How Supply Chain Finance Helps the Consumer Electronics Industry

The consumer electronics industry has been experiencing unprecedented change over the past two decades as new technology has changed the way in which we live and interact with one another; producing an endless supply of new products and never ending product improvements. Remember when the first iPod was introduced in 2001? Today, there are countless versions of this once novel product plus a surplus of new and more developed products such as the Apple Watch or AirPods. The point is that new technology has created a tight competition among industry players to come out with the latest and greatest product and as a result, consumer demand for the better and cheaper product has fostered short lifecycle products. This can take a toll on the consumer electronics supply chain. CE companies carry large inventories to meet consumer demand and therefore have to turnover more often than not which is extremely costly for the company's bottom line especially in the event of product malfunction or worse, product failure. Consumer demand has been reshaping the CE supply chain since the dawn of social media; however, COVID-19 was a catalyst for some of the new supply chain challenges that we see today. Prior to the pandemic, industry players had done a very good job at optimizing global supply chains for cost effectiveness; however, the pandemic coupled with tariffs and regulations shined a light on the lack of diversity within the consumer electronics market. The fallout has resulted in a renewed effort to pursue supply chain regionalization. There are benefits to regionalizing supply chains. The most obvious being risk mitigation. Vulnerabilities tend to multiply as product components move through a number of factories across various locations. Regionalization provides a less complicated path from manufacturer to consumer. It also limits the exposure to factors outside of the company's control like tariffs. The future of the consumer electronics supply chain demands a more mature supply chain that focuses on reducing risk exposure, responding to competition, anticipating and meeting consumer demand, responding to shrinking product life cycles, and improving supply chain visibility. Supply chain finance boosts industry players resilience during a time of uncertainty and protects the bottom line so they can realize growth more quickly and seamlessly. SCF provides buyers and sellers with peace of mind to fund the payments they want to while keeping the supply chain moving forward. Buyers within the consumer electronics industry improve their working capital position and sellers grow their cash flow position. Discover how CE companies benefit from a revolving credit facility to ease cash flow pressures and unlock flexible funding. To learn more, please get in touch here.

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