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.
Wednesday, September 11, 2013
Moto X Supply Chain
The articles “Building a flexible supply chain for uncertain times” and “Ten ways to
improve inventory management”, emphasize the need
for supply chain systems to take into account more than just forecasting demands
to take into considering for effective inventory management. They propose
making the supply chain more flexible by cutting across departments like marketing
and sourcing. In this blog I am going to highlight companies which have
successfully implemented them and which have had difficulty implementing it.
Mobile device manufacturing companies have
had some difficulties implementing an agile supply chain. Microsoft’s Steve
Balmer openly admitted that they made a huge mistake with over forecasting the
demand of Surface tablets. They have cut the price by a 100$ and are yet having
trouble selling it. As an opposite
example to this scenario, Nexus 4 devices flew off the shelves and its sales
were under rated. There was a huge waiting time to procure the Nexus 4.
Motorolla, with its manufacturing plant in
texas, has made added some variability to the supply chain process of
manufacturing phones. With the launch of Moto X, they have made the phone
external colors extremely customizable. While the skeleton of the phone remains
the same, the external colors are highly customizable; in fact you can also
engrave your name on the phone. The phone is assembled in Texas and can be made
to order and delivered within 6 days on order.
Motorolla is the first company to assemble
and distribute its phone in the US. It gets the cell phone processors from
companies like the Qualcomm- which outsources its production to a Taiwan
manufacturing company. It gets its memory from Samsung in Korea. Only 17% of the
manufacturing is done in the US.
Google made a huge bet by buying a manufacturing
plant in Texas- trying to assemble the phone in on a made to order basis. It’s
a little more expensive for them to assemble the phone here but they have saved
on the millions by avoiding wrong forecasting sales and possibly making loses
it (like Microsoft did).
It’s probably too soon to say if it’s effective
enough, since it has only been 2 months since the phone's release. Would this be the
best supply chain model that mobile manufacturing companies could adopt?