The diagram below illustrates both inventory and information flows across the high tech value chain.īeing able to exchange business documents across a relatively complex and fast moving supply and demand chain is important to the smooth running of these high tech operations. Once these products are manufactured they are shipped via specialist high tech distributors such as Avnet and Arrow to the OEM’s storage and distribution facilities before finally being forwarded to retailers or resellers.

It is not unusual for an OEM to work with many different contract manufacturers in order to manufacture one product. These contract manufacturers will be responsible for either designing the entire product, to which the OEM would simply apply their logo or they will build a number of sub-systems that make up the final product. Meanwhile, on the demand side of the chain, the OEMs, such as Dell, HP and Cisco, work in partnership with a number of contract manufacturers, such as Celestica, Flextronics and Jabil. Once the chips or other electronic components are manufactured they will be distributed to a number of strategically located distribution hubs so that they can ship the components to the EMS or contract manufacturers as and when required. On the supply side there are the fabless semiconductor manufacturers, these companies will typically design the semiconductor chips but will then outsource the manufacturing of the chips to a specialist chip manufacturer such as Global Foundries who in turn will source their materials from the raw material providers. In order to try and explain how the high tech supply chain is structured, the following diagram illustrates the key players across both the supply and demand chain. This model is common across many high tech companies now including Apple, one of the world’s leading high tech consumer brands. So you could say that Cisco has become a ‘branded integrator’, responsible for the design and marketing of their products, but the actual manufacture of their goods is handled by external EMS providers. All of Cisco’s products are manufactured by outside contractors.

To give you an idea of how prevalent contract manufacturing has become within the high tech industry, Cisco, one of the world’s leading providers of networking based solutions, does not manufacture any of their own equipment. The industry relies on the use of many outsourced design consultancy and contract manufacturers, known as Electronics Manufacturing Service companies. Whereas the automotive industry has a tiered and fairly logical structure, the high tech industry is very matrix structured by comparison. The high tech industry has the most complex supply chain structure of any industry sector. The provision of simple-to-use, quick-to-deploy, and easy-to-maintain EDI tools is very important for high tech companies. This has meant that the high tech manufacturing companies have had to ensure that they can trade electronically with suppliers in any country around the world, even those with limited ICT related skills. For this reason inventory visibility across retail networks and multi model logistics networks is important for both the high tech companies and their business partner community.Īs with companies in the automotive industry, many high tech companies have globalized their operations to take advantage of low-cost suppliers in many of the emerging markets around the world. There has also been an increasing demand for introducing Vendor Managed Inventory systems to ensure that retailers have the correct levels of inventory to support for example new product launches or seasonal fluctuations in consumer demand. It is very consumer driven, which has meant that high tech supply chains have had to become flexible to changing consumer demands. Due to the nature of the high tech industry there has been a desire to try and exchange business transactions electronically, more so than in many other industry sectors.

Finale inventory edi integration