Supply Chain Management, Logistics, Supply ChainThe high-tech industry has experienced a season of acquisitions, and now it’s time to start thinking about supply chain optimization.According to the 2017 M&A Report, high-tech mergers and acquisitions totaled more than $700 billion in 2016, about 30 percent of the overall M&A market. This reflects a growth rate of 9 percent per year since 2012.Following any lofty M&A deal, companies are challenged with different customer bases, business models, and supply chains, including ways for suppliers to more efficiently deliver products to consumers. This is especially true for semiconductor companies pursuing M&As to broaden their product portfolio and customer base. Companies need to explore how the organization as a whole, and each functional area, can work together. Qualcomm’s acquisition of NXP in 2016, for instance, broadened its automotive customer base and dramatically increased the synchronization and coordination needed with customers and suppliers. The company will now integrate more closely with automotive supply chains, delivering their chips to the factory floor in time for product runs.Emerging consumer electronics supply chains differ from traditional products such as computers and peripherals. As companies like HP and Dell acquire high-growth startups they will need to establish supply chains with shorter lead times, unpredictable demand, increased customization, flexible pricing, and higher return rates.An M&A creates an opportunity to derive significant supply chain value. It requires logistics managers to establish partnerships and develop organizational processes that increase operational excellence. Included below are five supply chain optimization strategies for success:Leverage improved buying power.Integrate your procurement and rationalize supplier relationships for significant savings. Reduce the number of suppliers, but not product choice, and increase your resilience in case of supplier failure. First, examine your supplier network for over-reliance on specific vendors based on geography, components, or processes. Then renegotiate better prices, quality checks, lead times, and digital integration.Tune up inbound logistics.As you rely on fewer suppliers, gain greater visibility and control of your inbound logistics to quickly respond to supplier issues. Not knowing when products are coming in can disrupt your manufacturing plans and add cost downstream. Your inbound logistics systems should not only help you on a daily basis but also establish inbound trends and long-term plans.Invest in trade management.More than 90 percent of semiconductors used in the United States come from Asia, and more than 25 percent of the semiconductors manufactured in the United States are exported. During an M&A is a good time to ensure you are using the right broker to expand your geographic footprint and navigate trade regulations. Work with multiple international brokers to gain flexibility and continuity and significantly increase your compliance risk. Leverage trade management systems and experts to reduce compliance risks and identify opportunities to reduce costs through Duty Drawback, FTAs, and FTZs.Standardize design and components.As you bring in new products and capabilities during an acquisition, strategically talk about standardization. It requires a deeper understanding of product roadmaps and closer collaboration with suppliers and customers. Standardization starts at the product design level and permeates through the supply chain. Standardized products lead to greater scale in your logistics operations and consolidated shipments with greater pickup/delivery density and reduced costs.Optimize distribution strategy.Consolidating multiple fulfillment centers lowers cost by reducing excess capacity. Optimize your warehousing network with care to ensure it does not degrade service levels or result in stock-outs. Such risks can be mitigated with better warehouse management systems and with the support of logistics partners.Invest in transportation management.As the product portfolio and customer base expands, so does the need to balance speed and cost across the supply chain. Products with better forecasts and more scheduled deliveries require better transportation planning and consolidated shipping to reduce costs. When demand is predictable and high service levels are needed, focus on quickly getting your product out of your dock and in the air.
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