The agile supply chain and speed-to-market concept in technology manufacturing

Supply Chain

Companies focus on speed to market for a couple of reasons. There are first-mover advantages, and in some markets like smartphones there are a lot of consumers who are early adopters, so the market is strong for products that come to the market quickly (Smith, 1999). Companies can position themselves as innovators if they are consistently first to market with new ideas. Speed to market is also reflected in firms that are not the innovators, but the followers. Following the leaders quickly is a method that can allow a company to remain competitive but with a lower level of innovation expense; following the leader slowly can leave a company with a noticeably inferior product.

Yet, there are disadvantages to the idea of speed to market. First, it is sometimes a more complex strategy. The company will need to develop an agile supply chain, and have its systems dialed in to a much higher level than if it took more time in product development. There is often a need for a company's suppliers to take the lead on new innovations, and within that framework there is a much higher cost. Further, getting to market quicker does not mean that the product is inherently better. If anything, it increases the risk that there are faults in the product that will need to be resolved. Microsoft's incessantly buggy Windows versions in the 1990s and early 2000s were good examples of how not to get to market quickly.

Ultimately, getting to market too quickly can be a detriment to the business. First mover advantage works when the product that is delivered is of superior quality. The brand image is improved, not just because the company is an innovator, but because the company has delivered an innovative product with few flaws. When there are flaws, however, this undermines the business. The early adopters will complain about the product, and may even reject it. This is sort of what happened to Windows Vista, which had a bad reputation among early adopters, before most consumers had even worked with it. This was very much to the detriment of Microsoft, because it discouraged enterprise users -- the largest customer base -- from using it (Kingsley, 2008).

While some studies have shown that speed to market has a positive correlation with profitability, there are other studies that contest such a conclusion. Langerak and Hultnik (2006) note that there are many instances where this is not the case, where the risks associated with bringing a product to market before it is ready become manifested, to the detriment of sales of that product, and potentially to the reputation of the entire brand.

The end consumer can also be harmed by products that have been rushed to market. There are some instances where product safety ends up being an issue, such as the Ford Pinto, but more commonly the risk is that the consumer will rush out to buy the new product, only to find that they have wasted their money on a lousy product. Early adopters always run this risk, but in many cases they do accept this risk as part of what goes along with seeking out hot new products at every turn.

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There are several different advantages to speed. First mover advantage is important, because the consumer is more likely to give the first one to market an opportunity, than the 10th one to market. Moreover, the first mover is likely to be perceived as the innovator in the market, with later companies as followers, unless they are able to leap frog the first mover. Speed to market can also reduce costs, if the time that inputs and goods spend in the supply chain is reduced.

There are also several contributions that speed can make to logistics and supply chain strategy. Cost is a big one. The less time that goods spend in the system, the less money is required for things like warehousing. Another contribution is superior service (Robinson, 2013). Customers can receive goods more quickly with a logistics system designed for speed. Responsiveness is another advantage -- customization can be done when the logistics systems works quickly. Dell is a good example of a company that has used the pace of its logistics system to deliver a higher level of customization than most of its competitors.

Another contribution is that a company can have shorter product life cycles. End users want new products, and if your company has a highly-efficient logistics system it can deliver (Harps, 2005). Further, speed contributes to supply chain strategy because the need for speed requires companies to invest in the latest technology, and focus on improving efficiency. Even when the company does not seek speed as a means of attaining competitive advantage in the marketplace, pushing for speed will make the company better (Bowersox, 1990).