PCH International (PCH) Introduction PCH International is the behind-the-scenes
ID: 467897 • Letter: P
Question
PCH International (PCH)
Introduction
PCH International is the behind-the-scenes partner responsible for some of the most successful launches of consumer electronics accessories. PCH is the enabler, turning an idea into a physical product in the hands of a consumer, while optimizing quality, costs, and time-to-market for clients. PCH clients are located all over the world; PCH designs and manufactures products for three of the five largest personal computer, smartphone, table and e-reader brands currently on the market. In order service these demanding clients PCH has established 10 regional offices across multiple time zones with more than 4,500 employees. Successes include a growth in revenues from $30 million USD in 2001 to an excess of $1 billion USD in 2015. PCH attributes this dramatic increase in revenues through the creation of innovative supply chain value-added services and capabilities.
The PCH Solution
By 2007, PCH counted a number of global clients and customers. Among its clients were three of the five personal computer companies, three of the top five telecom and networking companies, and the top five leading contract electronics manufacturers. In PCH’s framework, each PCH solution could be mapped to the various challenges in the three flows of the supply chain, thereby addressing the various gaps in coordinating these flows
PCH Technology Supply Chain Solution
1. Virtual Supply Chain (Flow of Information)
2. Physical Supply Chain (Flow of Products)
3. Financial Supply Chain ( Flow of Funds)
Information transparency was a highly valued feature fore technology companies given the many moving pieces involved. Transparency of process is a central PCH offering. PCH developed a series of online software tools that drive internal PCH activities and to provide a portal for clients and suppliers to oversee and participate in the process.
These software visibility tools that consolidated relevant information for each individual customer:
StatusFlo – showed inventory levels of goods in the various locations
TransFlo – included all relevant billing and shipping documents
ChinaFlo – information database on over 900 factories evaluated by PCH
The historical success of PCH was in manufacturing services where goods were sourced and manufactured for clients. Over time, however, PCH had moved deeper into the product life cycle where solutions were replacing entire distribution systems. With this strategy, PCH developed core services that addressed the complexity and confusion of sourcing and manufacturing in Asia, in particular in China. These services included postponement and fulfillment services.
As discussed, component suppliers and factories sometimes ran into a working capital crunch when unable to obtain feasible financing from commercial banks. PCH saw this as an opportunity for another value-added service. PCH envisioned that there was a role of an intermediary to facilitate the financial flow from the moment the retailers placed their orders to the delivery of goods. The new model was such that retailers would place orders with PCH and PCH would then place orders with the factories. Given PCH’s size and relationship with global technology firms, banks would be willing to lend funds to PCH. PCH would then lend funds back to its factories and suppliers at a higher interest rate, but still lower than what the factories and suppliers would have gotten on their own. PCH effectively made the interest spread between the banks and the factories and suppliers.
Growth & Success thru Supply Chain Optimization
Having established itself as a leading manufacturing, sourcing and fulfillment organization, PCH looked at other areas of the supply chain for additional opportunities for value-added services. PCH aggressively established additional operations and capabilities in the following value-added areas:
1. Product Design & Engineering
2. Inventory Management & Global Distribution
3. E-Commerce & Retail
As a result, PCH created the first world-class end-to-end supply chain service offering that helps clients create, develop, manufacture and sell hardware products direct to consumers.
Product Design & Engineering
PCH Access is part of an integrated platform bringing leading global electronics brands and hardware startups from concept to the consumer.
PCH Lime-Lab
Highway 1
Established in 2012 and headquartered in San Francisco, PCH Lime-Lab provides state of the are product design and engineering development services
Based in San Francisco, the Highway 1 accelerator program helps hardware entrepreneurs share their ideas into unique and viable product offerings
Clients of Lime-Lab and Highway 1 work closely with PCH’s Shenzhen team through development to the selection of the right manufacturing partners to bring their product to market.
Manufacturing, Inventory Management and Fulfillment
PCH employs over 4,200 local staff in China managing manufacturing, fulfillment and distribution
China Turnkey Services (CTS)
China Fulfillment Services (CFS)
PCH has qualified over 800 factories in the Southern China region; PCH clients have access to the ideal factor to fit their production needs. The PCH team provides factor floor design and supervision of the production process
With over 1.2 million square feet of fulfillment operations in the Futian free trade zone, PCH clients can reach 90% of their worldwide customers in 3 days. PCH fulfillment provides inventory management, packaging and distribution services.
E-Commerce & Retail Distribution Worldwide
Through acquisition and organic growth, PCH has established capabilities to manage distribution globally for e-commerce and retail channels.
TNS Distribution
ShopLocket
China Direct
Acquired by PCH in 2011, TNS Distribution is a leading global distributor of consumer electronics and accessories. TNS specializes in products for eReaders, iPod, iPhone, iPad and Mac with an extensive range of digital lifestyle solutions.
Acquired in 2014, ShopLocket offers PCH clients an entrepreneur-friendly marketplace to launch and sell their products.
Established in 2012, China Direct enables global brands to sell into the domestic China market.
Supply Chain Value-Added Services & Capabilities
PCH has revolutionized the traditional supply chain model by creating value-added services and businesses through the supply chain from product concept to customer delivery. PCH continues to develop value-added solutions along the supply chain in order to offer the customer a complete end-toend solution. PCH’s supply chain network provides a strategic competitive advantage to clients. This integration of services results in reducing product development time and shortening time to market – key factors for success in the fast changing competitive consumer electronics market.
Case Study Questions
1. Targeting organization – What is the ideal company for PCH to work with in terms of alignment of strategic procurement and supply chains?
2. What is the best suited supply chain for PCH – all outsourced, in-source or a hybrid model? Think in terms of asset light and risk adverse. Justify your decision.
3. PCH has a heavy focus on China and considerable resources located there. What are the risks and rewards to this type of strategy?
4. Assuming PCH plays a neutral role between its clients and the manufacturers. What type of market entry strategies should be used?
5. Assuming PCH plays a neutral role between its clients and the manufacturers. What Incoterms would be ideal?
PCH Lime-Lab
Highway 1
Established in 2012 and headquartered in San Francisco, PCH Lime-Lab provides state of the are product design and engineering development services
Based in San Francisco, the Highway 1 accelerator program helps hardware entrepreneurs share their ideas into unique and viable product offerings
Explanation / Answer
1.
Ideal company will be focusing on client requirement and offering them option to choose their own configuration in final product. The company doesn’t own its manufacturing unit but manage creation of final product by working with party vendors. This requires an effective real-time supply chain which focuses on flow of information along with material and finances.
2.
Hybrid model is the best suited supply chain for PCH because in this case the company can strike the balance between asset light and risk adverse model. The company can in source critical item which has unique features important for the product and can outsource non-critical items
3.
Risks are:
Rewards are:
Author's Note: Please be specific to part that need to be answered.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.