Benchmarking is the process of comparing business processes and performance metrics to industry bests practices. The dimensions used for measurings such process are quality, method, time and cost. It also involves the identification of best firms in similar industry or any other industry where similar processes exists or happens. By comparing this results and processing of these studied from similar industries with our own results, which help to learn that how well the targets perform and how they do it. It’s also used to measure performance using any specific indicator resulting in a metric of performance and compare with others.
These are good questions and I am sure a concern to many readers. Our approach and solution to competitiveness benchmarking has been reviewed by our attorneys with no issues raised.
To question 1, no price information or other client names is disclosed publically in our reports. The information Lytica receives is used to form statistical distributions that are used to assess competitiveness. In using FREEBENCHMARKING.COM uses sign, electronically, a contract with Lytica that restricts the use of their data and commits us to confidentiality.This agreement can be downloaded off our website after registration. In this regard we are no different than any other third party engaged by a company to help with supply chain service. Others in this same relationship category would be EMS providers who see and work with a clients’ pricing or auditors reviewing financial statements and inventory valuation.
To question 2, as will be discussed in my article to be published by EBN on Monday, we have two ways of ensuring the quality of the data in our analysis. The first is that we segregate the data by its source being Silver, Gold or Platinum clients. Platinum data is data from our Platinum customers. We know Platinum data is pristine because we work with this data everyday getting customer quotes, implementing price reductions at contract manufacturers and reviewing price books or other cost information. We see the customer’s source data.We report in Gold reports against all three datasets independently. The second way we ensure quality is to have our component engineers and specialists review data before it is accepted into the database as reference data. When a report is requested, we add the clients data to the reference data sets, run the report and then remove this data from the data set and place it in quarantine until deemed acceptable or rejected by Lytica. Doing this only the client submitting contaminated data gets a contaminated report. We have proprietary tools and algorithms that we apply to Gold and Silver Client data and reject the entire dataset if anything fails our tests
The dealings, naturally, must be above board legally and I doubt a non-disclosure agreement between a supplier and the customer is weighted heavily towards the supplier. In many of these situations, the supplier is really at a disadvantage most of the times. It must comply with non-disclosure requirements from the customer but lacks typically the muscles to request the same of the customer.
At some level, these pricing information are also publicly available though maybe not at the granular level. I don't believe buyers are completely in the dark as to what they can expect to pay for components but as you may imagine, a fraction of a dollar shaved off millions in parts can add up to huge savings.
1.Is it actually legal to disclose such information publicly in an attempt to manipulate the market prices of components, especially if the Supplier has the information covered by an NDA ?
2. How would the database be protected from people submitting false data in an attempt to force the prices down?
What a great job Lytica has embarked upon to eventually create a leveled playing field for manufacturers buying electronic components. Hopefully this will help bring down prices. But I find it surprising that executives of multi-billion dollar companies remain completely in the dark about what rivals pay for similar components until now. What happened to assessing the opportunities and threats to a company's survival in order to remain competitive? But on the flip side, I am not surprised about the choice to remain in the dark to encourage secrecy and create an illusion of superiority of end products and its accompanying high retail price.
Well, its definitely a very good initiative to set up benchmarking of component pricing. But as the article says not everyone wants to or can be open. After all its all business and everything ends on money. I guess everyone would be happy if this sets up in reality and becomes part of business ethics.
Ken, thanks for your honest response and shedding some more light on the different levels of client services.Bolaji mentioned that your article will be available on Monday.I am looking forward to reading it and learning more about FREEBENCHMARKING.COM.Like I mentioned before, I really do like the concept.Thanks again.
A couple of clarifications. Our data is used in aggregate form only and we never reveal supplier or client pricing. As a pure benchmarking service, we help clients understand how their pricing compares with best-in-class and average pricing in our database. Suppliers can use our reports to gain insight into their market competitiveness, and understand how their pricing is trending against competitiion quarter to quarter, or whatever timeline they choose. I also know from my experience in semiconductor sales, that reliable benchmarking data can be invaluable in justifying more competitive pricing with internal marketing groups. I encourage buyers and suppliers to try the free Silver service, and contact me with your feedback and questions.
This service would definitely level the playing for the buyer community. From that perspective, I can see why OEMs would be happy--OK, willing-- to share their pricing information. I'm less clear on why suppliers would do so. They are as protective of their pricing information as OEMs. Chances are, buyers are going to use the lowest price to negotiate with their supplier. So for suppliers, this could drive prices down. I don't see the upside.
It will be good to have the opportunity to communicate with the execs on this. Thanks for the opportunity.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Archived Dialogues
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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