Publicity November 2012

Supply Chain Managed Service Enables “Predictive Visibility”

Gerry Fay, chief global logistics and operations officer at Avnet Inc.

Avnet Inc.’s role in high-tech supply chains enables it to co-ordinate information from start to end. Its Control Tower service provides customers with “predictive visibility” into their supply chains and empowers them with multi-tiered collaboration that assists in risk mitigation. Combining people and processes, Avnet uses leading technology to enable its customers to quickly respond to disruptive supply chain events.

Gerry Fay, chief global logistics and operations officer at Avnet Inc. answers questions about this innovative resource.

Why are risk management programmes important to supply chain professionals?
Risk is inherent in the supply chain. Given some of the dynamics we face today with moving overseas, with outsourcing, and in emerging markets it is crucial to identify all the risks that could potentially affect your supply chain and then to try and figure out ways to mitigate them.

What is the best supply chain risk management strategy?
There is no one-size-fits-all strategy.

The really important factors are identifying the risks that have the most impact on your supply chain, from a cost and quality perspective, and then finding ways to eliminate or mitigate them.

Why is Control Tower important to the electronics supply chain industry?
It gives the customer visibility both up and down their supply chain.

All of our 100,000 customers benefit from being able to see inside the supply chain ecosystem from the beginning to the end.

Providing that information to the orchestrator, usually original equipment manufacturers, is very important. It allows them to get the visibility they need to identify supply chain risk and determine how they are going to deal with it.

What does Avnet’s Control Tower offer?
We provide end-to-end visibility for our customers.

Because of the relationships we have, we can go all the way back to the beginning of the supply chain with our suppliers and, in many cases, to our customers’ customers.

It is this information that is most important, since it enables our customers to see what is happening in the supply chain and where their risk may occur.

For example, we can find out if manufacturers have potential manufacturing problems, or if the end customer’s demand is decreasing.

Our customers can use all of this information. We boil it down to a very simple format so they can quickly extract assessments of the risks and determine against what they are going to take action.

After all risks have been exposed, how should firms decide which to address?
Deciding this is actually easier than identifying the risks.

Once the risk has been identified, it’s really a matter of how expensive it is and how costly it could be to the company. The cost of mitigation and elimination should also be considered.

After those calculations, the best path to take can be determined: whether to eliminate, mitigate, transfer or accept the risk.

What should be done once potential risks have been prioritised?
It is then time to take action.

You must consider the professional relationships that you have within the supply chain and figure out how it would be best to deal with them.

Most of the time, the risk isn’t to a tier-one supplier with whom you have a close relationship. Instead, it may be further down in their supply chain.

It’s about taking the information, approaching the specific supplier and explaining that it’s not their potential risk but, instead, that you feel one of their suppliers is at risk. Then explain how you put a mitigation plan together.

Once you have identified the risk, communication and collaboration are needed to eliminate it.

For example, after the 2011 Tohoku earthquake, numerous companies felt that they didn’t face a big risk, because some of their semiconductor suppliers that were based in Japan also had [semiconductor fabrication plants] fabs outside the country.

It wasn’t until later that many companies found out that the adhesive  manufacturer who puts the adhesive for semiconductor caps in place had a problem. This affected the fabs no matter where in the world they were located.

So, it’s important to identify those key suppliers that could be a risk to your supply chain, no matter how far back they are.