Cost Management While Choosing Electronic Component Supplier

The suppliers you choose in electronics manufacturing decides the success and profitability of your product. The reliability and quality of a product depends upon the electronic components suppliers. The important factors to keep in mind while choosing the supplier are reliability and high-quality of the products while managing operating costs are as follows:

Factors Influencing Cost 

A host of factors drive your cost up or down depending on how well you structure your agreement with your supplier. Depending on the period of time your products  are being covered and the scope of supplier’s warranty, the cost structure can vary. Tariffs, transportation, duties, engineering services, prototyping costs, and authorization services for returning materials are among critical cost factors that are mostly overlooked.

Lack of Visibility in Price Structure

Some manufacturers are hesitant in providing breakdown of price in a detailed way that specifies test, labour, manufacturing overhead, material cost, labour, cost of acquisition, and profit or gross margin. But without clarity in cost breakdown, how can you know about the cost improvement opportunities you could get in the future or the kind of assumptions used in product quoting.

Ambiguity in Details Regarding Supply Chain Model

It is always better to have discussion beforehand whether all transportation costs such as duties,  taxes, and freight, taxes included, or will they be separately invoiced? All of these can have a perceptible impact on your product cost.

Lack of Attention to Non-price Issues

The cost structure for repairing products that are not in warranty, the inventory for warranty repairs under different cost structure and different locality and how do quality associated metrics like per part million failure rates and yield play into the total price.

If you are looking for electronic component suppliers then classify the supplier based on your specific requirements and supplier ratings to ensure that you get certifiable, high quality and OEM-traceable products.

Challenges Faced By Supply Chain Managers

Obsolete components are the hard to find electronic components in the regular market. With technological advancements everyday, it is becoming challenging to find obsolete components. Supply chains are not left unhinged under this scenario, they go through several challenging phases and deal with real issues everyday. Some of the challenges being faced by supply chain managers today have been listed below:

Inventory Management:

Inventory is no longer associated with just box counting alone. Today, the warehousing industry is one of the most challenging phenomenon and it must work in synch with other company departments to exceed client expectations. In order to cope up with timely delivery of large orders, the companies need to stock enough inventory to avoid any delays in orders or else the profits might be affected.

Supplier Management:

Like with great power comes great responsibility, similarly with inventory comes suppliers and it can be a daunting task to manage them. Supply chain managers have to be absolutely aware when they need to procure one item or more from a supplier. They also have to manage the suppliers in an adequate manner to maintain their services with consistency and reliability at the right prices.

Quality Control:

Ever since globalization, managers often face challenges in the form of maintaining quality control of the products manufactured overseas, which are not in synch with prescribed standards of their country. Thus, supply chain managers also have to ensure that different products they procure are of standardized quality and can fit well in the supply chain. Failing to do so can affect the cash flow adversely.

Risk Management:

Supply chain managers have to take care of supplier issues in such a way that it doesn’t affect the company adversely. They often have different vendors around the globe to mitigate the risk of losing supply from a single supplier in case of any calamities like earthquake etc. They need to have proper backup plans to maintain their company’s profits at all times.

Hence, a supply chain manager’s job isn’t easy. They have to factor in all risks and possibilities across the supply chain at all times. SCM is a silent process but has to run smoothly for a company to function properly.

Emerging Challenges In Electronics Industry

The advancement in electronics industry is often startling and there has been a major paradigm shift over the past few decades. The manufacturing division of electronic components has direct impact on the electronic component distributors in the market.

The electronic companies have to be on their toes at all time and change swiftly with time to meet the emerging challenges in the market. Let us have a look on some challenges being faced by the electronics industry and distributors alike:

Reduced Operating Margins

Constant innovations and global competition have driven the prices down. In such a scenario, the companies need to be cost-efficient in all perspective to maintain their profits.

Complicated Supply Chains Globally

Almost every company has to play their cards well and stay well as per international standards while properly allocating both internal and external resources. Multiple issues like compliance and traceability are putting additional operational burdens on the companies. Sometimes the components and additional subcomponents travel across three continents or more before reaching their final destination and then the final user.

Managing Warranty and Service

In order to leverage the supply chain across the globe, a lot more focus is laid on managing the quality. Superior quality and traceable systems improve the warranty reserve and service hours in the post production department.

Diminishing Product Life cycles

Consumer preferences can change instantly and as a result all EMS companies and other contract based manufacturers must be equipped with a New Product Introduction (NPI) process. Effective communication between manufacturing, sales and R&D are integral for timely products launches with the right volume and targets.

Uncertainty In  Demand

Volatile economics and cyclic demands can create a lot of fluctuation in production. It is important to have lean capabilities and keep a demand aligned inventory.

The increasing standards and regulations are driving companies to account more for CSR- Corporate Social Responsibility. Since E-Waste is one of the hot topics these days and a lot of stress is being laid saving the environment, the companies must think of complete lifecycle of products while making decisions.