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The High-Tech Supply Chain is Too Focused on Low Cost?

published: cw 39, 2005 in eLogistics & eFulfillment

An important corollary to Moore?s Law is that high-tech products will see a constantly improving price/performance ratio, which is reflected in a cutthroat market. An AMR Research report says the supply chain in the high-tech industry is suffering from a cutthroat market, and that companies are driving costs down at the expense of customer service and perfect order performance rates. ?The results are not a surprise. The high-tech industry is known for its relentless focus on cost reduction,? says AMR analyst Bill Swanton.?But at what point do lower unit costs obscure the sight of customer service issues and profitability?? High-Tech has traded off customer service to achieve low supply chain costs. Is this the right choice?

AMR points to the low supply chain costs in high-tech?put at just 16 percent of revenue?compared to an industrywide median of 24 percent. AMR also notes the perfect order performance in high-tech is 74 percent, compared with 90 percent cross-industry, suggesting the low costs are causing order performance problems.

Source: AMR Research


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