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Factoring Oversupply Into Supply Chain Relationships

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Barbara Jorgensen
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Re: Oversupply and knee jerk reaction for purchasing
Barbara Jorgensen   1/3/2013 4:37:53 PM
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Bolaji--another good point. Customers were placing multiple orders with one supplier and multiple orders with second suppliers. Again, buyers were just hedging their bets and supliers/distributors weren't comparing or checking the orders. The result prompted a reaximination of the supply chian that has improved things greatly.

Bolaji Ojo
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Re: Oversupply and knee jerk reaction for purchasing
Bolaji Ojo   1/2/2013 8:26:22 PM
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Douglas, I recall the oversupply that emerged in the supply chain at the time you referenced and the reason behind it was many other buyers put in similar orders at different suppliers to "guarantee" they would receive their sometime "one" order. It resulted in more than $10 billion in oversupply and the industry's worst downturn when demand collapsed.

Barbara Jorgensen
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Re: Oversupply and knee jerk reaction for purchasing
Barbara Jorgensen   1/2/2013 4:02:18 PM
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Hi Douglas: Your practice--which makes sense for the buyer--is called double-ordering and does contribute to excess inventory. The fact is, distributors don't like to share order information with each other and suppliers don't consolidate orders in the way you describe. Suppliers consolidate orders for forecasting purposes, but if someone orders finished goods, the parts are usually shipped then and there. The order volume and customer ID is shared after the shipment. Unless a supplier has a system to compare Avnet's orders with Arrow's orders AND search for common customer names, the parts are already in the channel. There's also a stickier issue: Let's say a supplier does spot a double order, which one does he cancel? Arrow's or Avnet's?

Real-time data could conceivably alleviate this, but suppliers still have to compare orders and search for common customer names. When all goes well, POS data is shared once per month between distrbutors and suppliers and chances are, orders have already shipped.

FLYINGSCOT
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reverse
FLYINGSCOT   1/1/2013 7:58:29 AM
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Reverse logistics sounds like an interesting concept and I look forward to reading your next post.  In our industry I hear of many suppliers shying away from opps resulting in fully custom components as the risk does not warrant the reward in most cases.

Douglas Alexander
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Oversupply and knee jerk reaction for purchasing
Douglas Alexander   12/31/2012 4:01:32 AM
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@Barbara...when tantalum capacitors were on allocation several years ago, my strategy was to place identical orders with several qualified sources and if Kemet was carried by several distributors, I would likewise place the same order with all of the approved distributors. My understanding was that they would aggregate my orders with other companies' orders and place the combined quantity on a single order to the manufacturer. I don't think the manufacturer could see who the end user was a a function of breaking out the single large order. As a result, I am covering my bases if just one distributor is able to give me the parts in total or if two or more were able to send me partials. Is it common to have an oversupply of inventory as a result of this kind of ordering after an allocation lift? Nowadays, it seems like for more part types, I am seeing requirements o complete NCNR (non cancel, non return) forms before the order is accepted. Is this why this form is more common today than ever?

Jacob
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Re: Build more flexibility in your supply chain
Jacob   12/31/2012 3:23:42 AM
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TaimoorZ, various outsourcing will help the companies to minimize their overheads but in one or another way it wonít be good for the companies. They donít have any control on the outsourced employees and there wonít be any bond between employees and management. Itís more or less like a daily wage employee and hence there wonít be much involvement from employee side too. so the role of the company is limited to like a system integrator or assembling unit.

TaimoorZ
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Re: Build more flexibility in your supply chain
TaimoorZ   12/30/2012 2:54:26 PM
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@Himanshugupta: Yes, labor outsourcing is one way of bringing flexibility into your manufacturing process. The other is of course outsourcing a portion of your manufacturing to vendors so that you don't have to maintain a minimum level of production to cover overheads.

Himanshugupta
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Supply Network Guru
Re: Factoring Oversupply Into Supply Chain Relationships
Himanshugupta   12/30/2012 1:59:33 PM
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Obselete products are not only a problem of electronic companies but many other industries such as garment, sports items etc. Timely discount is one way to clear inventories but flexible supply chain is for sure a more high-tech solution. If we can predict the accurat demand atleast half the time before the actual requirement of the product then we can finetune the production and supply chain. Such predictions are not impossible but better analytics and data crunching is required.

Himanshugupta
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Re: Build more flexibility in your supply chain
Himanshugupta   12/30/2012 1:53:42 PM
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@TaimoorZ, making accurate production is really difficult but maybe cutting down labour on demand can lead to some benefits for company. I know that lots of manufacturing companies keep contract labour which is exactly for this reason. These measures introduce some flexibility in supply chain though at some financial costs.

hash.era
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Stock Keeper
Re: Factoring Oversupply Into Supply Chain Relationships
hash.era   12/30/2012 11:19:21 AM
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Yes that happens practically everywhere. Its not easy to get things forecasted right to the dot but if the movement trend is properly analyzed you can get closer to it.

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