Design Con 2015

Registered & Screwed

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Barbara Jorgensen
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Re: Role of purchase department?
Barbara Jorgensen   11/12/2012 3:29:20 PM

@hm: Purchasing should source to the engineers specs if the product gets designed in with a distrbutor's help. The problem is, in spite of purchasing's best efforts, something happens at the factory level. Often, decisions to sub something are made on the fly and purchasing may not find out about it until it's too late..

The other scenario is yes, purchasing gets a better deal from another distributor. That is purchasing's job. But that alienates the distrbutor that did the design work. That's why supplier give designing distrbutors a preferred price on volume, so they won't be undercut and purchasing doesn't have to go elsewhere.

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Supply Network Guru
Role of purchase department?
_hm   11/11/2012 6:35:44 PM

What is the role of purchase department? Do not they look after this problems and help organization to reduce their cost or make their cost more realistic?


Barbara Jorgensen
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Archaic practices
Barbara Jorgensen   11/9/2012 3:54:42 PM

Ken--you'd think that with all the technology we have that there would be a better way of doing things. Knowing distribution as well as I do, I can see why they'd want to protec themselves from design "poaching" or undercut-prices from competitors. At the same time, the residual effects of these practices (phantom inventory) have to be time-consuming accounting nightmares. As long as the channel manages this stuff, it's invisible to customers. But I wonder: if customers were aware of it would it matter? As long  as they were paying a fair price?

Ken Bradley
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Re: Ready for Change?
Ken Bradley   11/9/2012 10:55:14 AM

 Bolaji, Registration ties into a practice between manufacturers and distributors called ship and debit. If a part is registered with a distributor, they get a bigger refund(Debit) from manufacturer when the part is sold to the registered customer than any other distributor. As a result there is no competition between distributors.  This "figure out what your costs are after the product is sold" process restricts competition and adds complexity and cost.  A simpler process of buying from your supplier at a negotiated price and reselling to the customer at another negotiated price would be better and is the way most business works.  Registration and "Ship and Debit" are the anomalies.

I see these overhead attracting processes as a means of price control by the manufacturer; no one else gains (most lose). I haven't met a distributor yet that is unwilling to compete on a level playing field.

Bolaji Ojo
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Ready for Change?
Bolaji Ojo   11/9/2012 7:16:11 AM

Ken, Your analysis is thought provoking. In my case, I wonder if what's stopping the system from changing a structure we know is not optimal is that people don't like the alternatives or don't know which alternatives to pick and whether these would be better than what they have now. The fear of unknown fields can be paralyzing.

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Supply Network Guru
FLYINGSCOT   11/8/2012 4:37:25 PM

Not many people like the registration process as it tends to converge on an optimal solution only for a limited number of people in the chain.  At the end of the day for everyone to succeed they all need to feel comforatble with the deal they are getting.

Barbara Jorgensen
User Rank
Telling it like it is
Barbara Jorgensen   11/8/2012 4:07:03 PM

Ken: As always, you've been able to clarify in no uncertain terms the problems with this system. In my experience, most OEMs don't even know about it and those that do find it time-consuming. Distributors don't want to nag their customers but registration is one form of "protection" (in theory) for the work they do. Suppliers don't like it because the compensation aspects of the programs are an accounting nightmare. I guess it's like democracy: it's the worst system in the world, except for all the others.

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