Consumer electronics supply chain leaders seek partnerships to support decarbonisation efforts

The value of the global consumer electronics market is expected to surpass US$1tn by 2030.¹ It is fast-paced and competitive, and it needs responsive supply chains that can get products to market quickly.

That is now truer than ever. Rapid innovation, complex global sourcing arrangements and demand for convenience are forcing businesses to continually innovate the consumer electronics supply chain.

In this context, we surveyed 75 supply chain and logistics leaders at consumer electronics businesses around the world as part of a larger survey of 500 executives in the technology sector. The findings reveal that the view of consumer electronics leaders about supply chain and logistics issues differs from those in other sectors in some key areas:

• Lacking robust risk mitigation processes: Just 32% of consumer electronics businesses have a robust process for supply chain and logistics risk management and scenario analysis, compared with 40% in other sectors.
• Strategic partnerships are in high demand: 69% of consumer electronics businesses want their supply chain and logistics partners to do more to help them innovate and test new ideas – 16 percentage points above those in other sectors (53%). But today, the majority (56%) say their partners are solely focused on servicing their current needs rather than innovating for the future.

Supply chain and logistics can make or break a business

The 500 executives we surveyed from across the technology sector show there is a clear correlation between businesses in these sectors that have high-performing supply chains and better business performance.

For example, 77% of technology businesses with high-visibility supply chains (meaning that components and goods can be tracked as they travel through the supply chain with a high degree of accuracy) grew revenue in the past three years, compared with just 46% of businesses with low-visibility supply chains. Stronger supply chain visibility seems to mitigate unexpected disruptions, reduce costs and increase customer satisfaction – ultimately, it can improve business performance.

However, not every consumer electronics business acknowledges this. Only half (52%) say their supply chains and logistics is a source of competitive advantage or that a well-functioning supply chain and logistics helps deliver growth. In parallel, consumer electronics businesses’ top supply chain priority in the next 12 months is cutting costs–53% flag this as a top priority, a greater proportion than in any other sector. Other aspects of supply chain performance, such as reliability (only selected as a priority for 20%) and resilience (19%) are much less of a priority.

In time of high inflation and tightened consumer spending², it is understandable that cost control is high on the agenda. But the danger is that supply chain performance, and therefore business performance, suffers if cost control is prioritised at the expense of improving other areas of the supply chain.

Achieving their decarbonisation aspirations will not be easy: 55% say there are limited options to make their supply chain and logistics more sustainable and 49% say decarbonising supply chain and logistics is too expensive.

There are risks that threaten consumer electronics

The consumer electronics sector is no stranger to supply chain risk. For example, the global shortage of semiconductors – which are crucial to consumer electronics devices – that started in 2020 was estimated⁴ to have disrupted global GDP growth by 1% in 2021.

When asked about today’s greatest supply chain risks, rising geopolitical tension ranked first, followed by demand volatility. Consumer electronics businesses are also more concerned about exchange rate volatility than other tech sub-sectors. This could reflect the international nature of supply chains for consumer electronics businesses, which source components from all over the world.

To survive, organisations will have to carefully manage and mitigate these risks. But only 32% of consumer electronics businesses in our research say they have a robust process for supply chain and logistics risk management and scenario analysis, compared with 40% in other sectors. There is a clear need to invest the time needed to build up adequate risk identification and mitigation measures.

It can also improve supply chain transparency and risk management. Suppliers are a lot more likely to alert customers early about potential delays, for example, if there is a close working relationship.

Unfortunately, many consumer electronics do not have strategic relationships with their suppliers today: over half (56%) also say their partners solely focus on servicing current needs.

According to our research, these businesses want more support from their external partners – particularly when it comes to the development of new products and services:

• 69% say they want their partners to do more to help them innovate and test new ideas – 16 percentage points above the global average (53%)
• 68% say that collaboration with partners will be a key source of supply chain innovation in the future, compared with 58% among other sectors overall

Through successful collaboration, supply chain partners can become more innovative and responsive to the needs of the global markets they serve. That will give consumer electronics businesses a competitive edge in volatile times.

For a deeper dive into the full research and actionable strategies, download the complete report - Be ready to build people-driven supply chains.

About FT Longitude

FT Longitude is a specialist thought leadership agency, owned by the Financial Times, working with a wide range of the world’s most prestigious B2B brands across Europe, the US and Asia-Pacific. FT Longitude’s 80+ clients are concentrated in the professional services, financial services, and technology sectors, but also stretch into energy, infrastructure, manufacturing and other industries. Headquartered in London, the company was founded in 2011 and was selected as one of Chief Marketer 200, Top Marketing Agencies of 2020, an Inc. 5000 Europe in 2018, an FT 1000 company in 2017, and a 2016 Leap 100 high growth UK company by City A.M. and Mishcon de Reya. It is led by founders Rob Mitchell (CEO), James Watson (COO) and Gareth Lofthouse (Chief Revenue Officer). For more information: visit longitude.ft.com.