The truth is that many of the shortages were predicted some time ago. Further, shortages are nothing new in the industry. As a result, leading independent stocking distributors have spent the past few years engaged in a long-term strategy of identifying, and investing in, directly sourced critical electronic components.
By doing this, independent distributors protect the supply, but are also able to lock in lower prices by making purchases before the inevitable changes driven by reduced supply and increased demand.
To protect high-volume orders, a distributor can lock in prices and delivery dates for many months at a time. This ensures that the inventory will be there when the customer needs it and not sold to someone else.
Image courtesy: Pixabay
In some cases, they can even make speculative purchases for a customer and/or provide financing to purchase inventory when a qualified client has capital constraints.
Large global networks offer another direct source for high demand parts. Because of the worldwide demand for components, independent distributors have expanded globally and placed sourcing experts in key supply markets.
For example, in addition to its 60,000 square foot facility in Torrance, California, Classic Components has established 12 regional offices in strategic locations throughout the world to support its global distribution business. The company has nearly 200 employees, who specialize in various aspects of the business, including supply chain, quality, technology, and logistics.
The buyers can develop an intimate knowledge of regional supply chains with the expertise to find and manage quality component suppliers. These experts then leverage these relationships to bring the best price and delivery to their customers.
“By using regional quality centers and logistic hubs, we have the flexibility to purchase components from any country, in any currency, and then ship them to anywhere they are needed,” explained Thomas.
Consider this example: A customer in Mexico wants components from Taiwan, due to availability. If the Taiwanese supplier will only sell to local companies, a distributor can purchase the components from its satellite office located there. Later the stock can be transferred or sold to another branch office before it is ultimately delivered to the customer in Mexico.
Tapping into global logistics can also help OEMs to manage or avoid tariffs by shipping to and from our international hubs in Hong Kong and the United Kingdom.
Another way to ensure the reliability of the independent distributor is to ensure they are thoroughly vetted. Established companies are used to complying with frequent requests for audits. In fact, some of the robustness of the quality systems implemented by independent distributors can be attributed to this activity.
With significant shortages in many high usage electronic products needed in the medical device industry expected to continue for at least the next two to three years, the independent distributors’ seat at the electronic components sourcing table has never been more relevant.
Through investment in developing deep global networks, inspection, authentication, inspection and quality systems, independent stocking distributors stand ready to provide medical device OEMs a robust option to navigate the white waters of international supply nimbly, effectively, and without the risk.