The "STB" supply chainSet-top boxes (STBs)?standalone devices that process digital entertainment information? represent a growing market, but their current supply chain model is too simplistic.
Savvy companies in this market have a tremendous opportunity to create a new operating model that will help enable high performance and gains competitive advantage.
Set-top boxes are increasing in popularity, but their supply chains are still fairly basic.
With some analysts predicting that as many as 200 million STBs could ship in 2011, and new players such as telecommunications providers entering the market, supply chains will have to get more sophisticated. In addition, the technology is becoming more complex, so life cycles are shrinking, failure rates are rising and, as a result, supply chains are lengthening.
The current supply chain strategy?basically "don't run out of stock"?must give way to a new operating model.
A new operating model focused on the efficient retrieval, refurbishment and reconnection of STBs could help savvy communications companies on their journey toward high performance.
Before making executional changes to the supply chain, companies must refine their service and logistics strategies. Devising a service strategy begins with a deep understanding of the three service options (technical dispatch, retail presence and exchange by mail) and their impact on cost, service and time.
When it comes to a logistics strategy, the most important driver is that the costs for reverse logistics (service and repair) are typically twice those of forward costs. Most logistics network designs should, therefore, focus first on finding the best location for repair and refurbishment centers.
Once these strategies are in place, the focus becomes execution. The key challenge in this area is the wide variety of forward and reverse logistics competencies at which STB suppliers must excel.