Entries Categorized as 'Supply Chain Segmentation'

Acer New Product Launch of Tablets, Iconia and Smartphones New Supply Chain Strategy?
by Matt Davis | November 24, 2010 | Comments Off

Acers supply chain is known and benchmarked as a stellar example of end-to-end operational efficiency. It affords them some of the lowest price points in the PC marketplace. It is with this knowledge / perception of Acer that I watched the series of product announcements at their press conference and began to wonder Is Acer moving away from their singular focus on cost? Comments Off
Category: Digital Supply Chain Supply Chain Segmentation Tags: Acer, Acer Tablet, Digital Supply Chain, Iconia,New Product Introduction, Supply Chain, Supply Chain Segmentation, Tablet
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Supply Chain Segmentation Becoming a Reality: Dell & Converse

by Matt Davis | November 15, 2010 | Comments Off

Have you ever heard someone say Oh I dont care what kind, just get the cheapest one and then in the next moment, No, I dont like that one. Its not me. Lets look somewhere else.? We all are constantly making choices and tradeoffs when were shopping. Typically, were balancing our opinion of ideal cost, [...] Comments Off
Category: Supply Chain Segmentation
Segmentation

Tags: Converse, Customization, Dell, New Product, Supply Chain, Supply Chain

Acer New Product Launch of Tablets, Iconia and Smartphones New Supply Chain Strategy?
by Matt Davis | November 24, 2010 | Comments Off

Yesterday, Acer announced a host of new product launches at their global press conference several of which put them into new product categories including tablets and smartphones. Is Acer trying to marry product innovation with operational efficiency? Acers supply chain is known and benchmarked as a stellar example of end-to-end operational efficiency. It affords them some of the lowest price points in the PC marketplace. They are able to take advantage of a unified strategy around cost reduction by way of a build-to-stock (BTS) manufacturing model, extremely low overhead, 24-48 hour turnaround on strategic buys from suppliers and low cost transportation nodes. This model does bind them into transactional sales as they arent structured to support some of the customization and longer buy cycles in the B2B marketplace, but the strategy has landed them in the #2 global market share for PCs. It is with this knowledge / perception of Acer that I

watched the series of product announcements at their press conference and began to wonder Is Acer moving away from their singular focus on cost? Acer announced 4 new ventures that grabbed my attention: 1. Alive (the App store): Alive will be Acers new App store is was marketed as complet[ing] the circle of services and solutions offered by all Acer group brands. Acer states that Alive will be different from other app stores as it is real time and will get to know you better the more you use it. The idea being it can better recommend content as you provide it with information on your likes. 2. Smartphone: The yet to be named, yet to be priced smartphone is set to launch in April 2011. Primary features are the 4.8-inch size, Android platform and 1024480 screen resolution. Given the look and features of the device, it appears to be positioned against the iPhone as well as other PC manufacturer smartphones like Dells Streak. Acer seems to be positioning their device as a merger of the smartphone and the tablet, but its 4.8 inch size places it more in the mix with smartphones regardless of features. 3. Tablets: Acer announed both a 10 inch and 7 inch tablet. The tablets will run on the Honeycomb OS (Googles 3.0) and come preloaded with Alive. Both will be available in April. 4. Iconia: Iconia is an interesting key board free dual screen notebook. Imagine two glossy visual displays on your notebook with the second in the place of a traditional keyboard. The concept is to expand touch technology to the notebook, but are consumers ready for no keyboard? Issues with typing seemed to have been one of the primary concerns of iPad users, keeping notebooks as a necessary device for any heavy typing activities. The new product announcements seem to indicate that Acer has picked up on two key trends for consumer electronics manufacturing. Digital Supply Chain: I have spoken about the convergence of digital and physical supply chains in previous posts (http://blogs.gartner.com/matthew-davis/2010/10/07/googletv-anotherspotlight-on-digital-physical-supply-chain-convergence/). With each new product introduction, there is further evidence of hardware manufacturers designing devices focused on content delivery. Acers announcement of an app store, smartphone and tablets follows in stride with this trend. The debate on content remains: Who is the gatekeeper? Is it the app store? The OS? The device? or the content itself? It seems as though Acer is wagering that the gatekeeper is a combination of them all. They announced that there app store is built around you with real-time learning, that the content creators are well-known, local and global and that they can make devices that consumers will want. Supply Chain Segmentation: Acer is the first company that comes to mind when I think of the efficient, end-to-end supply chain. I have discussed how others in the consumer electronics space are segmenting their supply chains into multiple, end-to-end value chains focused on specific customer values (http://blogs.gartner.com/matthew-davis/2010/11/15/supply-chainsegmentation-becoming-a-reality-dell-converse/). The concept being that one company can align supply chains to deliver on cost, cycle time, customization, etc or a combination of those factors. Is Acer moving in this direction? The new product introductions do not provide a definitive answer. It would be short-sighted to think that just because a company focuses on cost that they should not pursue the content market or the tablet space. That said, Acers Iconia announcement does confuse me. Why are they pursuing a fundamental shift to notebook design that is ahead of consumer expectations? Even if the product is a success, the demand will be low and likely variable. A highly demand variable, low volume platform? Sounds a lot like customization that will require supply chain agility. So this announcement could be a first step toward supply chain segmentation. The strategic question is if this is the right move in a market where Dell dominates the configure-to-order space and Apple is already established as the

innovation provider. Is there a place for Acer? Sounds familiar to questions about grabbing market share for low cost products from Dell and HP in the past I am always interested in new product launches and try to figure out what the products are saying about a companys corporate and supply chain strategy. At first glance, the Acer announcements seem to be a battle cry of were not just well priced PCs. But upon further reflection, I do see a connection to some major trends in the consumer electronics space. The recognition of the importance of content is critical. It seems Acer also believes that tablets and smartphones are blurring the lines of mobile devices and PCs. A strategy to get into this space is a smart move. But what about this Iconia? Is it just another option? Or does it signal an updated supply chain strategy? Ill reserve further thought here until I see the price points of these products next year. That should be a direct indicator of their strategy as well as the focus of their supply chain. What do you think? Are these new products the right move for Acer? Do you think these are signs of a shift in strategy? How much of your assessment will depend on the price points of the new products? Comments Off
Category: Digital Supply Chain Supply Chain Seg

Supply Chain Transparency

In 2010 the California Transparency in Supply Chains Act of 2010 (SB 657) was passed and will go into effect on January 1, 2012. This law requires large retailers and manufacturers who do business in the state of California, and have annual gross worldwide sales of over $100 million U.S. dollars, to be transparent about the efforts they have undergone to eradicate slavery and human trafficking in their supply chain. Acer is a member of the Electronic Industry Citizenship Coalition (EICC), an alliance of the worlds leading information and communications technology (ICT) companies. The EICC has published the Electronic Industry Code of Conduct(EICC Code) which establishes conduct standards for global ICT companies to improve working and environmental conditions. Acer actively works as part of the EICC to provide safeguards which prohibit supply chain use of slavery and human trafficking. Acer has adopted the EICC Code and requires adherence to this Code by its employees and direct suppliers. Acer also supports and participates in the EICCs Freely Chosen Employment task force which is designed to help identify opportunities to share best practices among members, expand the code of conduct, and make recommendations on available tools and training. Acer has taken multiple actions to eradicate use of forced labor, slavery and human trafficking in its supply chain. These actions include:

Supplier risk assessment Acer assesses the risk of inappropriate labor practices in its suppliers operations by evaluating several factors. These factors include supplier: assessment questionnaires, operational characteristics, business

risk dynamics, results of prior audits and other relevant factors. Acer also considers the concerns of outside parties in making these risk assessments.

Supplier audits Acer conducts announced on-site audits of its suppliers to ensure compliance with the EICC Code and takes seriously all forms of non-conformance. Audits are conducted by Acer employees and/or third-party consultants retained by Acer. Suppliers are selected for audit based on the results of the risk assessment analysis described above. Additionally, Acer participates in the EICC Validated Audit Process (VAP), which employs an independent audit manager to inspect procedures and tools, and verify audit results. Acer employs varied auditing processes to ensure a robust audit program with complementary methods to validate and continually improve Acers supply chain adherence to the EICC Code.

Supplier Declaration Acer requires all direct manufacturing suppliers to sign a Declaration of Compliance with the EICC Code. This Code obligates the suppliers to adhere to Acers standards of upholding the human rights of workers and treating them with dignity.

Supply Chain Management Employee Training Acer has launched a training program for its employees with manufacturing supply chain responsibility. This training ensures that Acer employees in procurement roles are fully aware of the standards Acer has established for its suppliers to eradicate slavery and human trafficking in the Acer supply chain. The training also provides supply chain management employees with strategies to identify and respond to inappropriate supply chain labor practices. Acers supply chain personnel are also made fully aware of the responsibilities imposed on Acers suppliers via the EICC Code and the audit program Acer has instituted to ensure supplier compliance with this Code.

For complete information concerning Acers supply chain responsibility program and specific audit findings, please seeAcers Corporate Responsibility Report.

APPLE:

How Apple Uses its Supply Chain as a Strategic Weapon

Thursday November 3, 2011 8:16 pm PDT by Arnold Kim

Businessweek provides a very interesting look behind Apple's supply chain and how they have managed to fine tune their operations into a competitive advantage. According to more than a dozen interviews with former employees, executives at suppliers, and management experts familiar with the companys operations, Apple has built a closed ecosystem where it exerts control over nearly every piece of the supply chain, from design to retail store. Apple's well known to be a master at operations with much of that credit going to now CEO Tim Cook. Businessweek's profile gives many examples of how Apple has managed to stay ahead of the competition, with much of it being the ability to predict needs and also secure the necessary pieces by exercising their enormous $81 billion cash hoard. Even as far back as the launch of the Bondi blue iMac in the late 90s, Apple's Steve Jobs paid $50 million to buy up all available holiday air freight space at a time when most of its competitors were shipping by sea. This reportedly handicapped rivals such as Compaq who later wanted to book air transport. Similarly for both the iPhone 4 and iPad 2 launch, Apple bought up so many suppliers and machines needed for assembly, they squeezed out the competition who needed the same resources. The tactic ensures availability and low prices for Appleand sometimes limits the options for everyone else. Before the release of the iPhone 4 in June 2010, rivals such as HTC couldnt buy as many screens as they needed because manufacturers were busy filling Apple orders, according to a former manager at HTC. Apple's level of efficiency and control extends into launch day where factories work for weeks building hundreds of thousands of devices. Electronic monitors are placed in part boxes to discourage leaks and completed products shipped in non-descript boxes to avoid detection. Even in their retail stores, they can monitor demand by the hour and make supply chain adjustments as necessary.

Posted by Bob Ferrari on Mar 12, 2012 in Consumer Goods Focused Supply Chain,High Tech Supply Chain, Supply Chain Strategy | 0 comments
The following also appears as a published guest commentary on the Supply Chain Expert Community web site. Last week, Apple again captured traditional and social media mindshare with the introduction of the newest version of the iPad which is scheduled for customer availability later this week. Consumer frenzy

for having the latest and greatest Apple device is again building and already the company is warning that initial supplies may not be able to satisfy pre-order demand expected for the planned March 16 availability date. Beyond the headlines and the consumer frenzy to be the first to get ones hands on this latest new device is speculation as to whether the post Steve Jobs era of Apple also implies shifting and added challenges to supply chain strategies for Apple. If you believe that supply chain strategies must support business outcomes, then Apple will have to adjust some of its supply chain strategies. In terms of sheer capabilities, the existing scope of supply chain fulfillment is staggering. The company boasts that it sold 176 million iPod, iPhones and iPad devices in 2011, accounting for 76 percent of total revenues. This represents over a half million of these devices shipped every day if you do not count Sundays. That is not a lot of room to allow for capacity or supply shortages. The continued shipments of all of these devices also led to the companys recent announcement of surpassing 25 billion Apps downloads from theApple App Store. The leveraging of recurring electronic content sales is another key strategic component of Apples business plan. It is no wonder that Apple surpassed Exxon as the most valued company. With market capitalization exceeding 500 billion, stockholders respond to every move or any setback, particularly when it relates to supply chain. The open question for speculation, however, is whether Apple has reached a crossroads concerning its strategic supply chain strategies and future capabilities. Visibility to the company has clearly escalated given the numbers cited above, along with more visibility to the companys high profit margins. Our recent commentary on Supply Chain Matterspointed to two recent watershed events as triggering a new phase. Apples January announcement of a more aggressive stance in supplier social responsibility standards, a revealing New York Times article revealing current production and supply chain practices, and a corresponding ABC News Nightline visit to Foxconn facilities in China have added considerably more visibility to the inner workings of Apples supply chain. There have also been reported rumors coming from Apples supply base that indicate testing of a subsequent tablet computer with a screen size of about 8 inches with a potentially lower cost market entry. Our Supply Chain Matters belief is that Apple is positioning the next generation of capabilities to penetrate broader, perhaps more cost sensitive geographic markets.

All of these current signs point to the need for changing supply chain strategies for Apple, some of which may be conflicting. Reuters columnist Richard Beales argues on his blog that Apple needs good, not just better, supply chain. The title is a bit of a misnomer since this columnists argument is that with $500 billion in market capitalization and $100 billion in cash, Apple needs to shift its supply chain strategy to a higher cost model to fund more social responsibility. The sheer visibility and brand image of Apple has placed the company supply chain practices under the looking glass, and Beales argument is that just as Nike encountered in the 1990s, consumers will demand a more socially responsible Apple supply chain. Last week in the Opinion section of the Wall Street Journal, Holman Jenkins Jr. column,The End of Apples Roach Motel, (paid subscription or free metered view) speculates that if Apple continues to be successful in its content and cloud services models, its devices will become cheaper and more disposable. His argument is that Apples margins will start coming down sharply and the Roach Motel will prove less formidable than assumed. That seems to argue for a lower-cost supply chain driven model. A recent Reuters article points out that for retailers other than Apple, the profit margins for stocking products are thinner than other consumer electronics products. From a customer foot traffic and interest perspective, retailers like Best Buy have no choice but to stock Apple products, but must in-turn upsell the customer to other products to uphold margins. While Apple remains the channel master, pressure will increase for higher margins or shared profits for retail partners. Which direction Apple eventually takes is up to Tim Cook and his senior supply chain team. As a supply chain community, however, we should anticipate that some strategy changes may be forthcoming. What about your views? Do you believe that Apple has to shift its supply chain strategies to respond to both business strategy and consumer sentiment requirements? Bob Ferrari