The role of supply chains has evolved drastically over recent years. It is an area of industry that is being transformed from a necessary business logistic into a critical driver of innovation.
On 3rd December 2024, David Paulson, Global Vice President of Avnet Velocity spoke at a webinar hosted by Bolaji Ojo, Publisher of The Ojo-Yoshida Report, sharing his insights on how supply chains are driving innovation in the technology sector.
Outlining how supply chains have become a critical enabler for innovation, particularly in markets such as semiconductors and networking infrastructure, Paulson explained the critical role of supply chain strategies in helping businesses to navigate challenges, bring products to market efficiently, and remain competitive.
“The supply chain is being utilised to accelerate innovation. It’s now a vehicle to capture value, exceed performance goals, and meet customer experience expectations, market penetration, and revenue targets.”
In this context, supply chains are no longer confined to the background; they are becoming a strategic tool to address industry complexities and deliver cutting-edge solutions.
Supply chains are the backbone of innovation
Today, supply chains are shaped by both advancements in technology and the aftermath of global disruptions, such as the challenges faced during recent constraint periods in sectors like automotive and semiconductors.
Highlighting an example of these challenges, Paulson said: “During the constraints, a $1.50 microcontroller shortage for a windshield wiper motor prevented entire pickup trucks from being built.” This anecdote served as a reminder of how even minor supply chain hiccups can cascade into huge revenue losses.
On the supply side, semiconductor companies face their own hurdles, as Paulson explained: “Semiconductor manufacturing requires a 26-week planning horizon. During constraints, resources were diverted from supporting designs to expediting parts – a highly inefficient use of talent and time.”
Inefficiency costs money, money keeps a business in business, so the need for robust planning and advanced supply chain tools is vital.
Driving results with innovative supply chains
One way to overcome these challenges is to adopt Supply Chain as a Service (SCaaS). Companies like Avnet, who are leveraging SCaaS to turn their supply chains into enablers of innovation by offering tailored solutions that address specific customer needs.
Sharing a success story from the semiconductor industry, where Avnet implemented a digital “control tower” to centralise demand streams and inventory, Paulson said: “This allowed the customer to prioritise manufacturing based on their needs, not those of their contract manufacturers.” The result of this was improved visibility, smarter decision-making, and the ability to outperform competitors during a constrained market.
Another example came from the networking infrastructure sector. To address cost challenges posed by high-bandwidth memory – 50% of the bill of materials for a key product – Avnet introduced a financially structured model. By owning the high-value components, Avnet reduced costs by 40%, enabling the customer to remain competitive while gaining market share.
Supply chains as tools for innovation
Digital platforms, like Avnet’s control tower, provide end-to-end visibility, connecting inventory across manufacturing stages from raw materials to finished goods, and it is this visibility that enables companies to make informed, agile decisions that align with their business objectives.
“Speed and agility are critical to developing solutions. Dedicated supply chain enablement teams are essential for fast, informed decision-making,” Paulson stressed, speaking on the importance of embracing digital innovation.
Key takeaways for leveraging supply chains
To embrace the full potential of supply chains as drivers of innovation, businesses should consider the following:
- Invest in visibility: adopt digital tools that offer real-time insights across the supply chain, enabling proactive responses to disruptions.
- Embrace SCaaS: partner with organisations that offer supply chain services tailored to your specific challenges.
- Prioritise resilience: build strategies that minimise risk and ensure business continuity during global or regional disruptions.
Leverage tailored solutions: address unique challenges with customised models, whether financial restructuring or strategic inventory management.
The supply chain is no longer a back-office function – it is now a strategic part of business, enabling innovation and offering a competitive advantage.
“It’s not supply chain for supply chain’s sake, but supply chain as a tool to drive revenue, profitability, and customer satisfaction.”
