High-tech companies expect robust growth in their industry, and
they're preparing for it by weighing a broader range of factors
when building their manufacturing supply chain networks, according
to the fifth annual UPS® Change in the (Supply) Chain (CITC)
survey.
The survey, conducted for UPS by IDC Manufacturing Insights,
found that while high-tech companies still favor the strategy of
off-shoring as a means to cut labor costs, a large number also have
begun "right-shoring." This strategy optimizes the supply chain to
take advantage of cost benefits and local resources to achieve the
best customer service and overall profit margins.
CITC also shows high-tech companies increasingly are entering
emerging markets and exploring 3D printing for new product designs
and prototypes.
IDC polled 516 high-tech executives in North America, Europe,
Asia Pacific and Latin America. Respondents were senior high-tech
supply chain professionals. The results reveal an ongoing evolution
in their supply chains that affects the placement of companies'
owned facilities and the selection of their suppliers. (Download
the CITC executive summary at pressroom.ups.com.)
"High-tech companies are building more flexibility into their
shoring strategies and supply chains so they can respond better to
demanding market dynamics," said Dave Roegge, high-tech marketing
director at UPS. "They're thinking more holistically about their
strategies to evaluate their transportation costs and the time it
takes companies to deliver goods."
"Customer requirements change rapidly, especially considering
the steady stream of high-tech innovations and the fact that there
is little to no downtime between product generations," Roegge
said.
Many of these companies see right-shoring as the solution.
Right-shoring balances a number of factors to determine the
proximity of sourced materials to production, warehousing and
distribution. These metrics could include cost, quality and the
time it takes to recover from any operational failures. Forty five
percent of survey respondents said they use right-shoring
strategies.
Off-shoring, which moves manufacturing or assembly to countries
with low labor costs, remains the most common strategy. Forty seven
percent of survey respondents said they off-shore. Near-shoring,
which moves manufacturing or assembly closer to the location of
demand, continues to gain in popularity as companies improve
service levels, reduce inventory in transit and seek greater
control over product quality and intellectual property. Thirty five
percent of respondents said they near-shore. That's a gain of 25
percentage points since 2010.
"It's about having a nimble supply chain," Roegge said.
UPS is a global leader in supply chain and logistics. The
company helps customers achieve business goals by addressing
barriers with supply chain and logistics capabilities. UPS
identifies its customers' business needs and offers a broad
portfolio of services in the high-tech and other industries. These
services include supply chain design, engineering and network
design and transportation and inventory optimization. UPS also is
the world's largest customs brokerage.
Industry export growth continues; new opportunities
emerge
The growth outlook for high-tech exports is strong, the CITC
survey showed. Forty six percent of the respondents said they
expect industry export growth globally to increase at the current
pace over the next two years, while 28% of them expect faster
growth. North American and Latin American respondents were the most
optimistic about the future of high-tech exports.
High-tech companies have successfully penetrated many emerging
markets. Among survey respondents, 71% said they are already
selling products in China, 45% in India and 42% in Brazil. Some
high-tech markets once considered "emerging" have now emerged, but
growth opportunities remain. The top three markets that high-tech
companies are planning to enter this year are Brazil, Russia and
India.
Although new-market penetration is high, barriers to expansion
continue to evolve. In 2013, the top barrier to expanding in
emerging markets was difficulty assessing the likely appeal of
products. In the most recent survey, 35% of survey respondents said
navigating the regulatory environment was the new highest hurdle to
expansion.
3D printing useful in product design
The CITC survey also explores the commercial adoption of 3D
printing. Seventy percent of survey respondents report having
hands-on experience with it, including 32% who said they are just
beginning to understand it.
For now, high-tech companies use 3D printing mainly to spur
innovation as they design new products. The top benefits include
faster product development and manufacturing processes. Regionally,
43% of respondents in the Asia Pacific region - primarily high-tech
manufacturers in China - said they use 3D printing for production
of finished goods. In North America, 29% of respondents said they
use 3D printing for this purpose.
Other topics covered in the survey include high-tech companies'
approaches to risk management and their views on
sustainability.
About UPS
UPS (NYSE: UPS) is a global leader in logistics, offering a
broad range of solutions including the transportation of packages
and freight; the facilitation of international trade, and the
deployment of advanced technology to more efficiently manage the
world of business. Headquartered in Atlanta, UPS serves more than
220 countries and territories worldwide. The company can be found
on the Web at ups.com® and its corporate blog can be found at
Longitudes.ups.com. To get UPS news direct, visit
pressroom.ups.com/RSS.
CONTACT: Kyle Peterson, UPS
404-828-4626
kylepeterson@ups.com
Rebecca Harbin
404-870-6825
rebecca.harbin@mslgroup.com