April 29, 2021

Harnessing the Power of WillCost™ to Accelerate NPI

Traditionally, new product teams have relied on a detailed, bottom-up “should-cost” analysis to generate an estimate for the specification, construction, composition, and manufacturing requirements for a new product design. These teams would then use this estimate as a target for negotiations with potential suppliers and contract manufacturers. While this is a valuable strategy, the savviest negotiators augment such estimates with a top-down, outside-in analysis and fresh insights about the market factors. This allows them to change the game altogether. 

LevaData’s New Product Accelerator (NPA) platform was designed with a simple goal in mind: help organizations identify and act on sourcing savings opportunities and risks to streamline and accelerate new product introduction. One effective way to do that is through LevaData’s WillCost™.

What is LevaData’s WillCost™?

WillCost™ is a powerful capability found within the New Product Accelerator platform. It collects and analyzes real-time data to determine what the market is actually paying for the same investments as your organization. The AI platform utilizes community-based analytics and third-party data to provide an in-depth evaluation into which opportunities are available–and worth pursuing. It also unveils what kinds of prices the community has managed to lock in for the future.

The Value of WillCost™

With the current market as volatile and competitive as it is, it’s getting more difficult for organizations to identify and act on savings opportunities from their direct material spend. New Product Accelerator alleviates this pain point by constantly searching for savings and risk mitigation opportunities through AI and predictive tools. 

This machine-learning technology provides organizations with two key value points. First, it mitigates countless workforce hours lost searching for valuable data to inform spending decisions by providing all the crucial insights in one cohesive, easy-to-navigate platform. Second, by leveraging actual market data to garner accurate cost indications, your organization will have the confidence–and evidence–to renegotiate your spending with suppliers and unlock better prices successfully.

Capitalize on Accelerated NPI Now

For far too long, organizations have struggled to optimize the balance between cost savings and risk mitigation. In reality, though, achieving this balance is far less complex than you might have believed. With LevaData’s New Product Accelerator platform and WillCost™ capability, you’ll quickly and efficiently move toward complete spend transformations with the confidence you’ll achieve accurate, honest, and fair results.

Find out more about how LevaData’s AI-powered, community-driven technology can help you uncover and act on saving opportunities to accelerate your NPI processes by scheduling a demo now

April 21, 2021

How the Semiconductor Shortage Increases Lead Time & Generates Supply Chain Risks

Since the beginning of 2021, the discrepancy between the increasing demand for semiconductors and the lack of available supply has become a worldwide news event. In fact, semiconductor shortages have been reported across almost all major IC groups. While the most obvious impact has been within the automotive industry (the lack of critical semiconductors led to shutdowns of auto factories for all the major manufacturers), the shortage has undoubtedly generated supply chain risks across the board.

The Cause Behind the Shortage

Numerous factors played a role in straining the semiconductor ecosystem, all the way from foundry to backend OSAT capacity. Some of the most notable include:

  • Increase in consumer purchases of digital devices during the COVID shutdown to enhance connection and productivity
  • Accelerated build-outs of data centers
  • 5G handset and infrastructure investments
  • Exponential demand for cyber currency mining hardware

These factors all drove increased overall demand for a wide range of semiconductors, from microprocessors and power management ICs to memory controllers and various logic ICs. In addition, factory disruptions and US-China trade tensions exacerbated an already tight supply situation.

What This Means for Your Organization

With this backdrop in mind, LevaData analyzed the changes in lead times for the main semiconductor groupings. From January to April of 2021, semiconductor IC lead times increased 75% on average. For some of the more in-demand components, those increases have been even more dramatic:

  • Programmable logic: 12 to 33 weeks (175% increase)
  • Microcontrollers: 16 to 44 weeks (175% increase)
  • Network interface ICs: 12 to 40 weeks (233% increase)
  • Serial IO controllers: 9.5 to 39 weeks (311% increase)
Semiconductor lead times

In some instances, customers saw their lead times increase to 52+ weeks. In such cases, any new order for components will take a year or more to deliver. Given that most companies struggle to forecast more than six months out, this creates significant supply chain risks, putting a massive strain on revenue visibility and attainment.

Although LevaData believes such actions on behalf of semiconductor companies are a slight overreaction to the current supply/demand frenzy, all indications point toward a tight supply over the next nine to 12 months – at least until Q2’22 – while the industry works to expand capacity.

However, there are also indications that many customers are building larger component inventories than they have previously maintained. This could lead to some semiconductor supply corrections due to double-ordering and overbooking. In the meantime, robust planning, supply risk assessments, proactive order management, and real-time insights regarding supply trends are essential for any procurement team to stay ahead of a very competitive game.

What Your Organization Can Do to Stay Ahead

Companies that invest in supply chain analytics and visibility platforms are better positioned to react to market shifts and predict future market movements. This enables them to gather the right supply at the right time to ensure revenue attainment.

LevaData’s Supply Risk Navigator platform provides visibility into potential risks and obstacles by using community-based analytics and real-time market data. By offering clear, prescriptive, and predictive insights, your organization will remain nimble, adaptable, and, most importantly, successful. Find out more about how LevaData’s revolutionary, AI-driven platform will help you mitigate supply chain risks and keep your operations moving forward today.

December 22, 2020

4 Steps to Assure Supply & Maintain Competitiveness in a Tightening Semiconductor Market

Based on our client insights as well as LevaData community trends, it is clear that the semiconductor market supply outlook has begun to reflect tightening inventories, with spot supply shortages and extended lead times impacting across industries.  Unplanned upsides and targeted price reductions are getting harder to obtain in this environment, as manufacturers are experiencing robust demand due to economic recovery from the initial dramatic COVID-19 slow down.

Reasons for the increased tightening in supply include the continued strong IT demand for work-from-home purchasing, 5G device and infrastructure expansion (including the latest news that Apple is driving for 30% production increases on iPhones in 2021 due to 5G demand), as well as demand shocks from Huawei advance buys due to US semiconductor purchase restrictions.  In addition, supply impacts from backend material shortages and reduced capacity investments, are contributing to an overall tight semiconductor market. 

It is difficult to predict how long this situation will last, especially given the renewed economic slowdowns that may come with additional COVID-19 outbreaks worldwide, but many industry observers are estimating the situation of tight supply lasting into Q3’21.

Given this situation, LevaData recommends the following actions for customers to assure supply as well as maintain price competitiveness:

  1. Ensure all EMS/ODM partners are driving full demand plus appropriate buffers to suppliers.  In certain cases, buy-aheads of key components to ensure inventory may be warranted.
  2. Price declines in Q4 were as expected, but Q1 is showing flat or even somewhat higher pricing. Lock pricing soon and consider pricing agreements for the first half of 2021.  
  3. Push back on manufacturer attempts to raise prices, using LevaData Target pricing insights.  Wherever pricing is not "best-in-class" there is no real justification for higher prices.  We continue to see some targeted reductions being given in this environment, given the right leverage.  
  4. As always, stay in close contact with key suppliers, advising them of demand outlook and pressing them for priority in supply.  Don't forget the smaller suppliers as well, which may have less influence in the fab or backend supply chain - consider sending out an updated RFx to gather updated lead times to ensure purchasing is aligned to the longer cycles.  

Interestingly, the semiconductor industry has fared rather well during 2020 while many other industries have struggled, reflecting the importance of electronic content in distance communications, digital sales and online engagement, and even COVID-19 related mitigation systems, among other things.  Maintaining a vigilant approach for supply, while utilizing LevaData insights to guide negotiations and targets, will enable those companies that are investing in digital transformation to stay ahead of the curve in managing supply and price risks.

November 3, 2020

From Triage to Transformation… Building Resiliency with Agile Supply Chains

The bitter China–United States trade war might actually have helped organizations prepare for the COVID-19 pandemic.

When the world’s two largest economies decided to impose tariffs on hundreds of billions of dollars’ worth of one another's goods, corporations were pressed to consider alternative supply chain management constructs.

LevaData recently sat down (in a virtual, COVID-19-friendly manner) with a group of Chief Supply Chain Officers (CSCOs) from some of the worlds most renowned high-tech electronics and manufacturing companies. We wanted to understand how their respective organizations had managed to move from triage to transformation during the first phase of the pandemic, while building resiliency and agility for the future.

One fact is beyond doubt: COVID-19 disrupted supply chains like few crises have before. It exposed supply chain vulnerabilities of many organizations, especially those that operate or have business relationships in China and other impacted geographies.

Wuhan, the Chinese province where the COVID-19 outbreak is reported to have originated, is highly industrialized and plays an important role as a manufacturing hub for numerous Fortune 500 firms. Many of the organizations we spoke with were however already actively rethinking their supply chains long before the pandemic, especially those with a high dependence on China to fulfil their need for raw materials or finished products. While tariffs are often quoted as one of the main factors for such exit strategies, there are several other concerns as well, related to intellectual property and security, prompting organizations to reconsider China.

Keeping the lights on

A decades-long lean manufacturing effort focused on minimizing costs, reducing inventories, and driving up asset utilization had removed buffers and flexibility to absorb disruptions. When the pandemic hit, much of this needed to be unraveled, and quickly. The lack of visibility beyond the first tiers made their efforts unmistakably challenging as supply chain management teams started reacting to the disruptions caused by COVID-19. One of the first challenges was to gauge supply chain impacts and to find leverage without reliable forecasts, while everyone else was trying to lock in inventory. Beyond securing their own supply and business continuity, teams even found themselves helping to facilitate their suppliers’ transition to a work-from-home environment in order to maintain production. For those organizations who had already reduced their dependency on China, many had moved production to Malaysia. While the COVID-19 outbreak in Wuhan served as a precursor, the shutdown of Malaysia followed shortly. The counter measure became moving inventory out of these regions but also leveraged local manufacturing capacity to dual source.

As teams witnessed forecasted demand from traditional brick and mortar plummet, demand started to surge via on-line channels and agility became the sustenance to offset the lack of predictability. Initially the cost of airfreight could be passed on to the customer because of scarcity, but once the airlines started to close down, airfreight was longer an option. The trade war had only caused financial implications affecting cost of goods, the main question for supply chain teams during the pandemic became what do you do when you can’t get it at all?

Never let a good crisis go to waste

In many ways, the pandemic exposed patterns and flaws in our supply chains which historically could be circumvented by securing alternative sources or expediting freight already in motion. For most organizations, the pandemic highlighted the importance of efficient supply chain management and it earned the supply chain function a seat at the leadership table. Attention was brought to cost of distance and the importance to compress time instead of just squeezing out inefficiencies. Leadership teams are consequently not just reconsidering their reliance on China or monolithic reliance on any geographical regions. It also accelerated inchoate decisions to shorten supply chains and move some production closer to consumers in EU and US. Those with their own manufacturing capacity are moreover looking at increasing production redundancy between production locations to secure core products.

How to play the new game

Supply chains are in dire need of de-risking and will need to take a cluster-based approach per key region focusing on network optimization. Most organizations are already busy reexamining their supply chain constructs, and many have created risk and resiliency think tanks identifying, and eradicating, points of failures. Without the ability to travel, people have generally become more productive and are subsequently coming up with more improvement initiatives. Some of the companies we spoke with, even pledged to leverage AR/VR technology moving forward to reduce time-consuming physical factory visits. Compared to most historic supply chain disruptions, during the COVID-19 pandemic, the manufacturing infrastructure remained intact while workers were being sent home. This highlighted the reliance on, and cost of, labor inside the supply chain and new strides will be taken towards optimization and automation.

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About the Cognitive Supply Chain Management Executive Roundtable

Each quarter, LevaData hosts intimate roundtable discussions featuring a mix of thought leaders and Chief Supply Chain Officers (CSCOs) from global manufacturing organizations. Each roundtable is focused on a pressing issue that impacts the ability of these CSCOs to push their businesses forward and include discussions on where emerging technologies may be helpful in overcoming these challenges. To ensure these events generate candid discussions and opportunities to share experiences, they are not recorded, and the participants are largely anonymous. To continue this important conversation beyond this event however, we have captured highlights and key insights from our discussions above.

If you’re a CSCO that would like to join this community to share your experience and learn from your peers, we’d love to have you. Please send an email to info@levadata.com and we’ll get right back to you.

April 28, 2020

CEO’s Take Heed: You Are Now Supply Chain Risk Managers

I could write another blog post on risk management, but Angel Mendez, COO at HERE Technologies already nailed it. I encourage everyone within a global manufacturing company, starting with the CEO, to give it a read:

CEO’s Take Heed: You Are Now Supply Chain Risk Managers

From my perspective, this quote sums it up:

To be successful in mitigating these events, one has to install and operate a formal, data-centric, technology-enabled process that can be immediately deployed. The process must be inextricably linked to a broader Enterprise Risk Management framework, which must be regularly rehearsed and stress tested.”

- Angel Mendez

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Rajesh Kalidindi
Founder & CEO
LevaData

March 27, 2020

Winning the “New Normal” with Resilient Operations

Although the linguistic debate continues, the two characters within the simplified Chinese word for “crisis” (危机) are often interpreted as signifying danger and opportunity. Everyone would agree that there is plenty of “danger” right now - to our health, families and jobs - but the organizations that create an opportunity will be the quickest to recover and the most competitive in the long run.

McKinsey calls these organizations the “Resilients.” In their analysis of the 2008 recession, they found the companies that thrived had two attributes: speed and discipline. “Speed” in being more decisive in implementing change in response to triggering events, and “discipline” in using data to guide those decisions.

When it comes to speed and discipline, there are actions companies can take now that won’t just help them get through the crisis, but accelerate their recovery and improve their long-term competitiveness

. These include:

  • Anticipating risks before they consume cash and resources
  • Evaluating markets and locking in pricing now, before demand and allocation dictate costs
  • Democratizing data by bringing insights to the professionals who can make the decisions and have the tools needed to take action.

In reality, there is no one simple answer. There are however, simple ways to act that doesn’t just minimize damage, but creates opportunities. We’ve learned in our personal lives that flattening the curve minimizes the depth and longevity of a crisis. Why not apply we the same logic to our operations?

Rajesh Kalidindi

Founder & CEO
LevaData

March 27, 2020

Introducing the Supply Management Manifesto

Right now, global manufacturers are purely (and understandably) in reaction mode to a pandemic that’s swept the world with unprecedented speed. Addressing emergency supply shortages and figuring out how to manage an entirely remote team are appropriate responses to this fluid situation.

It’s also time to recognize that the coronavirus is not a stand-alone event, but the continuation of a trend towards volatility, complexity and uncertainty. Consider that in the span of a few months we’ve gone from the brink of US-China trade war, to a global pandemic, to the start of an economic downturn. The coronavirus is an emergency, but it’s also an example of a systemic shock that will likely be repeated with increasing frequency.

This crisis can serve as a wake-up call for supply management to develop a new approach that’s agile and resilient. If we don’t go beyond war rooms and tiger teams to develop a system that detects risk events and recommends actions, we’ll inevitably face another emergency with limited options.

The New Role for Supply Management: Margin Protectors

The greatest opportunity for supply management isn’t becoming better at managing inherent supply risk, but in redefining their role and relevance to the company’s future. In addition to giving teams a better foundation for controlling costs, a new approach would give supply management a greater opportunity to protect and grow margins.

In volatile times and economic downturns, increasing product margins will be critical to driving growth for global manufacturers.

Although this is never an easy task, my experience as a sourcing operator and tech company founder suggests that with the help of cognitive technologies, many enterprises have room to lift margins by one to three percent.

A New Approach

A full, digital transformation of sourcing, procurement and NPI is required to build an agile supply management system, but issues surrounding culture, perception and organizational structure also need to be addressed. That’s why I’d like to present the opportunity facing supply management not as a process to adopt, but a set of beliefs to embrace: Supply Management In The Age of Volatility: A Manifesto

Supply Management as an Engine for Growth

While no one welcomes the coronavirus or risk events that’ll follow, supply management has a unique opportunity to showcase their value by driving growth despite an economic downturn.

Sourcing and NPI teams will face an incredible amount of pressure, but the technology to help them drive their company’s next stage of growth is available now.

Rajesh Kalidindi

Founder & CEO
LevaData

March 26, 2020

Vulnerability is Exposed in Volatile Markets

Every day, we wake up to a new event disrupting businesses. In 2020, those disruptions are flowing into our personal and professional lives at a scale unlike anything we have seen before. As we deal with personal safety, it is also clear that our professional lives are also under siege with the economic impact that has been triggered with Covid-19 . This will truly test our resiliency in many ways.

As companies and customers brace for the impact from Covid-19 , there is one simple truth. It will end and when it does, those that have prepared now will be in the prime spot to lead the market. These topics are discussed on a daily basis, with everyone asking how to:

  • Keep employees safe
  • Protect jobs
  • Keep margins intact
  • Achieve growth

The reality is that these critical aspects of business are being tested. Those that optimize and improve resiliency now, leveraging the power of global data and insights, will fare 10x better than those who do what has worked before. The world has changed, and if we aren’t considering how to change, then we know how evolution plays out.

What is clear to us, as we talk to our clients and leaders around the world is that there is a massive and immediate need to reduce risk, improve supply visibility, reduce costs and help employees be productive remotely. We need to build the agility and resilience into our organizational DNA, so the next time around, we react faster and better.

LevaData has an important part to play with our customers and industries in reducing material costs rapidly and building resiliency to protect jobs as a result. We are committed to make these turbulent times not just manageable but less impactful.

However, we can help, please let us know.

Rajesh Kalidindi
Founder & CEO

January 23, 2020

Supply Management Predictions for 2020

Although there’s no shortage of annual predictions at this time of the year, we wanted to share some trends that consistently come up on our platform, across our customers and in the news.

The world promises to be increasingly volatile and uncertain in 2020

Geo-political and geo-economic tensions are going to continue driving turmoil in the marketplace. Some key events that supply chain professionals will need to keep an eye on:

  • Brexit: Boris Johnson’s government has a clear mandate to execute Brexit in 2020 - an impossibly short time frame in which to negotiate a comprehensive trade deal. While LevaData’s research shows that manufacturing executives aren’t especially concerned about Brexit’s implications (see below), even a “soft landing” will have supply chain repercussions well beyond the auto industry.
issues impacting supply management in 2020
  • China: Tariffs aside, there are other growing concerns amongst companies whose supply chains run through China. Labour costs have been rising and environmental restrictions have been tightening. Intellectual property and cybersecurity concerns are drawing increasing scrutiny. There’s also a potential flashpoint as the standards war surrounding 5G heats up and the potential for export controls on ZTE and Huawei become points of contention. China has shown itself more than willing to retaliate both politically and economically when challenged.
  • WTO: The handicapping of the WTO’s disputes adjudication process risks a breakdown of the global trade system.

These risks occur against a background of standard risk sources and new areas of concern, in particular, the creeping risks of climate change, and cyber attacks from state and non-state actors.

Risk management will evolve into a core strategic sourcing discipline

The industry is slowly accepting that we’ve entered a new stage of VUCA and contingency planning is becoming a regular practice. To manage, sourcing professionals will have to find ways to adapt. 

Unfortunately, risk management is a complex, time-consuming process that most commodity managers and procurement teams are ill-equipped for. Witnessing these concerns across its client portfolio, LevaData partnered with Resilinc to improve on our platform’s ability to identify risk events and recommend alternatives.

As organizations rise to the challenge, more sophisticated approaches to risk management will grow in popularity and many companies will make initial investments in technologies that provide improved visibility, AI-enabled prediction, automated event monitoring and scenario planning.

For a detailed guide to how companies are using new technologies to address volatility, see our joint webinar with Resilinc on Operationalizing Risk Management with Cognitive Sourcing.

Data explosion fuels digital transformation

When we conducted the research for our Cognitive Sourcing Study in 2019, we found that 74% of respondents considered data-driven procurement somewhat or very important. That’s unlikely to change anytime soon.

As the world becomes increasingly digital and the internet of things (IoT) becomes a reality, the amount of data available will continue to explode, as will expectations that recommendations are based on data-driven research. As this becomes the norm within leading supply management teams, data skills will be required of not just engineers but sourcing managers and others. 

This will prompt a move towards easy to use, “no-code” technology that will result in a huge rise in the number of data use cases. New ways of interacting with the data will come into wider use (RPA, chatbots). In turn, the improved transparency will spur more cross-functional collaboration throughout the organization.

To manage and make use of this data, organizations will rely on advanced analytics and AI to produce insights and make predictions. As a result “digital transformation” will continue to be a popular theme. 

Among the leaders surveyed in LevaData’s 2019 Cognitive Sourcing Study, 75 percent said their organizations had a digital transformation initiative underway.

  • Launched in the past year: 22%
  • Initiative active for 1-2 years: 26%
  • Initiative in place for 2+ years: 19%
  • An additional 14% are planning an initiative
  • Only 20% have no plans to start
digital transformation trend in sourcing

Despite a steady march towards digital transformation, there are some concerns about whether sourcing teams are currently up to the challenge. Leaders surveyed in LevaData’s 2019 Cognitive Sourcing Study, found that only 40% considered their sourcing team to be somewhat or very ready for digital transformation, down from 46% in 2018, and 52% in 2017. 

An Elevated Role for Sourcing Professionals

As technology provides sourcing professionals with more accurate information and improved insight into supply chains, they will begin to take on an increasingly strategic role within the organization. And as rising volatility inevitably leads to high-profile losses or missed opportunities for global manufacturers, executives will see their supply chain as a potential competitive advantage rather than a cost-cutting department. 

Our Cognitive Sourcing Study 2019 indicates, however, sourcing teams are stretched thin and largely consumed with fighting the latest fires.

As digital transformation and the adoption of AI tools take on more routine tasks, sourcing professionals will find more time to focus on risk reduction and other strategic opportunities.

For more on the state of cognitive adoption among global manufacturing companies, you can review the full results of our Cognitive Sourcing Study 2019.

August 21, 2019

Supply Chain Brain Q&A: Future of AI for Strategic Sourcing

Richard Barnett, LevaData's VP of Marketing and Alliances sat down with Supply Chain Brain to discuss AI's growing role in strategic sourcing. Supply Chain Brain has the full interview, which covered a variety of sourcing-related technology topics:

  • A growing role for AI suggests that managers will be forced to either adopt cognitive sourcing technology, or find themselves left behind.
  • Companies are generating a competitive edge by incorporating cognitive sourcing in their supply chain management. The capability to identify risks and opportunities that would otherwise be invisible is far too valuable to pass up on.
  • A common challenge among sourcing teams is meeting savings goals that are borderline unattainable without the help of AI. As pressure increases on these teams, more and more of them will shift from excel spreadsheets to a cognitive sourcing platform. This is especially true with the current uncertainty in the market and trade agreements.
  • Those who are successful will be the ones who adopt the most agile sourcing strategy, allowing them to rapidly sense and act upon opportunities.

Visit Supply Chain Brain for the video interview - which is part of a series on the impact of AI on supply chains.

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