New Supplyframe report highlights ample opportunity for electronics industry digital maturity growth

Most companies across sectors remain reactive or opportunistic, putting them at risk

PASADENA, Calif.  – Supplyframe today released “The 2024 Digital Maturity Model & Report for the Electronics Industry.” The new report, which is based on a recent survey, reveals that three-fourths (75%) of electronics industry professionals still use some form of ad hoc spreadsheets for sourcing, nearly as many (70%) manually validate and optimize their bills of materials (BOMs) without access to real-time intelligence, and close to half (43%) said that their sourcing teams are reactive and follow the lead of the engineering department.

However, only 16% of those surveyed reported having some level of collaboration and alignment between engineering and sourcing during design. Less than 10% said that they use a third-party solution that is purpose-built for the electronics industry. And a mere 1% said they can accurately identify upcoming critical events before they impact their business.

“Investments in digital transformation are rising, and some of the turmoil in the global manufacturing and supply chain arena has stabilized,” said Supplyframe CEO and founder Steve Flagg. “But this research – which shows companies across sectors rate their digital maturity between one and two on a five-level scale – uncovers persistent challenges and opportunities for elevating digital maturity across new product introduction and procurement processes.”

Based on feedback from customers and partners, Supplyframe created a baseline for digital maturity, focusing on organizational structure, people and talent, design for supply chain, technology and systems, and analytics and performance. Sixty respondents in senior procurement, strategic sourcing, or supply chain positions from medium to large enterprise organizations across electronics industries completed a 12-question survey, which Supplyframe mapped to their five-level model illustrating digital maturity across global manufacturing. The model categorizes the five maturity levels as reactive, opportunistic, integrated, optimized, and predictive.

Companies across sectors remain reactive and opportunistic

Digitally mature organizations use an integrated platform to make collaborative design and sourcing decisions based on real-time intelligence. That empowers them to identify and address risk early in the product lifecycle and throughout their strategic sourcing processes.

Yet the average digital maturity scores of companies in the automotive and transportation industry and the component manufacturing arena were just 1.0. Averages for the high-tech and OEM sector and the industrial equipment space were only slightly higher at 1.3. The average for companies in the life science industry registered a bit north of that at 1.6. And although the aerospace and defense industry fared a bit better, it only landed at 2.1 on the five-level scale.

Persistent challenges are significant and broad-ranging

The research also indicates that more than a third (36%) of electronics industry professionals consider cost, supply, quality, new product introduction sourcing, and technology as significant challenges. This points both to the broad scope of the challenges facing global manufacturers and to the dire need for transformation within the entire design-to-source journey.

Meanwhile, 20% of the survey group said they are most concerned with an assurance of supply. This highlights the need for greater visibility into inventory and lead times. Relying on historical data and timelines is not enough. Businesses need real-time data on key supply metrics.

Belief in data is strong, but processes are manual and intelligence limited

Even though time is of the essence in today’s supply chains, and 80% of those surveyed said they believe data-driven capabilities are a top priority for their organization, 60% of the survey group said that they manually pull data for a sourcing event for two weeks or more.

Often, procurement teams are forced to make decisions based on limited context. And because sourcing and procurement decisions are resource-heavy and rely on spot solutions, as reported by 80% of respondents, companies end up paying premium prices for their components.

Now is the time for companies to elevate their digital maturity

In recent years, events and trends such as chip shortages, climate change, geopolitical turmoil, the pandemic, and rising product complexity have created near-constant disruption and elevated risk on the global manufacturing and supply chain landscape. Some of these factors have stabilized. Yet many companies remain stuck in firefighting mode when it comes to getting the components they need, which puts them at risk of getting hit by the next big disruption.

But there are five steps that engineering, sourcing, and supply management leaders can take to elevate their digital maturity, decrease their risk, and increase their opportunities. That includes establishing a baseline, identifying challenges and obstacles, focusing on cross-functional alignment, championing new solutions, and creating a phased approach to value realization.

“With a clear roadmap and a deeper understanding of digital maturity opportunities, leaders within today’s global manufacturing organizations can take action to pursue digital transformation across the enterprise,” said Richard Barnett, chief marketing officer and SaaS sales leader at Supplyframe. “A potential level-five enterprise would combine organizational adjustments, new technologies, better analytics, and cross-functional collaboration.”

Supplyframe, a Siemens company, offers customers a wide range of next-generation solutions and decades of industry expertise, helping them realize their short- and long-term digital transformation goals through a combination of new capabilities and real-time intelligence.

Click here to access “The 2024 Digital Maturity Model & Report for the Electronics Industry”