"Rethinking the Supply Chain Strategy - Adding colors and sizes to smart phones"
On behalf of : Manish Thukral
The pioneer and leader of the smart phone industry set a new trend by introducing colors to the look and feel of smart phone. The company gained its highest revenue in the first week of its launch in comparison to its earlier launch. The industry had already introduced size as a characteristic for smart phones like xPad, min xPad, xPhone 4 inc. in height and xphone 5 inc, in height etc.to serve different user preferences. Adding color to the design allows customers to make a style statement to augment their choice of apparel. For example, a person carrying smart phone with gold or velvet red color adds uniqueness to the personality and puts him to different class of people.
However as the time passes, what may leave buyers of smart phones unsatisfied is the limited number of colors/size options available. What about the buyers who would like to carry smart phone in colors different than the few launched in the market? The feel factor a customer gets by carrying a smart phone with colors of his choice is similar to that of wearing apparels in colors of his/her choice. Imagine if Levis Strauss provided jeans in only four different colors and sizes! If a buyer needs a different color/size, he would move on to a competitor, say Lee Cooper. The choice of the color is regional too- flashy and bright yellow/blue colors can drive high demand in North American markets but not so much in the Asia Pacific region. Smart phones are generally expensive and reflect the personality of the user and availability of colors/sizes can make or break the deal. I personally delayed the decision to buy a smart phone because it did not come to the market in a size which competitors have.
It is very exciting to see the new trend of colors and sizes in smart phones but this has left customers wanting for more. Smart phone makers will have to do increase the catalogue of colors/size for choice. This market demand for more options in design will call for rethinking the supply chain strategy for profitable growth to make and deliver the products as per the customer's choice.The demand planning techniques for smart phones will have to adopt the approach of characteristic based planning. Smart phones or more generically 'speaking gadgets' have adopted two more characteristics to its planning i.e. Size and Color. Choice of colors is seasonal too, that adds another factor of seasonality to the demand plan.
The supply plan need not build an inventory of each color/design that the company can offer to the customer in store. The strategy can be to keep the high demand colors in stock, in store whereas low demand colors may be ordered online with the shortest time to market lead time. Manufacturer's should also look at allowing buyers to configure their smart phone- for example, one customer would like 4 inc, gold color and 5 mpeg camera whereas other customer may pay a higher price for 5 inc., pink color and 8 mpeg.Sony enjoyed the success of its Sony Vaio laptops that come in a range of color options and the ability to configure the laptop as per the customer's requirement.
These are just my initial thoughts and would be glad to hear the reader's views on this new trend of adding colors and sizes to the smart phone, what the customer would want next and how the supply chain strategy should be re-aligned to meet the demands tailored to each customer choice while driving profitable growth in the market.