Bolaji, We've seen reductions in AVL's from principals to distributors (authorized and independents) over the years in order to reduce costs through consolidation and to mitigate risk up and downstream. That retraction creates new hybrid opportunities for all channels to reinvent themselves.
Smith & Associates is increasing our market share globally as a result. Principals are still divesting their low margin lines putting our channel on the front lines for lead time issues, price increases and end-of-life/inventory solutions. As a result, we've seen large players this year qualifying new channels to diversify.
In theory, rainy day buffer at tolerable levels is the best answer to soften the cost average in the wake of these devastations, however tell that to the shareholders.
After all,the forecasters are only human themselves too.
We humans tend to be more often than not creatures of habit and enjoy repeating things;whether forecasters like it or not this very inherent bias creeps into their thought-process every now and then.Thats just the way things are.
Dustin, If the natural disasters of 2011 are still shaping the electronics industry supply chain what happens if new ones occur in 2012? These occurrences don't announce their plans and the industry has been caught unprepared before. In your opinion, as the industry tries to control the negative effects of the last disasters are the players also putting in place mechanisms to reduce the impact of any future events?
If a company is concerned about not having a single source situation for a critical component, secondary sources should be identified and qualified fairly early in the product life cycle, and should be procuring product from multiple sources prior to a supply issue. Then, transition from one source to another is a simpler (but not necessarily simple) matter. But what if the supply line issue comes from scarcity of a raw material required by either supplier? Or miltiple suppliers are all located in the same geographic region? Risk mitigation is easier when you know what risk you want to protect against...but when you are expected to protect your company against any eventuality, that is a difficult matter!
I agree that inventory risk management is pretty important. Although I'm not sure that companies have studied this too well.
Do you think they are prepared to change suppliers very fast? in case one of them stops producing (for any reason)? It's really hard to do, and costly but it's the only thing that could work in case a natural disaster (e.g.) would affect the supplier.
@mfb: it is interesting that you note that. The "local" distributor went the way of the dodo bird in the 1980s and 1990s but is making a comeback of sorts. Distributors aren't storing inventory in every market like they used to--overnight shipping has taken care of that--but they are opening local offices again. It seems to be strking a chord with customers. These guys don't have the kind of money to dally with--these offices are deliberate and the marekts have been researched for some time now.
@eldridge: LOL. It still strikes me as funny we all just assume the forecast is wrong. It is; it is a reality of doing business; and the best one can hope for is to mimimize the risk. Still, we should set the bar higher, don't you think?
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.
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.
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.