Industry Insights: The Path Towards Design-to-Source Intelligence

 

As a professional working in the electronics manufacturing space, alongside a team of industry leaders and experts, I have a unique perspective across supply chain executives, engineers, distributors, and more. This kind of perspective provides deep insights into the state of the industry and the challenges we face. While it’s not difficult to imagine what the industry faced in the year that was 2020, it is important to take stock and position ourselves for a better 2021.

My journey this year took me through numerous topics that led to a single place: Design-to-Source Intelligence. Everything this year was leading up to this new paradigm put forth by Supplyframe that truly puts power back into the hands of decision-makers and key individuals throughout the electronics value chain. For the seminal article in this ongoing series, let’s look back at the journey that led to this realization.

The Electronics Manufacturing Industry Faced Unique New Challenges in 2020

We’re no strangers to challenges in this industry. Prior to 2020, topics I covered ranged from spotting counterfeit chips, to rising lead times for specific components. I also covered things like the trade war between the U.S. and China, along with industry-specific stories around upcoming trends and evolving challenges.

2020 was different. Our journey begins in February 2020, with my article about the early implications of COVID-19 on global supply chains. At this point, the virus was still mostly contained in China, but delays were already beginning to spread across the global supply chain.

Automotive companies began announcing the suspension of production because parts from China were no longer available. Razat Gaurav, CEO of supply chain analytics firm, Llamasoft, weighed in saying “Everyone right now is working hard and scrambling to figure out optionality and assessing the risk on which parts are at highest risk.”

In a time of uncertainty and disruption, assessing and mitigating risk finally came to the forefront. Furthermore, Gaurav went on to say that automotive manufacturers like Toyota were focusing on alternative sourcing options and cost implications.

Elsewhere, electronics video game console manufacturer, Nintendo, announced around this time that their popular Switch console would suffer from delayed shipments and restocks as well.

Consider this quote from the article:

“When trade slows in China, that obviously means less income for other countries, and it will slow them down as well. In other words, their growth rates are not independent of the Chinese growth rate.”

— Gary Hufbauer, senior fellow with the Peterson Institute for International Economics

As China’s manufacturing began to suffer from delays and disruption, the rest of the world followed suit, all while revealing an underlying issue surrounding single-sourced products and a lack of risk mitigation strategies.

Identifying a Problem, Revealing The Solution

Fast forward to April 2020 and Supplyframe teams mobilized to capture current and future insights from our DSI Network and complementary research and surveys across various industries. We partnered with Dimensional Research to conduct a survey of over 200 global manufacturers focused on their response to the initial supply disruptions related to the Covid-19 pandemic as well as capturing the opportunity to transform New Product Introduction (NPI) processes at these companies.

This survey revealed the dire need for innovation and improved sourcing technology to meet both demand and evolving challenges across the global landscape. We captured these results in an infographic, but here are some highlights important to our story here:

  • 99% of respondents reported making changes to business operations as a direct result of COVID-19
  • 99% also believed their organization would benefit from additional capabilities or sourcing solutions
  • 91% claimed that sourcing issues were a major source of product delays
  • 81% revealed that they have been forced to make expensive spot buys because of availability issues

It was at this point that we revealed issues beyond the ongoing pandemic. There were deeper problems holding the industry back, problems we knew about well before 2020.

Turning our attention to May, we sat down with Erika Earl, who worked with NASA’s Jet Propulsion Lab (JPL) using Supplyframe solutions to assist them in their sourcing efforts as they designed and built a ventilator in just 37 days. Not only was this a monumental achievement from a timeline perspective, but also in terms of maximizing supply resilience at the point of design.

Erika was able to use Supplyframe DSI insights to identify alternate parts that were functional equivalents, but traditionally used outside of the medical supply chain and the related shortages that were emerging in real time due to unexpected demand for existing ventilator models.  Working together in days, the design team was able to qualify alternate components and suppliers across the entire design BOM, ensuring that other organizations that would adopt this open-source design to be successful in ramping up production and meeting critical ventilator demand in their communities.

Steve Flagg, Supplyframe’s CEO, also weighed in on this story, highlighting a key takeaway:

“This experience puts greater emphasis on the importance of building resilient supply chains. That starts in the product design phase with a connected NPI process – enabling effective collaboration across sourcing, engineering and manufacturing by injecting prescriptive intelligence at every decision point.”

Specifically, the concept of building resilience through prescriptive intelligence rang true as I continued to report on this and other stories. In June, our internal data began to show some levels of recovery happening across the industry, based on engineering activity.

Interestingly, this data showed a shift towards more consistent activity throughout the week, which could be due in part to most people working from home. Even so, it pointed towards a more agile approach to engineering and sourcing.

September brought our first iteration of Supplyframe Executive Insights: a virtual roundtable series where we bring together industry leaders to discuss timely and relevant topics. The first session of this series brought out significant discussion around digital transformation, and what that concept looks like in a post-COVID-19 world.

A comparison that arose during this discussion was an apt metaphor that likened global supply chains to a vehicle on a road trip. In our current states, we were driving without GPS, essentially flying blind. Without any insight into things like traffic, weather patterns, or other data that could easily improve the “trip” as it were.

A combination of access to intelligence and a smarter approach to collaboration across traditional silos became the key takeaway from this virtual event, which you can watch here. All of this discussion, these insights, and this data, was building towards October, when we unveiled Design-to-Source Intelligence for the first time.

A New Paradigm and a New Path Forward

Moving towards 2021, many organizations are facing the fact that they do not have a detailed view of their supply chain from end-to-end. Furthermore, they are not resilient in the face of global upheaval. These are just some of the challenges facing global supply chains in the coming year.

”..in the pre-COVID-19 world, companies utilized “just-in-time” supply chains, offshoring to low-cost countries and cost containment as a competitive advantage. In today’s environment, organizations need to shift their thinking toward “just-in-case” supply chains, or more multi-shoring to reduce risks and sustainability considerations as a competitive advantage.

—Mourad Tamoud, EVP Global Supply Chain, Schneider Electric

We are witnessing both an acceleration of digital transformation initiatives related to supply management (including direct materials sourcing platforms, new product introduction, supplier risk management, etc.).  McKinsey has observed the same trends, with a clear call to action for their clients to adopt digital capabilities to manage resiliency and achieve new levels of agility.

“Companies have historically been reluctant to invest in this sort of resilience before a shock occurs, believing that the benefit simply was not worth the cost. Certainly, more frequent shocks help change that cost-benefit calculation. But there’s another reason to reexamine that equation: new technologies are changing the economics of supply-chain resilience. Investing in resilience with digital capabilities at the core can pay off not only in the long term, but also in the short term. Most important, digital tools can enable business leaders to build agile and structural resiliency measures into their operational models regardless of where, how and when a shock occurs”

—Kweilin Ellingrud, McKinsey Global Institute, “Reimagining supply chain resilience”, September 22, 2020

Driven in many ways by this critical shift in the market, Supplyframe began a strategic review of its solution portfolio and messaging for our key audiences and communities.   We launched a brand new website and revamped our existing solutions to take advantage of a bold new concept: Design-to-Source Intelligence, also known as DSI.

We began with an in-depth whitepaper on DSI. Here we presented the case for a new shift towards resiliency and agility across the electronics value chain. Our suite of AI-powered DSI solutions incorporates actionable insights and advanced analytics sourced from engagement across our DSI Network.

The DSI Network spans across 70 vertical search engines and over 10 million monthly engineering and supply chain professionals as they perform daily technical content and supply market research and decision-making. These activities and actions generate billions of supply, demand, intent, and risk signals that feed into our DSI platform.

It is here where all of this data is aggregated and processed to generate insights that provide real-time intelligence for industry professionals. Our solutions harness these insights to provide critical information for sourcing, design, quoting, and manufacturing across the electronics value chain.

As an introduction to Design-to-Source Intelligence, the stories of 2020 have proven that the industry is ready for a shift towards smarter, more efficient solutions. Of course, this is just the beginning. Stay tuned for more entries in the Industry Insights series as we explore stories from other industry professionals and learn how DSI’s benefits span across the entire electronics value chain.

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Bradley Ramsey
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