Technology Week - Day 4
Inside the Subsectors: Consumer Electronics
The consumer electronics subsector faces a number of challenges and opportunities when it comes to maximizing efficiencies. Low-cost, contract manufacturing remains a key doctrine, while more efficient distribution solutions are gaining traction. With 40% of global manufacturing still in China, many technology companies have taken note of the country’s push to encourage manufacturers to move away from the traditional developed zones towards the west – the so-called “Go West” policy.
The incentive for industry is a potential 50% savings in the cost of labor compared to Shanghai, and a number of companies are responding by setting up factories in these new production zones.
Technology Week - Day 4
Inside the Subsectors: Consumer Electronics
Questions remain for many businesses, however, over the cost implications, skills of the available labor pool, carrier capacity, and the legislative and regulatory environment. Companies need to conduct a thorough cost/benefit analysis and monitor the situation with their respective suppliers and partners. At the same time, many consumer electronics companies are taking a closer look at their distribution models and considering more innovative and efficient solutions.
Direct distribution, for example, where companies are moving away from the traditional supply chain set-up of regional distribution centers and warehousing, is an attractive alternative.
Technology Week - Day 4
Inside the Subsectors: Consumer Electronics
Under this scenario, goods are shipped from manufacturer to customer with as few intermediate “touches” as possible, because every touch means extra cost as well as potential quality implications.
Another alternative is consolidated distribution, where small volume less-than-container-load (LCL) movements via ocean freight, from multiple vendors in one country or across a region, can be managed utilizing a central hub to build a cost-optimized full container load.
Technology Week - Day 4
Inside the Subsectors: Consumer Electronics
At DHL, we are providing customers guaranteed transit times and levels of visibility with their consolidated distribution solution. Late configuration in the supply chain is another area of interest, given that regional and national customization is unavoidable, and that time to market is a factor in determining what is configured where.
Again, this is an area where we are opening up a new dimension of possibilities, including through our end-of-runway Center of Excellence coming into operation in Leipzig in Q2 2012. In all of these areas and more, we are working closely with consumer electronics customers to open new frontiers in supply chain efficiencies.
