The fallout from the global recession, massive fragmenting of the value chain, the rise of a more diverse world economy and new sales and distribution models have created tough challenges for semiconductor companies when it comes to understanding and predicting demand for their chips and managing their supply chains.
This lack of accurate information is a dangerous liability in a world characterized by unprecedented volatility and competition.
Without clear insight into true demand and an accurate picture of capacity, semiconductor companies find themselves essentially flying blind. Without the ability to know what to produce and in what quantities, as well as whether there is sufficient capacity to handle this production, these companies are finding it difficult to meet customer needs, especially as the economic recovery begins.
To address this challenge, semiconductor companies should focus on three priorities: sales force effectiveness, supply chain integration and optimizing their collaborative planning and fulfillment capabilities.
This focus will help improve supply and demand visibility, bridge critical gaps in the management of value chain/partner dynamics, generate greater value for customers and ultimately help companies achieve high performance.
Semiconductor companies must focus on integrating their external supply chain partners by developing and deploying strong extended relationship management (XRM) capabilities.
Through XRM, a semiconductor company triangulates key systems to facilitate integration of important and accurate data from design partners and suppliers on the manufacturing side, and customer and channel partner data on the demand side. This triangulation helps improve demand forecasts, production plans and the acquisition of manufacturing capacity, allowing chip companies to make better decisions and improve customer service and profit.
An effective sales force is critical for making the most of every customer relationship. A robust customer relationship management (CRM) system that provides an accurate picture of the sales pipeline is essential. The CRM system should also be integrated with the company's Product Lifecycle Management (PLM) and Enterprise Resource Planning (ERP) systems to achieve a tighter connection with relevant stakeholders and processes from across the organization.
Another important connection takes place among regional sales forces. Most successful organizations focus on creating a more coupled sales force that shares information, resources and best practices across regions. They also train their sales forces to inculcate the behaviors necessary to reduce the time from stage one to stage two in the sales process, ultimately improving the conversion rate.
A final success factor in improving sales force effectiveness is creating new metrics and reward structures. These should make sales people accountable for pure sales (driven by commissions), the health of the pipeline, the accuracy of forecasts, the time between sales stages and conversion rates.
Companies must be mindful of the profitability, opportunity cost and strategic value of each deal, not just its size. They also have to take steps to ensure that the potential value of each deal is depicted accurately.