I think online sales can be better alternate for cost reduction and to avoid the third part involvements. The user can select the components from online catalogue and place the order online. These orders can be executed in factories/godowns and they can dispatch the order at the earliest. There are mainly two advantages from such online procedure. First of all pricing is less, when compare with the vendors and secondly speedy delivery of the item.
ABC is good analysis tool. It can find out many leakages in expenses. But, it should be used pragmatically. Some expenses are desirable. They have hidden and long term advantages. You should not price tag in simplistic manner.
If we are trying to break down into the activities a distributor typically does and putting a cost to them, how about things like advising your customers and helping them out with ordering, and providing market feedback and consumer insights to the manufacturers? Surely these are important functions and there's a cost (and hence a price) associated with these.
Its is great that the distributors provide this service, but to expect that some of the cost from the ABC is not passed to the small businesses that benefit from the product distribution may be asking too much of them. I believe some of the "free" services is what is referred to as customer service and this is also an indirect service to the the customers which goes a long way in building good business relationships!
That concept is not a new one. In a book I'm reading about the author's mother's life, he describes her job during WWII. It was to use a comptometer to add up every cost factor of production to arrive at a price that included a profit.
I find it amazing that more companies haven't tried to put price tags on everything they do to maximize their profits. I don't agree with the process, but you can't continue to give things away for free while taking away from items that will make money. It is amazing how distributors still have to prove themselves worthy every year, even if they are in good standing with the suppliers and customers.
For smaller suppliers the distribution channel provides coverage that would otherwise be impossible. ABC would value that (I reckon) a lot less than is actually charged by the distribution channel.
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.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
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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