The CHIPS and Science Act of 2022 is a significant boon to the semiconductor industry, but it’s not a supply chain panacea. Analysts forecast the semiconductor market to grow 6-8% annually through 2030, requiring the industry to double production to keep pace. The CHIPS and Science Act has prompted companies to commit well over $200 billion to U.S. manufacturing projects. But complicated logistics associated with building new fabrication plants mean investments are unlikely to increase manufacturing capacity growth until 2026.
In the interim, experts expect declines in global semiconductor revenue this year and continued supply chain challenges for high-tech companies. Organizational leaders must prioritize data management for revenue optimization and compliance now to reap the benefits of the CHIPS Act in the future. Data, channel visibility, and innovation will set manufacturers up for success.
The right data
Manufacturers must gather the right information to make strategic business decisions. Relying on lagging data, such as incoming orders, makes companies reactive rather than proactive to market fluctuations. Manufacturers miss opportunities to adjust pricing, alter forecasts, identify areas of improvement, and correct revenue and compliance issues.
Accurate insight requires leading data across the product lifecycle, including real-time sales, supply chain movement, parts availability, channel and regional demand, trends, and current industry investments, to name few. These types of data points paint a more accurate picture of supply and demand.
Most companies recognize data’s value — 97% of surveyed executives report an interest in improving data and analytics capabilities within their revenue management programs. Data complexity and quantity make spreadsheets inefficient and inadequate. Currently, 62% of decision-makers report an inability to consistently turn data into insights and recommendations. Technology solves this problem by collecting and analyzing data to generate a holistic understanding of the selling environment, eliminating issues with siloed, inaccurate, outdated, or missing data.
Channel Visibility
High-tech companies require diverse channels to do business but, too often, companies lack the necessary visibility into their channels. A quarter of decision-makers aren’t confident in their channel revenue data’s accuracy. Yet everything — including supplier revenue recognition, crediting field compensation, and paying partner benefits — requires accurate, timely data. Without trusted information, friction increases, undermining decision confidence and hampering the ability to identify partner programs’ impact.
Understanding products’ routes to market, including channels, end customers, and geographies, informs production, marketing, and pricing strategies for revenue optimization. This information gives manufacturers better predictability, accountability, and transparency about what’s happening in the channel.
Channel data exposes areas of lost revenue, including over-payments, inaccurate pricing, incorrect rebates, and poor incentives. Quality data also identifies and helps weed out ineffective partners and increases accountability for improved channel health.
Visibility enables compliance. Companies need to know the origin of the parts they source — and their products’ final destination — which can be difficult to ascertain without comprehensive supply chain data. Blind spots lead to expensive missteps.
The CHIPS Act includes even more potential restrictions. Channel data enables supply chain leaders to spot gray market activities, such as unauthorized brokers selling their products in unauthorized channels for lower costs, thereby eroding prices.
Most companies already use a channel partner portal. Layering a data management solution on top enriches the data, accelerates analysis, and removes manual processes to provide business, finance, procurement, and sales departments better insight into all channels.
Innovation
Companies must innovate products and processes to remain competitive. Leading-edge products create value economics and anchor pricing, but manufacturers must empower themselves to capitalize on opportunities.
Now is the time to invest in the future. During this period of slower demand, leaders have more capacity to strategize and innovate business processes. When sales accelerate, innovative companies will have the advantage.
By devising new data-gathering strategies and investing in revenue optimization and compliance solutions, leaders gain the visibility needed to make process changes and enhancements. The insight generated from data analysis informs improvements to quoting processes, price management, demand forecasts, and channel programs, among other business functions.
To maximize product value and optimize revenue, manufacturers should leverage leading data to enable a proactive — rather than reactive — business strategy. This approach fortifies current revenue streams while companies await the material impact of the CHIPS Act. Innovating now positions manufacturers to take full advantage when the manufacturing landscape changes.
Chris Shrope leads high tech product marketing at Model N.
