News, Insights and Best Practices for Manufacturing in Mexico

High-tech companies adapt to shifts in supply chains

06 Dec 2013

Category: Logistics Management

As consumer demand for high-tech products grows, the manufacturers of such goods are increasingly considering nearshoring and dynamic supply chain management solutions as a result.

According to the fourth annual global UPS "Change in Supply Chain" survey conducted by IDC Manufacturing Insights, 82 percent of high-tech U.S. executives will maintain their existing supply chain strategy, citing the low-cost benefits in select countries or a close proximity to raw materials or key suppliers. However, 27 percent of logistics executives are embracing nearshoring - a figure that has tripled since 2010.

"Shifting market dynamics such as end consumer demand, emerging market growth and increased global competition are having significant implications for high-tech supply chains at every stage of the product lifecycle," said Ken Rankin, high-tech marketing director at UPS. "It's critical for high-tech companies to align their supply chain strategies to broader business goals and build competencies around each stage of the product lifecycle to achieve greater customer centricity while also improving operational efficiencies and driving growth in new markets."

When executives in support of nearshoring were asked about the top drivers to do so, 55 percent believed doing so gave them greater control over intellectual property and more influence over the quality of their products, while the majority said nearshoring would bring production closer to demand, improving customer service.

"Improving service levels by bringing production closer to demand" was reported by 76.9 percent on average as a key driver for nearshoring in the survey. However, among the major global regions, North American executives had the highest support for this category [reason?]with 81.3 percent, ZDNet reported.

The importance of quality and service
In a global marketplace with international competition, high-tech companies must differentiate their products, whether it is quality, design, customer service or a combination of all three. Customer centricity, a term that refers to the creation of a positive experience at the various stages of a sale, can help a company add value to its products and to its brand - creating opportunities of repeat or long-term business, according to Businessdictionary.com. 

The UPS survey found that, while 39 percent of executives reported that their existing supply chains were built to support customer centricity, a figure that is expected to rise to 44 percent in the next two years as exports increase. Product quality is increasingly taking the back burner as companies focus on strengthening their share of core markets. Those that offshore to Mexico with a shelter company needn't sacrifice one for the other as they expand in emerging markets.

 

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