Supply Chain Shortcuts High-Tech Manufacturers Can Take to Compete Globally
Global consumers aren’t slowing down. Consider this: By 2030 China’s private-consumer market will reach $9.6 trillion, up from $4.4 trillion today, according to a report by Morgan Stanley. And not only do they want more tech products, they’re also unwilling to wait for them. In fact, 35% of tech consumers responding to the latest UPS Pulse of the High-Tech Shopper survey said they needed their products faster than the free shipping option offered by online vendors.
The growth of the global middle class offers midsize tech businesses an opportunity to expand beyond domestic markets and offer differentiated services. But they may lack the resources they need to compete with larger competitors in new, overseas markets. “We’re finding that midsize companies in particular are looking for—and need—strong logistics support to bring their tech products and services successfully to market,” says Dave Roegge, Director of High-Tech Segment Marketing at UPS.
The reason: When companies sell overseas, they typically face challenges maintaining compliance with local standards and customs requirements, meeting repair and field service needs, and managing more complex order fulfillment. “These challenges may seem more daunting for companies that may lack an in-country presence or the internal resources to package and distribute similar products to multiple global destinations with different language and compliance requirements,” says Roegge.
“They’re looking for ways to simplify the management of multiple supply chains where each new country may require different instructions for the same product—or even a modified product to meet that country’s requirements,” Roegge adds.
Faster Product Launches, Fewer Risks
High-tech manufacturers are constantly innovating, introducing, replacing, or redesigning products. This means they must be nimble and ready to bring new products to any number of markets before their competitors.
“The ability to execute an effective and speedy product launch can offer a longer time in market before another manufacturer comes up with a better mousetrap, so to speak,” Roegge says.
All tech companies need to meet their promised launch and delivery dates to compete in a crowded marketplace. But midsize businesses often lack the in-house compliance expertise and staff to respond quickly to customers in multiple markets.
Some midsize companies find a logistics provider with overseas infrastructure and expertise can help handle product launches from initial deployment to final delivery in different markets. With a capable, well-resourced ally, the odds may be improved of midsize firms pulling off complex launches successfully.
A logistics provider also can provide visibility tools that help manufacturers understand where their products are located at all times, helping keep inventories lean—and moving.
Meeting the Compliance Challenge
For manufacturers entering foreign markets, regulations can pose additional challenges. For example, some markets may place heavier tariffs on high-tech imports, Roegge says. Tariff classifications, value declaration and duty management can create confusion and increase costs. In addition, companies may need to customize equipment to meet local market test and safety standards. In the European Union, for example, electronics manufacturers must conform to hazardous chemical requirements, such as the RoHS Directive and WEEE.
A competent logistics provider, such as UPS, can help firms avoid compliance issues and border delays with compliance services and customs brokerage. These solutions can include customs clearance, classification and documentation of products, screening for restricted parties, trade management and consulting, and more.
A global customs brokerage representation minimizes the number of brokers you need and simplifies customs processing. And a single customs broker like UPS means a single point of contact.
“Brazil, for example, has very different customs and compliance regulations in place than India, which has very complex tax practices and different import duty levels,” Roegge says. “So midsize companies who find skilled global logistics experts able to provide international trade management and customs brokerage services can have the advantage of one collaborator, and more time to focus on doing what they do best—running their own business.”
Seamless Post-Sales Support
Many high-tech firms, in particular, may want to provide repair or exchange services to differentiate themselves or provide upgrades to extend the life of their products. Compliance requirements and other challenges related to global expansion mean companies need to manage those product variations appropriately when customers send them back for repairs or returns, according to Roegge.
Efficient reverse logistics may help companies process returns and service issues more quickly. This might include delivery of replacement items with simultaneous collection of a high-value return shipment. “International returns, just like outbound distribution, can also run more smoothly with a logistics provider that has trade management and customs brokerage expertise,” Roegge says.
Oftentimes, customers don’t want to wait for exchanges or repairs of high-value goods. In some cases, a customer may not be able to operate efficiently without the merchandise. Manufacturers that can minimize downtime—or even deliver a replacement item with simultaneous collection of a return shipment— for their customers are more likely to win in a competitive marketplace. “Speed is an essential component of good customer service. You need to expedite return journeys so you can keep the customers happy,” Roegge says.
Secure Solutions
Tech companies face another challenge that can quickly derail global expansion efforts: Intellectual property theft. It’s always a concern when they introduce products to overseas markets.
According to Roegge, a logistics provider can help reduce security risks as products move between destinations. For example, UPS provides 24-hour security at its distribution centers, including inventory controls and investigative protocols to immediately address any missing parts or products.
“A large majority of these products have various assembly points. Something may be sourced from China or Vietnam, assembled in Mexico, and then warehoused in the U.S. for delivery across the nation. There can be many legs in the journey, and security is an issue throughout,” Roegge says.
Midsize tech companies can significantly reduce similar risks that impact their ability to compete globally by partnering with supply chain experts. “Ultimately, there’s less chance of issues occurring when everyone handling the shipment from Lagos to Louisville is wearing the same company uniform,” Roegge says. Partnering with a global logistics leader can mean the difference between figuring it out as you go on the world stage and having teammates at your side whose sole purpose is to make your company an international player.
See how UPS can help take your high-tech business global—expertly and cost efficiently.
