S&OP in high tech companies should incorporates measures of risk

Filed in archive Point of view on May 1, 2009

According to a recent article from Logistics Management based on this month's analyst reports, supply chain risk management has got new dimensions for high tech companies operating globally.

Sourcing from low-wage countries like China seemed like such a logical idea before the world's economy went south, said C.J. Wehlage, research director, AMR Research. But with demand continuing to slacken, logistics decision-makers are now more concerned about maintaining the integrity of their pipeline. "The failure of some suppliers in China has become an issue," he said. "And having the low-wage option is not such an advantage if quality and reliability suffer."

The future of forecasting and that of sales and operations planning (S&OP), is also another area being highlighted. Wehlage noted that in some ways shippers could benefit by one aspect of the recession.

"High-tech companies are re-thinking their approach to 'demand-sensing,'" he said. "What works for Budweiser in the beverage industry, may not be right for Samsung in the consumer electronics sector. It might, in fact, be a case of having too much information."

Overall, it seems that high tech companies should revise their S&OP capabilities again to be even more agile, incorporating some measures of risk.