Manufacturers that retained control over their BOMs, developed deep knowledge of the critical costs in their supply chains, and selectively maintained direct ties with lower-tier suppliers were able to react quickly when the Great Recession occurred. Idea in Brief Big original-equipment manufacturers have gone too far in delegating management of lower-tier vendors to top-tier suppliers.
Related products Abstract In the past 25 years, major original-equipment manufacturers have delegated the management of their supply chains to a handful of first-tier suppliers. It can take one to two years to accomplish. The reality is that an OEM simply cannot delegate responsibility for keeping itself competitive to its top-tier suppliers.
Take into account the environmental and social impact of parts, including the processes used to produce them. Specifically, an OEM should form close ties with vendors that have a significant impact on its cost of goods sold, have strong innovation potential, pose sustainability risks, and can provide insights into important trends.
They typically are exposed to a wide diversity of ideas.
They carefully determine which items they should directly source themselves and which they should totally delegate. Such access has enabled companies like Apple and LGE to influence the development of emerging technologies, incorporate them into products before their rivals do, and secure supplies at an advantageous price.