[photopress:IT_bob_parker.jpg,full,alignright]If there is one area in China electronics business that can be improved it is the supply chains. And this is an area where computers can help.
Bob Parker, vice president, research, Manufacturing Insights, an IDC Company, and seen in our illustration, said that an oft quoted study published by the National Institute for Standards and Technology (NIST) reported that there was approximately $3.9 billion of waste in the electronics supply chain due to poor coordination.
Bob Parker though that figure modest. He said the research by his company is that, globally, there is more than $250 billion of waste in the electronics value chain and over $900 billion across all global manufacturing value chains. Waste refers to unnecessary delays and costs.
He said that given the tight profit margins in the electronics industry, recapturing these costs and shortening cycle times should be central to a supply chain excellence strategy.
There are few that would argue with them.
He thought a new operating model, based on openness and supported by a new category of software, is required.
He said, ‘The electronics industry will be the laboratory in which we refine this new operating model, but expect other manufacturing segments, as they emulate the fragmentation and global nature found in electronics, to follow suit as well. The aforementioned NIST study, for example, identified $5 billion of coordination waste in the U.S. automotive industry.’
Electronics companies have the lowest average net profit margins (2.5%) of any single manufacturing industry, which means they must constantly strive to lower costs and improve efficiencies.
Bob Parker said the basic idea ‘is to deliver a domain wide feedback loop for executives, middle management, and individual contributors. ‘Two kinds of feedback loops get created. Control Loops catch exceptions and initiate corrective actions. Reinforcement Loops identify superior performance and initiate action to magnify the benefits.’
That sounds a bit like management-speak.
But he is right in saying ‘it has to be improved and that this probably requires a new category of software application. . . . Companies need a decision environment that we have labeled Intelligent Operations Management. What you get visibility into the state of a value chain’s operating performance and provides control through feedback loops that enable better results’.
Note Bob Parker is vice president, research, Manufacturing Insights, an IDC Company and was not pushing a specific program that would totally solve the problem. He was spelling out the problem and suggesting way its could be solved.
Source: Industry Week