The answer to high tech supply chain challenges

The answer to high tech supply chain challenges

SMEs in high-tech manufacturing face all the usual supply chain challenges, plus some that are particular to the sector. Affordable, cloud-based, user-friendly MRP/ERP systems can provide the capability they need, writes Sara Duff, UK Business Development Manager at

The general public often thinks of ‘high-tech’ in terms of Silicon Valley tech giants churning out consumer electronics in Chinese factories: even the UK’s own Dyson mostly manufactures in the Far East. But that is far from the whole truth. In electronics alone, the UK is the world’s fifth largest producer, supporting over 800,000 jobs and £78 billion annual turnover. 14 of the world’s top 20 semiconductor companies have UK design or manufacturing sites. And while it is true that 80% of our activity in semi-conductors, for example, is supported by foreign direct investment, there are 6,000 British firms in electronics, 95% of them SMEs, although of course this includes many firms in design or application that don’t themselves manufacture.

And electronics isn’t the UK’s only high-tech strength. We have world-leaders in fields from medical imaging to satellites, in new production techniques, robotics and additive manufacture, and in novel technical materials such as the Manchester-born graphene. The zero-carbon drive is spawning many more new and innovative British companies in sectors from power generation to automotive and aviation. Even where the ‘heavy metal’ – such as a robotic arm – is imported, a high proportion of the added value is captured by British configurers and system builders. Meanwhile, well publicised and probably chronic global supply chain issues are favouring the reshoring of at least some high-tech manufacture.

SMEs in high-tech face all the usual manufacturing challenges, plus some that are particular to the sector. Often these firms are spin-offs from a larger research establishment or they may be the result of one person’s endeavours. Entering manufacturing for the first time they may have little insight into how production industries and supply chains work. Conversely, there are many long-established manufacturers that are having to incorporate advanced technologies and production techniques into ‘heritage’ operations and products.

At the same time, even the most high-tech manufacturer still requires ‘old school’ metal-bashing, plastic moulding and the like for cabinets, racks and enclosures, although this may not sit easily with the production environment required for the new technologies. Often these will require rigorous ‘clean room’ conditions (and control of other environmental factors such as temperature or shock-loading in transit), across manufacturing, storage and transport. This needs to be trackable, traceable and auditable, down to item or batch level, and often extending to packaging, containers and vehicles.

All this activity needs to be brought together in a MRP/ERP system, but there is more. The procurement and issue of protective equipment and clothing for clean rooms needs to be managed as rigorously as the components and assemblies themselves. Often, assembly of small, sensitive parts can only be performed by machine, so even if the components are commodities, their packaging and presentation appropriate for the machine – in bandoliers, for example – needs to be reflected and controlled in the Bill of Materials. ‘Kitting’ – presenting a complete set of parts for a particular assembly stage, often in purpose-designed packaging – is a useful practice, keeping delicate parts protected, and minimising entries and exits in a clean room environment, and the kitting process itself is something to be planned and scheduled. This can also be relevant to the final installation of the completed equipment for a customer.

Working at the ‘bleeding edge’ of technology, controlling design and engineering change is an acute challenge, and needs to be enabled in the configuration of the ERP system. This doesn’t just apply to hardware – installation and testing of the current version of any software, at sub assembly or completed equipment stage, is also an activity whose resources, from manpower to test rigs, needs to be planned and scheduled.

The ability to backflush obsolete parts from the system helps manage engineering change, but paradoxically, many firms will need to continue to stock ‘obsolete’ parts to support their products in service. Indeed, a characteristic of high-tech manufacturing is that there is often a particularly long ‘tail’ of rarely used Bill of Material parts (often of quite low value but difficult or impossible to re-order). At the OEM level this can be tens of thousands of part numbers, sourced from hundreds of often small and specialist suppliers.

Being at the forefront of technology, high-tech OEMs tackle these and other issues with the latest advances in business process automation: machine learning, even artificial intelligence, are appearing in their production, procurement and inventory management processes.  It isn’t expected that their smaller suppliers, specialists and start-ups, will be as sophisticated. What is expected, as an entry level requirement, is that they will have the various systems, almost always based around MRP/ERP, that will provide traceability and auditability of parts and processes, assurance and visibility around inventory availability, order progress, delivery schedules, allow early detection of problems and issues, and above all be able to interact automatically, and eventually autonomously, with the OEMs’ own systems without information having to be reinterpreted and rekeyed.

Affordable, cloud-based, user-friendly MRP/ERP systems from MRPeasy can provide smaller high-tech companies with the entry-level capability they need, and provide a robust backbone on which other more specialised systems can be hung. If the firm becomes a tech ‘unicorn’, something more sophisticated may well be required, but in the meantime it gets you into the game.