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After a brief slump during the pandemic, the consumer electronics market is booming again. It's expected to grow at a CAGR of 5.3% and reach a market value of $989.37 by 2027.
Consumers are buying smart, innovative digital devices such as connected TVs and work-from-home devices. This has enabled the consumer electronics market to return to pre-pandemic levels. Besides, the rise in outsourcing, shorter production cycles, and constant technological developments have significantly contributed to the market's growth in recent times.
As such, OEMs are now focusing on expanding their production, shortening the design cycles, and optimising resource utilisation to meet consumer demands. They've started Just-In-Time (JIT) inventory to keep pace with these demands and streamline production. That's because JIT inventory utilisation gives OEMs visibility into their inventory and plays a role in supply chain management and lean manufacturing.
Let's find out how it can help OEMs plan their production.
The Just-In-Time inventory utilisation process involves creating, storing, and tracking products. It's about balancing and managing customer demands and not keeping excess inventory in anticipation of receiving more orders in the future. As a result, it helps OEMs to:
Given the increasing demand for consumer electronics products, OEMs need to optimise their production process and reduce the production cycle time to deliver the products on time.
JIT inventory utilisation can help OEMs in this regard. It can detect potential bottlenecks in the process and eliminate them to accelerate production speed. It also facilitates easy movement of materials through the production cycle. For example, OEMs can schedule the jobs and ensure that the workers have all the necessary materials for production.
Altogether, JIT ensures that materials move from one step to another per the schedule so that the product is ready just in time for shipping. The resulting streamlined production, agile procedures, and shorter turnaround time enable OEMs to deliver the finished products faster and bring efficiency to the production process.
Wastage is normal in manufacturing. But OEMs should be concerned when the industry produces $8 trillion worth of waste every year. Wastes can be in any form - production defects that lead to waste of time and material, overproduction, and excess inventory that could lead to product damages and high storage and transportation costs.
OEMs can reduce wastage with the help of Just-In-Time inventory utilisation. JIT inventory allows OEMs to produce only what's needed. So it reduces the excess inventory. It also prevents overproduction and ensures that the OEM does not incur losses due to unsold products in the warehouse.
JIT also makes it easier for OEMs to detect defective inventory items and eliminate or fix them to decrease waste. As JIT ensures that the raw materials are sourced from local areas close to the factory and are available in small quantities multiple times a day, the chances of wastage are further reduced.
Take Dell, for example. The company has used Just-In-Time since the 1980s. Instead of stocking pre-assembled computers in a warehouse, Dell ordered the parts only when the customer placed an order. This prevented wastage, reduced costs, and improved lead times.
In a rapidly evolving market, OEMs must stay agile and quickly respond to customer demands. A product that was in trend yesterday could become redundant today. For example, during the COVID-19 outbreak, OEMs had to manufacture products used at home rather than in offices as people started working from home.
But excessive production or unused inventory could lead to unnecessary wastage. Just-In-Time inventory utilisation wards off this challenge and allows OEMs to respond to market changes faster. It reduces the lead time and shortens the production cycle. This helps deliver quality products to the customers on time and improves customer satisfaction.
Good production quality with fewer defects improves customer satisfaction, reduces production costs, and enhances product performance, not to mention the benefits it accrues for brand value.
Favourably, JIT works on the principle of making continuous improvements and maintaining lower defect rates. This helps OEMs enhance the production quality of existing and work-in-progress products.
Also, given that the floor manufactures fewer products at any given time, OEMs can focus more on the product's quality. Good quality products also reduce damages such as storage-related accidents. When suppliers guarantee quality in advance, OEMs can send the material directly to production instead of waiting to get it verified.
Just-In-Time inventory utilisation aims to reduce waste and improve production efficiency. However, none of that is possible without employing relevant and reliable technology. With the help of technology, OEMs can coordinate with their suppliers and ensure that the different materials and parts arrive on time. They get clear visibility of the entire inventory, which can help them streamline the procurement and production processes.
At QodeNext, we understand the significance of a demand-driven supply chain. We work with OEMs to help them manufacture high-quality products on time and address the utterly dynamic customer demands. Our solutions tailored for the consumer electronics industry enable OEMs to comply with regulations, mitigate risks, and reduce wastage due to faulty products.
Contact us to know more about them.
