapt to customer needs quickly.

The automotive industry has been proactive in finding inventive workarounds for the component shortage. In the past, auto companies operated primarily from single-source suppliers because they were guaranteed a high level of quality and knew parts were compliant with all major regulations. However, many businesses within the industry now rely on Flex’s supply chain team to identify multiple suppliers and make components requests 18 months in advance. Our cutting-edge tech stack and risk management framework give us the agility to be a strategic partner to help customers navigate change effectively.

#3: Supply & demand challenges persist

Last year was an important moment for supply chain professionals. We’ve long worked in the shadows, but global shortages of everyday household products, such as toilet paper, thrust us into the spotlight. Many supply chain executives used this particular moment to enact change in their operations, including investments in long-term sustainability initiatives and tech stack to help their teams work with clean information from clients and suppliers. One negative trend that has emerged, however, is fear-driven components ordering.

Supply chain professionals must enact a cross-disciplinary approach to sourcing to ensure smooth operations. Worldwide, we see businesses try to address all their component needs simultaneously, which creates scarcity. This situation sparks more panic buying, and the cycle continues in perpetuity. Supply chain professionals can collaborate with OEMs and suppliers to streamline their sourcing processes.

A good way to think about the problem is with the toilet paper shortage that affected North America in 2020. Consumers started to see empty shelves for an essential household item and immediately began to panic, hoard, and overpay for toilet paper. Once the supply chain rebounded and addressed the increase in demand, many people were left with dozens of rolls of toilet paper they didn’t use for months. For premium brands, these types of surpluses come with additional inventory costs.

Flex helps our customers navigate supply chain customers through their supply chain challenges through actionable, updated information from our supplier network. We’re able to compare our customers’ forecasts against the insights from our own Flex Pulse system to find what our team calls “True Demand.” We also have escalation tools that enable our team to consolidate component orders for our clients.

#4: The goal of collaboration is trust

Trust serves as the bedrock to every successful client partnership. Collaboration is a given, but relationships take off once both partners understand and optimize their workflows together.

In my experience, there are three types of clients:

• Type 1: a high-growth brand that has quickly emerged and doesn’t have experience owning and operating a global supply chain;
• Type 2: an organization that has experience outsourcing their supply chain and wants to establish a partnership with their supply chain team;
• Type 3: views their manufacturing and supply chain partner as commodities and tell them what to do and buy.

Flex’s end-to-end capabilities allow us to accommodate all three types of businesses, but we shine when partners form a strategic partnership with our team. When a premium brand trusts us, they gain the total value of our cross-industry expertise as well as our design and supply chain capabilities. Focusing on the value proposition each party brings to the table creates better engagement and results.

Supply chain operations are critical and challenging to navigate for many global businesses. Understanding those challenges intimately — and offering creative solutions — is what makes Flex the ideal partner for thousands of companies around the world. Our team of experienced supply chain professionals helps premium brands optimize their operations while circumventing these common challenges.