Strategies for Success in the Ever-Changing Electronics Industry
Khoi Luong, supply chain manager, Semtech
In a discussion with Prisila, Correspondent at Asia Business Outlook Magazine, Khoi expresses his insights into the strategies employed by industry leaders to maintain supply chain continuity amidst the challenges posed by rapid technological advancements and the possibility of component shortages.
Industry leaders ensure supply chain continuity while managing rapid technological changes and potential component shortages.
In the wake of the COVID-19 pandemic, the electronics industry faced significant challenges, particularly regarding the procurement of materials. The surge in sales orders backlog placed immense pressure on our ability to secure necessary components. Obtaining up-to-date information from suppliers regarding lead times was crucial during this uncertain period, prompting us to pay for orders in advance to ensure a steady supply of materials for manufacturing.
Furthermore, staying abreast of new technologies was imperative. We established a regular cadence of requesting technology updates from our suppliers every six months. This allowed us to assess the feasibility of incorporating emerging technologies into our processes. Additionally, we actively monitored technology trends through industry magazines and the Association for Supply Chain Management (ASCM).
Gathering insights from these sources, coupled with our practical experiences, enabled us to make informed decisions and adapt to the dynamic landscape of the electronics industry. This comprehensive approach has been instrumental in navigating the challenges posed by the pandemic and staying competitive in an ever-evolving market.
The process of procurement and sourcing for electronic components or materials and strategies do you employ to mitigate risks in the supply chain, such as shortages or disruptions
In the realm of electronic components procurement, staying vigilant about lead times is paramount. Last year, we grappled with extended lead times due to various factors. However, this year, thanks to improvements in economy, lead times are expected to decrease. It's imperative to gather accurate lead time data for each component to create a well-informed annual forecast and issue purchase orders to secure materials.
In the past, we encountered a situation where an initially reasonable 16-week lead time stretched to one or even two years. To avoid such setbacks, we must continuously update supplier lead times, especially during critical periods.
Additionally, it's worth noting that the just-in-time supply chain and procurement approach can falter during times like the COVID pandemic. Lockdowns in many countries disrupted shipping, making it unreliable. Therefore, relying on just-in-time methods may not be feasible during such crises, emphasizing the need for adaptability in our supply chain strategies.
The prevailing trend in Vietnamese factories is the transition from manual testing to automation testing, reducing the need for a large workforce
Skill sets of team members and areas for their professional development in this sector
To enhance team engagement and prevent monotony, we've implemented a dynamic approach in our supply chain and procurement department. We've initiated a practice where team members take the 16 personalities test to determine their strengths and preferences. Based on their results, we assign them various roles within the department, ensuring everyone gains a well-rounded skillset.
Regular rotation is a key element of our strategy. Team members switch tasks, from releasing purchase orders to liaising with suppliers and preparing project cost estimates. This approach keeps our team members engaged and motivated, preventing boredom that could lead to attrition.
We believe that by fostering a diverse skillset and providing opportunities for growth, we not only keep our team members satisfied but also maintain a high level of adaptability within our department. This commitment to employee development is crucial to our success, ensuring our team remains motivated and committed to our organization's goals.
Most effective way to stay updated with the latest trends and advancements in the electronics industry that could impact supply chain and project management.
The prevailing trend in Vietnamese factories is the transition from manual testing to automation testing, reducing the need for a large workforce. This shift is exemplified by companies like Samsung Display, a key player in producing iPhone X displays for Apple, which has fully embraced automation in its production lines, eliminating manual testers and significantly saving on labor hours. This transformation is not limited to Samsung; even contract manufacturer like Jabil Vietnam is actively pursuing the transition from manual to automated testing processes.
Furthermore, the potential for AI, such as GPT, to revolutionize various aspects of business operations in Vietnam cannot be overlooked. In areas like procurement and supply chain management, AI may find applications that enhance efficiency and decision-making processes. While the full extent of AI's impact remains uncertain, it is clear that Vietnam's industrial landscape is evolving toward automation and may gradually incorporate AI solutions to optimize various business functions.
"The potential for AI, such as GPT, to revolutionize various aspects of business operations in Vietnam cannot be overlooked"
Strategies to use to effectively allocate resources and manage project timelines in a dynamic industry like electronics
In our current operational model, proficient English-speaking team members handle overseas supplier management, taking advantage of tax-free zone benefits. They procure components without import/export taxes, ensuring cost-efficiency. Team members less fluent in English focus on local sourcing for fabrication and indirect components from local vendors. We aim to elevate their language skills, fostering confidence in interactions with foreign counterparts. Job rotations facilitate skill development. Our project timelines align with customer demands. We track lead times from order to billing, ensuring timely deliveries. Continuous updates on component lead times are crucial to meet customer expectations, avoiding potential delays upon purchase order release. This proactive approach ensures operational efficiency and client satisfaction.
Conclusion: While the current economic trend shows a decline with reduced orders, there is hope for Q4 as volumes are expected to rebound, signalling a brighter future ahead.