Last month I made a presentation to the IEEE Consumer Electronics Group in San Jose, CA. I asked this group of engineers a very important question. It was important because of the implications that designer choices have on the supply chain.
I started with my left hand holding the top of a slinky and my right hand supporting it underneath; when I took my right hand away the slinky elongated and oscillated up and down as I asked the question “What causes this?.” To my delight, I got the expected barrage of wrong answers (gravity, you took your hand away, etc.). Since this was a very intelligent group I gave them a second chance, this time using a marker pen rather than a slinky. When I took my right hand away, nothing changed other than me taking my hand away. They all looked puzzled.
The answer that I was looking for was structure. The result is inherent in the structure.
Your supply chain’s performance is dependent on its structure. Structure comes from its design which, to a very large extent, is defined by the product’s architecture, technology selections and market specification. These critical designer choices are usually made at a very early stage, the conceptual stage, in a product’s development. This is often long before operations personnel are even aware that a new product is on the drawing boards.
Amongst other things, architecture determines what is implemented in hardware and software; technology selections define chipset choices as well as what is custom or commercial and market specifications define product variations like colours and functions. These early design choices include or preclude various suppliers from the chain, create an envelope for supply risk and broadly determine product cost.
Most companies try to have supply chain people participate in design teams. This is a good idea but I believe that they should also be educating designers in supply chain fundamentals so that bad, irreversible decisions are avoided when products are being conceived. If there is one lesson I would like all designers to hold dear, it is to not commit to a component supplier until the price is benchmarked and negotiated by supply chain professionals. Once a design award has been made your company loses all leverage.
In supply chain design, it is important to get the supply base and its composition right. As with electronic design, you want to avoid single points of failure, ensure that the elements of your design work over all likely to be experienced variations and meet budget and cost expectation. Budgets may be thermal or power in electronic terms but they are dollars (cost) in the supply chain.
In our work at Lytica, we try to answer three questions:
1. How much should you be paying for electronic components?
2. What alternatives exist for the manufacturer that you are using?, and
3. Should you have confidence in this manufacturer in your supply chain?
Answering these questions gets to the heart of supply base design and determines how well you are addressing the top supply chain priorities of security of supply, cost and compliance. If you cannot answer these questions for each component and supplier, your supply chain will be weak and your ability to perform well will be severely compromised.
The parallels between electronic design and supply chain design are remarkable. This is why I believe that designers will be quick studies with key supply chain concepts and fundamentals. A sensible, well margined design makes everything better.
By Ken Bradley – Lytica Inc. Founder/Chairman/CTO
