NFI Industries

Out with the Old, In with the New: Technology Logistics

The very first Apple iPhone™ was released eight years ago on June 29, 20071. Since then, Apple has worked tirelessly to keep the latest technology in the palm of their customers’ hands which included nine hardware updates and numerous software updates. The Moore’s Law, a principle which states that the processing power of our chips doubles every 18 months, shows truly how quickly a single product can evolve. Kryder’s Law states that our technological storage doubles about every 12 months2. With these types of changes it’s no wonder that companies have to update their devices and improve their technologies so rapidly. The Consumer Electronics Association (CEA) predicted that the emerging products would grow by 242 percent in 2014 in comparison to 20133. When these shifts in technology happen, companies like Apple depend on their supply chain professionals to make transitions and product launches smooth. With such an abounding forecasted growth, the supply chain industry is there to help accommodate the rapid changes. Here are ways that supply chain professionals play a vital role in the movement of new technologies:

Optimizing for Global Reach

There is an expected increase in the amount of products not only being made internationally but also being distributed internationally as well. Companies are entering emerging markets and expanding their customer base to include countries around the world. It’s important that your 3PL is equipped with the capabilities to handle these global transactions. When a new product is announced, companies should already be adjusting their supply chain plans to accommodate the change. At this point, they most likely have already begun production of the new product. However, this doesn’t mean that they won’t completely stop making older products so these types of changes call for more organization. Companies will need to track the manufacturing of an additional product and ensure that supply meets demand. The manufacturer may be producing the new product more quickly to meet the expected demand upon release. The older product may become safety stock and there should be planning for overlapping product lifecycles. In some instances a planned obsolescence may be in the works and all aspects of the supply chain should be ready to handle the complexities involved such as reverse logistics.

Navigating International Transportation

Mobile phone companies usually have a model on the market in for just six to nine months before a new version is in the works4. If the older version of the product is being discontinued the company may have plans to ship their remaining inventory to stores or to ship them back to the manufacturer completely. As the new products are produced, companies may opt to ship a certain amount via air to ensure that they have the initial inventory to support their launch. They may continue to use air if there is evident demand since it is quicker than other modes of transportation. If these products stay on the market for six to nine months then the product could spend ten to twenty percent of its lifecycle in transit if they choose transport via ocean carrier5. This could hurt the company’s bottom line and in these instances the speed of delivery will triumph over cost.

Leveraging Warehousing for Flexibility

The companies now have to plan how to store their products. This may mean leasing more warehouse space to accommodate for the surge that will come with the release. By storing products in major hubs, shippers will be able to better distribute their inventory across areas. These companies may have a dedicated warehouse where they already allocated the appropriate amount of space to meet their needs. Companies may also choose to use a public warehouse where they can easily access flex space for the surge in a shared warehouse environment.

Even the most sophisticated supply chains must be prepared to shift and evolve at the same rate as technology. As the demand for new products and technologies increase, supply chains have to be ready to react.