The CHIPS and Science Act creates exciting possibilities for the U.S. semiconductor ecosystem but is not an immediate solution to the manufacturing industry’s current problems. As manufacturers grapple with continued supply chain challenges and global semiconductor revenue declines in 2023, they must fortify their supply chain processes now to capitalize on the CHIPS Act’s future benefits.
Through financial incentives for U.S. chip manufacturing, research, and development, the Act promises to promote innovation, boost domestic chip production, and strengthen U.S. competitiveness. Investors have committed $200 billion to U.S. manufacturing projects, but complex administrative and regulatory requirements and long construction timelines mean the investments won’t create tangible manufacturing capacity growth until 2026. At the same time, the semiconductor industry needs to double production by 2030 to keep up with the forecasted 6-8% annual demand growth.
Companies must prioritize channel visibility, data management, and innovation to set themselves up for long-term success.
Gaining Supply Chain Visibility
Manufacturers depend on channels for a significant portion of their revenue. Yet, many organizations are ill-equipped to manage channel revenue processes, leading to declines in business profitability and growth. One in three decision-makers thinks their company lacks the required resources to manage revenue processes.
Poor channel visibility inhibits decision-making and hampers analysis of partner programs’ impact. Manufacturers must understand their products’ routes to market, including channels, end customers, and geographies, to create revenue-optimizing production, marketing, and pricing strategies. Channel insights uncover transaction points generating lost revenue, such as:
- Improperly priced sales
- Inaccurate payments
- Incorrect rebates
- Poor incentives
Increased visibility improves partner accountability and allows organizations to identify effective and ineffective partners.
Furthermore, without comprehensive channel data, manufacturers may find themselves violating regulations. For example, partners may be selling in prohibited markets or breaking worker’s rights laws. These blind spots can cost millions of dollars in fines or other legal issues. Supply chain visibility will become even more crucial as the CHIPS Act imposes regulations about where and how companies receiving federal incentives can spend money.
Managing Data To Unlock Insights
Manufacturers must properly manage channel data to make impactful revenue optimization decisions. Model N industry data reveals nearly all surveyed executives expressed an interest in improving revenue management data and analytics capabilities, but 62% reported struggling to consistently convert data into actionable insights.
Relying on lagging data — like incoming orders — makes companies slow to adjust to market fluctuations. Manufacturers require leading data to forecast supply and demand accurately. Leading data includes real-time sales, supply chain movement, parts availability, channel and regional demand, trends, and current industry investments. With better forecasts, organizations can proactively adjust pricing, seize new opportunities, and improve processes.
Spreadsheets alone are ineffective for capturing and analyzing channel and revenue data. Manually maintaining these documents creates information silos and can result in outdated or inaccurate data. Using a data management solution in addition toa channel partner portal enables more comprehensive market analysis for more accurate decision-making.
Innovate Processes Now To Prosper Later
Now is the time to reinvent processes. During the last few years, sales were fast and furious, and companies struggled to meet demand. But the current economic climate has slowed things down. This downturn provides leaders with the bandwidth to strategize and try new methods.
Seize this opportunity to devise new data-gathering strategies and invest in revenue optimization and compliance solutions. The insight these tools provide allows decision-makers to see which business processes need to be enhanced or modified. Company leaders can make data-driven decisions about adjusting quoting, price management, demand forecasts, and channel programs, among other business functions.
For example, manufacturers can create processes leveraging real-time business intelligence to generate competitive quotes aligned with corporate pricing objectives. These changes can reduce quote cycle time, allowing sales reps to respond quickly to new opportunities and close more deals with desirable pricing structures.
When the market picks up, innovative businesses put themselves in a position for success. Research shows companies that plan for the next stage during an economic decline eventually outperform competitors.
Building agility is especially important as we await the CHIPS Act’s impact. Being able to respond and adapt to market changes requires data. Without complete information, companies may violate regulations or overlook revenue optimization opportunities. Now is the time to hone data-gathering activities and analysis for future prosperity.
About The Author
Chris Shrope leads High Tech product marketing at Model N. Chris has deep experience defining product market fit and related new product development activities. He has helped redefine value-driven conversations for a wide range of technologies, often in collaboration with subject matter experts and executive-level leadership. Chris received his MBA from the University of Colorado Boulder and holds certifications in Strategic Communications, Analyst Relations, Economics, Law, Product Management and Marketing. He is an advisory board member for the Inland Ocean Coalition, a national non-profit, helping with their chapter and business development efforts.