As competition continues to heat up in the smart device market, the demand for services along the semiconductor and electronics industry's supply chain is increasing. One of the key challenges as devices proliferate, while margins shrink to keep pricing levels competitive, is maintaining inventory balances and strategic sourcing. Navigating today's global supply chain requires skill and vigilance because component availability, pricing, and quality can vary tremendously and change quickly.
Services expand to meet competitive demands
Companies are focused on managing risks and market volatility while being focused on competition and differentiation. Managing increased risks, margins, and inventory ownership is among the top reasons we have seen increased requests for inventory and sourcing management services. The following are among the top service requests recently focused on the need to improve sourcing and inventory management:
- Reduce Total Cost of Inventory Ownership
- Manage Component Lifecycle
- Source Hard-to-Find Parts
- Identify Cost-Saving Opportunistic Purchases
- Consolidate and Reduce Vendors
- Hub Components for Just-in-Time Production or Repair
- Disposition Slow Moving or Excess Inventory
Overall, the most important value that these services provide companies is maintaining inventory for forecasting and shortages while reducing sourcing management. Because of the need for companies to focus on their core competencies rooted in design and end-devices, the opportunity to focus personnel on the device and service differentiation and improve margins by outsourcing is gaining momentum not only for production but also now for service and repair.
Selecting service partners requires diligence
There are important capabilities to consider when evaluating supply chain service partners and whether they can truly deliver on the promises. Just as you screen your vendors for sourcing parts, service partners also need to be audited and screened and should have industry recognized certifications. Certifications in and accreditation to leading industry standards for quality management and the corresponding processes and procedures should include the following:
- International Standards Organization (ISO) ISO 9001, ISO 17025, and ISO 14001;
- Components Technology Institute's Counterfeit Components Avoidance Procedures (CCAP-101);
- Certified (QC) inspectors (for example, CCAP-101 and CCCI-102 or equivalent);
- ANSI ESD S20.20; and
- AS 5553 and AS 9120-A for aerospace industries
In order to realize the greatest value and most integrated sourcing and inventory management gains, service partners should also be sourcing partners so that they can act with the greatest agility during market opportunities and guard against risks and problems during disruptions. Often well-integrated sourcing and service partners are able to be somewhat proactive during times of disruption, as they can source as events occur and ahead of shortages that arise after unforeseen supply chain disruptions such as natural disasters, fires, and similar types of events.
Some of the critical operational capabilities that a service partner should have include the following:
- Integrated operational and quality IT systems in place for sourcing, selling, hubbing, and testing to support best-in-class inventory management services;
- Dedicated, certified experts on staff to custom design programs to meet unique customer needs;
- Industry certified quality experts and certified ISO 17025 testing laboratory in-house to inspect and ensure quality;
- A global footprint with the ability to source product globally;
- Rigorous and continuous reviews and analyses of the internal systems, process, and procedures for handling all of the above (including updated ISO 9001 certifications).
The bottom line is, in fact, the bottom line when it comes to services and sourcing management. The main reason customers most request these types of services is the increased pressure on their bottom line. Businesses today are dealing with significant market competition on many fronts, resulting in supply chain shifts for “one-stop shops” for sourcing and inventory management to increase productivity and improve cost savings for both production and repair.
In short, supply chain services are gaining momentum in today's market because of increased focus on lean inventory, margins and cost cutting, and reducing hubbing costs.