Consumer Electronics Industry Overview
The consumer electronics industry has always been characterized by a complex supply chain network with a high level of subcontracting. Companies are extensively outsourcing services, thereby increasing the large intermediary contract manufacturers and suppliers. They are witnessing a steady rise in the cost of purchasing and doing business. Businesses, therefore, have started regarding procurement management as their top priority to minimize the overall spend and keep pace with changing business demands.
However, revamping the process is not an easy task. Companies in the consumer electronics industry must adopt procurement best practices to lower costs, enhance the process efficiency, and have a significant impact on the cost-income ratio.
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How Firms in the Consumer Electronics Industry Can Improve the Procurement Process?
Improve spend transparency
Creating a transparent procurement process is the baseline to unlock potential savings and achieve operational excellence. To ensure spend transparency, companies in the consumer electronics industry must define and implement the procurement policies properly. They must document every step of the procurement process and manage potential suppliers to get the best possible terms during every purchase. Regular audits should be conducted to improve contract visibility. Companies should also consider harnessing the power of automation and data analytics to minimize maverick spend.
Engage with suppliers
Organizations associate with numerous suppliers to procure specialty services, perform maintenance and repair. It’s crucial for companies in the consumer electronics industry to onboard potential suppliers and manage them. However, the process of scheduling services and managing the vendor can be time-consuming. Having a supplier management process in place can help companies to improve the source-to-contract process and better engage with suppliers. It can help them create a win-win strategy, monitor supplier performance with set KPIs and improve communication with vendors.
Implement six sigma methodology
Seeing the technological advancements, adopting six sigma methodology can be an appropriate step for companies in the consumer electronics industry. They can improve internal operations and meet the rising expectations of quality. Six sigma is an excellent methodology to address the requirements for developing new products that necessitate faster product development processes and shorter product lifecycles. It helps companies to reduce dollars spent on reworking defects and improves the level of customer satisfaction.
Manage contracts effectively
While managers look into the contracting process right from the agreement in principle to contract execution, they fail to completely unlock the value many times. As a result, they face challenges such as inconsistency across contracts, slow processing, and supply chain issues. Organizations must maintain a centralized data repository to create, store, and maintain contracts. Also, they should leverage the spend optimally to reduce costs and mitigate risks.
Inability to manage contracts efficiently can result in lost revenues for businesses. Give SpendEdge a try by requesting a free demo of our procurement platform and gain exclusive insights into the consumer electronics industry to improve contract management.
Standardize processes and manage risks
To achieve economies of scale, companies need to standardize processes and parts produced in different locations. This will enable them to manage product quality effectively. They should also consider developing a risk management strategy to tackle issues such as out-of-balance inventories, flexible capacity, and redundant suppliers. The real cost of holding inventory accounts for 20-30% which is much higher than the cost of ordering items.