Technology subsectors, including semiconductors, technology and consumer electronics (CE) original equipment manufacturers (OEMs)
The semiconductor manufacturing landscape encompasses various stages, from IP design to front-end manufacturing, packaging and testing, each often involving different companies in different global regions. For example, nearly 98% of sub-5nm chip production capacity resides in Taiwan and South Korea,¹ while Ukrainian companies supply up to 54% of the world’s semiconductor-grade neon.²
Semiconductor manufacturing is a precision-intensive, multifaceted process involving machinery such as lithography and etching, often requiring strict temperature control. The maintenance of facilities and equipment is crucial to prevent production errors.
Technology and CE OEMs’ manufacturing relies on diverse raw material components and extensive contract manufacturing, featuring a tiered supplier base. Managing this vast network poses challenges, with 42% of CE companies grappling with sourcing issues.³ Moreover, their sales channels span online, proprietary retail and third-party outlets, introducing distribution and inventory complexities. In addition, their sales models include business-to-business, business-to-consumer and direct-to-consumer (DTC) channels that often introduce several challenges in capacity and inventory allocation and fulfillment complexity.
These CE companies encounter demand volatility, driven by swift technological advances that lead to shorter product lifecycles. In fact, the consumer smartphone replacement cycle has declined from three years in 2017 to 2.6 years in 2023.⁴
Media and entertainment subsectors, including cruises, theme parks, over-the-top and broadcast
In the cruise industry, procurement delays affect new vessel launches, which can lead to cruise cancellations. Further, operational hurdles, including limited just-in-time replenishment, and rising costs due to inflation are impacting the sector.
Other significant challenges the cruise industry’s supply chain faces include logistics management stemming from the industry’s need to consistently supply a wide range of items across various international ports. This complexity is heightened by fluctuating passenger demand and seasonal variations.
Additionally, the industry must adhere to stringent environmental and safety regulations, which impact sourcing and waste management. Economic and geopolitical factors also influence supply routes and fuel prices, adding to the operational complexity and cost concerns in the cruise industry’s supply chain management.
The theme park industry also faces several supply chain challenges, primarily due to its unique and diverse requirements. First, there is a constant need for reliable and timely delivery of various items, ranging from ride components and maintenance parts to merchandise and food supplies. This necessitates intricate logistics and inventory management.
The industry is also significantly affected by seasonal fluctuations, leading to variable demand that complicates inventory planning and workforce management. In addition, sourcing specialized ride equipment and ensuring compliance with stringent safety standards can be challenging and costly.
Additionally, global supply chain disruptions, like those caused by pandemics or geopolitical events, can lead to delays and increased operational costs. Lastly, the drive toward sustainability in operations adds another layer of complexity, as parks seek eco-friendly and ethical sourcing options.
In the over-the-top (OTT), broadcast, and other media and entertainment subsectors with supply chains that require adaptability and responsiveness to variables such as end-consumer demand, maintaining 24-7 availability for customers is paramount. Consequently, the critical focus lies in maintaining back-end equipment, including uplink and downlink equipment, and servers, as these components are instrumental in service delivery. Maintenance assumes a critical role in these operations.
Telecommunications and network equipment
The ubiquity of telecommunications equipment, including its deployment in remote and geographically diverse areas, underscores the critical importance of ensuring uninterrupted uptime and connectivity. Predictive maintenance practices play a key part in achieving this.
Only 5% of existing remote monitoring solutions have yielded the expected results, necessitating a concerted effort toward improvement in this domain.⁵
And with only three to five major suppliers collectively controlling 70% of the spending on network equipment,⁶ the geographical dispersion caused by the concentration of suppliers is only compounding the subsector’s increasing complexity. As a result, navigating uncertainties requires telecommunications companies to establish a robust risk management framework and maintain rigorous control over the supplier network. This underscores the importance of developing strategic supplier relationships even further.
In the realm of consumer-facing operations, telecommunications and internet service providers face the challenge of efficiently managing their field workforce to optimize customer ticket resolution.
While all three subsectors’ challenges have persisted for years, the complexity of TMT supply chains is poised to escalate further. Additionally, the need for cost efficiency to maintain competitiveness remains ever pressing.
“We have made promising digital strides but must acknowledge that current technologies aren’t yet sophisticated enough to completely unravel TMT supply chains’ intricate knots,” Englund said.
Hence, accelerated, advanced and innovative solutions are necessary to surmount these challenges and build supply chain resilience.
