Report Spotlights COVID Impact on Supply Chain’s Need for Connected NPI

COVID-19-Impact-on-Supply Chain

We live in a fast-moving world in which customers expect new and better solutions every day. So, businesses need to move quickly to introduce products that the market wants and needs.

Global manufacturers have responded to this market imperative. The average consumer electronics manufacturer invests a quarter of its personnel to new product introduction (NPI). These high-tech manufacturers introduce a new product in 24 months on average. And the study “Design Teams: Requirements Management & Product Complexity” found that 92% of queried engineers and designers believe product complexity has increased over the past 5 years.

Current events have changed our world in recent months, but product innovation remains incredibly important. In fact, amid today’s challenging environment, it may be more important than ever. Yet a new study from Dimensional Research shows that more than half of the electronics industry product launches have been delayed or cancelled due to the coronavirus pandemic.

The study, “2020 Trends in Electronics Sourcing,” also indicates COVID-19 has led to increased component costs and prompted manufacturers relying on the global electronics value chain to rework their products. The study, commissioned by Supplyframe, also notes that the pandemic has resulted in an inability of some manufacturers to fill their customers’ orders.

The Pandemic Has Created New – and More Pronounced – Challenges for Manufacturers

Dimensional Research surveyed more than 200 decision-makers responsible for electronic component sourcing at global manufacturers for the study. The vast majority (91%) of the survey group – which represents the aerospace, automotive, high tech, industrial equipment, and medical device sectors – said sourcing issues are the cause of these product launch delays.

More than a third (37%) said their overall component costs increased amid the pandemic. And 35% said they are reworking products to replace components that are no longer available.

But Supply Chains Have Long Been Complicated, So NPI Has Never Been Easy

However, in many ways, the pandemic just escalated an already challenging situation. Electronics manufacturers have long grappled with global supply chain complexity, inadequate enterprise systems, and less than optimal collaboration during the new product design process.

The lack of adequate collaboration between internal engineering and sourcing teams during new product design can add to manufacturer costs, expose them to greater market risks, and lead to product launch delays. In the process, it can sully the reputations and negatively impact the career trajectories of the engineering and sourcing professionals involved in those efforts.

These Dimensional Research survey results illustrate the extent of the challenges noted above:

  • 85% said engineers select components that can’t be effectively sourced;
  • 81% said component availability problems have forced them to do expensive spot buys;
  • 79% said lack of proper collaboration has led to product introduction delays; and
  • 62% said these delays happen only occasionally, while 17% said they occur frequently.

Collaboration and Market Intelligence Lower Manufacturers’ Risk and Increase Their Success

However, better communication and trade-off decision-making based on market intelligence during new product design can lead to improved outcomes for manufacturers and their customers.

According to the “2020 Trends in Electronics Sourcing” report, 95% of those surveyed said solving component sourcing issues requires integration of internal engineering, finance, sourcing and supply chain teams as well as of external partners. An even greater share (99%) reported direct benefits from early collaboration between engineering and sourcing teams.

Such integration is possible when these teams have intelligent systems to enable effective collaboration. When NPI teams have access to real-time data about inventory availability, cost volatility, lead times, and global design cycle trends, they can work together to make more informed decisions and balance cost and risk over the product lifecycle.

Global manufacturers’ experiences amid the pandemic emphasize the importance of building resilient supply chains. The first step in doing that – and lowering risk while increasing product margin potential – involves establishing a connected NPI process to allow for effective collaboration among teams and enable businesses to make decisions based on prescriptive intelligence.


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