US high-tech companies are cautiously optimistic about economic recovery as they emerge from therecession but consider it unlikely to meet the US president’s goal of doubling the country’s
exports in the next five years, according to a UPS-commissioned survey.The survey named “Change in the (Supply) Chain” was designed to uncover the biggest business andsupply chain issues for high-tech companies during the recession and reveal how their supply chainschanged as a result. The survey also identifies how future plans are likely to change supply chainsin the high-tech industry going forward.
Conducted by the market research firm IDC Manufacturing Insights and sponsored by UPS, thesurvey targeted decision makers in the areas of operations, supply chain and logistics anddistribution at high-tech companies across the USA.
The report revealed that US technology companies are trying to find new ways to serve anunpredictable global customer base while simultaneously driving down costs. Thereby, they place agreater emphasis on areas that proved to be weaknesses during the recession such as responsiveness,resiliency and cost containment.
The high-tech companies expect demand for their products over the next 3-5 years to be drivenprimarily by customers in North America (86%) and Asia Pacific (71%), with Europe coming in third(61%), similar to today’s demand patterns. They also recognise the need for change in their supplychains. For example, 48% consider a lack of end-to-end visibility as a major challenge while 44%name unstable suppliers and demand planning as the weakest links in their supply chains.
Another challenge for high-tech companies has historically been the reverse logistics process ofhandling product returns and repairs. Survey respondents reported that meeting customerexpectations was their greatest business concern when it came to reverse logistics, cited by 46% ofcompanies. The greatest supply chain challenge was in getting customers to comply with returnsprocesses (22%).
“Survey findings clearly reveal an on-going conundrum in the high-tech industry to better servecustomers while reducing costs, yet manufacturers haven’t mastered the critical function of reverselogistics,” said Charlie Covert, UPS’s vice president of customer solutions for the high-tech andindustrial manufacturing sectors. “When done right, reverse logistics not only can drive downsupply chain costs, it also can become a key competitive advantage as it improves the customerexperience.”
In terms of investment, 46% of companies are preparing to invest in new product development tokeep up with customer demand over the next 18 months despite cost concerns. For this time period,66% of the companies named more efficient operations as their top business priority while 60% wantto focus on improving margins.
Despite some new-found optimism, 60% of the companies consider it “very unlikely” or “not likelyat all” that the goal of Barack Obama to double US exports in the next five years will be achieved.The overwhelming reason, cited by 60%of the companies surveyed, was the belief that the USA is “tooexpensive” for high-tech manufacturing.
Scott Davis, chairman and CEO of UPS and a member of the President’s Export Council, commented:“Input from businesses about the challenges of meeting export goals is invaluable to a betterunderstanding of the problem as well as working to remove barriers to international trade.”
“Despite the pessimism in some quarters, I believe this goal can be attained,” Davis continued.“The United States is still the world’s largest manufacturer and it’s been demonstrated time andtime again that foreign trade creates US jobs. And when an American company limits its business tothe United States, it’s turning its back on 96% of its potential customers. This is an issue ofeconomic growth and UPS is committed to helping our customers grow their businesses.”
