A collection of resources and commentary providing an introduction to supply chain management and related systems for students, practitioners, and anyone else interested in learning more about how to design, manufacture, transport, store, deliver, and manage products.
Tuesday, January 22, 2013
Should innovation and new product design be a key element when Planning Demand and Supply in a Supply Chain?
Should innovation and new product design be a
key element when Planning Demand and Supply in a Supply Chain?
art of coming up with meaningful projections of the demand for a product relies
heavily on economic, political and social indicators, a fact long time known in
the supply chain management world. But what happens when non-traditional
factors have a direct effect on the demand of a good? More specifically, what
happens when a company depends on the innovation and creativity of the
industries to which it supplies?
a recent article Sharon Stiefel discussed the role that lack of innovation in
electronic products had in the high levels of chip inventory at semiconductor
suppliers. As a result, semiconductor revenue is expected to decline in the
first quarter of 2013 given the fact that chip inventory held by semiconductor
suppliers reached record high levels in the third quarter of 2012. The article
attributes this miscalculation of demand to key demand drivers failing to
materialize, specially to the demand from new products that consumers purchased
in the holiday season, which had its worst performance since 2008. This
panorama is even murkier given the dire economic growth forecast for 2013.
most affected products were Ultrabooks and PCs, which despite innovative models
did not create the demand for semiconductors originally expected. Other gadgets
with high demand, such as tablets and smartphones, did not produce the stimulus
necessary to spur the demand of semiconductors either. Even Apple reduced its
demand from its supply chain.
article shows the vulnerability of companies not only to traditional economic
developments, but to more fundamental economic factors such as innovation.
Thus, the article leads to important questions. For example; is this failure in
forecasting the result of market saturation? Or should the semiconductor
industry look for new product design and innovation to target developing countries
with huge unexplored markets? Perhaps the most important question relates to
the limits of the third industrial revolution and the inexorable decline in
productivity. In the meantime the art of forecasting demand has a new