What Engineers Must Know About the Supply Chain, Part 1

Accenture and others have reported that company stock prices can dropanywhere from 7.5 to 12 percent following severe supply chain disruptions.

PriceWaterhouseCoopers estimates this drop at 9 percent and says that, for two-thirds of those companies, stock performance will still lag competitors a year after the disruption.

If this is the case, why do we let electronics designers (experts in volts, amps, and nanometers) have such a strong influence on supply chain design (cost, agility, and risk)? Their architectural and technology platform decisions certainly impact the security of supplies, and they play a major role in setting lifecycle costs.

For many years, companies have tried to bring operations and technology together (with varying degrees of success) by placing supply chain people on development teams. But the fact remains that, the majority of the time, designers select the manufacturers and vendors that make it into their supply chain.

Command and Control

Design engineers are making the big decisions, often leaving supply  chain professionals rearranging the deck chairs on the Titanic.

Design engineers are making the big decisions, often leaving supply
chain professionals rearranging the deck chairs on the Titanic.

The problem with designers
The designers are making the big decisions, often leaving supply chain professionals rearranging the deck chairs on the Titanic. Perhaps this is an overstatement, but it contains more than a grain of truth.

I believe that there is great potential in driving change through education. Supply chain professionals could benefit from a better understanding of accounting and technology; designers could benefit from better insights into the supply chain.

To this end, I have started writing a whitepaper for designers on supply chain basics, and I will be giving a talk on the subject at Design West in San Jose, Calif., next month. In preparation, I have been giving thought to what designers need to know about the supply chain to help them make better overall decisions.

I will outline six of my thoughts in part 2 of this series this week, but first I want to share some impressions I have about electronic product designers. They are smart, well-intentioned people who fall into three categories:

  • Solid citizens (70 percent)
  • True geeks (20 percent)
  • Ambitious, high-potential leaders whose career plans include running companies or at least holding positions of significant influence (10 percent)

All three types are important and necessary, but the true geeks and high-potential leaders are the ones making the supply chain decisions. They are the ones we need to influence. Designers are focused, energetic, inquisitive people, so they are open to acquiring knowledge — particularly if we can make it interesting and relevant.

Proper supply chain design can affect time to market, stock price, and the optimization of cost through benchmarked negotiations — 10 percent or more, as I see through Freebenchmarking.com’s Component Cost Estimator (registration required). That should be enough to capture the designers’ imagination. Careers can be made on such gains.

In part 2 of this series, I’ll describe the six things I want top designers to know about supply chain design.

By Ken Bradley – Lytica Inc. Founder/Chairman/CTO

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