How is demand for speed changing the supply chain?
Product development isn’t just about what you develop, but how fast you can get it to market. With this increasing pressure, buyers must add value to their organization by ensuring that the materials supply matches that demand. Our economy requires greater efficiency with fewer resources. Effective distribution supply chain solutions can help purchasing and supply chain professionals meet the demands of speed and efficiency, all while saving money.
Line down isn’t just an unforeseen hassle. It can be detrimentally costly. That’s why TTI’s customers have increasingly relied on our supply chain solutions to help them manage inventory and ensure that all their interconnect, passive and electromechanical (IP&E) components are there when they need them.We believe a distributor’s essential service is to make as much inventory available to customers as possible and ensure their production lines don’t go down due to a component shortage.
How does TTI help buyers add value to their organizations through supply chain services?
Since IP&E typically represents around seven percent of our customers’ procurement spend, but more than 75 percent of BOM line items, these transaction-intensive components tend to take a lot of the buyer’s time while comparatively adding little value. However, availability of these components is critical. TTI leverages 40 years of IP&E expertise and our broad and deep inventory to provide the lowest possible processing cost and continuity of supply, which leads to the lowest possible total cost of ownership (TCO) for our customers. TTI can completely manage and automate these transactions so our customers can focus on higher-value, mission-critical aspects of their business.
How does TTI’s supply chain program work?
Employing established best practices to create our Advanced Inventory Management (AIM) Platform, we created a proprietary software designed exclusively for managing IP&E products. Our materials management experts evaluate the customer’s forecast and work to optimize every aspect of the supply chain by providing economic order quantity and reorder point analysis, consumption to forecast analysis and materials acquisition cost. All of these factors are then used by our dedicated supply chain professionals to develop completely tailored solutions.
Each customer’s component demand is integrated into the AIM platform where the appropriate component quantity and schedule is then pipelined and an inventory reserve created to support unplanned spikes in demand. All this ensures on-demand product availability at the best possible rates.
So once the program is in place, who owns all the inventory?
Our system is flexible, built completely around the customer. In fact, our Vendor Managed Inventory (VMI) programs can be set up in a number of different ways:
Bonded Inventory – we reserve stock for our customers in our warehouse, using a schedule sharing program or estimated annual usage. The differentiator lies in how we reserve inventory: our reservation program drives to bond a manufacturers’ lead time of inventory at TTI and/or pipeline the balance depending on requirements. Most managed inventory programs will schedule inventory to meet only a portion of the customer lead-time demand, whereas we build inventory through lead time.
Consignment – TTI utilizes the customer’s forecast demand to appropriately manage the materials pipeline. Inventory is securely housed on site at the customer’s location and TTI retains ownership of the inventory until it is needed by the customer. TTI’s automated invoicing and replenishment system ensures that the supply is readily available.
In-plant Stores – TTI fully manages the inventory, with on-site personnel dedicated to managing the receipt and maintenance of the required inventory levels. Our customers benefit from being able to keep the inventory on our books, until components are needed.
What about new product development, when a forecast is not available?
Speed is just as critical for our customers involved in new product introductions (NPI). Launch to market timing can determine the ultimate success or failure of a product. Whether in the early stages of development or during final, pre-launch enhancements, the need for quick turn samples and pre-production support is paramount. TTI works closely with our customers’ product management teams to understand the development plan and build supply chain solutions to meet that plan, leveraging our relationship with Mouser, a TTI subsidiary, when needed. Since Mouser is focused on the needs of the design engineering community, the company is the perfect compliment to TTI’s production-focused broad and deep inventory. Together, we provide the complete continuity of services necessary to scale to meet the go-to-market demands of NPIs.
Other than speed, what are other benefits of a supply chain solution?
One of the main goals of TTI’s supply chain solutions is to eliminate non-valued-added activities that occur in procurement and materials management. TTI’s supply chain solutions allow customers to better utilize valuable floor space, cut inventory carrying costs, reduce transportation costs and eliminate the burden of purchase order reschedules.
Customers reduce their upfront investment, as well as risk , with our flexible solutions that allow TTI to retain ownership of the inventory until it is needed, while ensuring the products are available on-demand.
On an ongoing basis, our customers benefit from performance management tools that constantly evaluate and quantify key cost drivers in the material acquisition process and identify opportunities to reduce total cost of ownership.
hat kind of visibility solutions do you offer customers?
TTI recognizes that while our customers trust their IP&E inventory management to us, they still need to have insight into their inventory. To that end, we’ve developed an Internet reporting system, enabling our customers to view their current inventory requirements, reserved inventory and any potential issues due to manufacturing or forecast changes. AIM customers also can create and release purchase orders as well as see historical data to help support future decisions.
Why do customers choose TTI to provide these services?
It’s true that all the AIM program capabilities, materials reservation flexibility and support services we offer would not be sufficient to support our customers without the inventory commitment, product knowledge and premium suppliers that are the foundation of TTI’s IP&E distribution business. There is no substitute for inventory availability and industry-leading supplier relationships when it comes to supporting our customers’ volatile production requirements. Our lower inventory turns model coupled with our IP&E product knowledge and excellent supplier relationships enable us to provide the best support in electronic component VMI.
Additionally, our global footprint is a significant asset. TTI can seamlessly transition from the customer’s engineering group to production line whether it be local, global, EMS or a hybrid of processes and locations. Our supply chain solutions support the largest, most complex, multi-continent operations.
These comprehensive supply chain solutions sound great, but how are customers able to invest the time and effort it takes to implement these programs?
Fortunately, TTI takes the burden off our customers. Our professional materials and supply chain teams follow a documented, best-practice process that ensures a program is developed, implemented and monitored. In fact, more than 40 percent of our revenue comes from customers who choose a TTI supply chain solution to reduce the TCO associated with transaction-intensive IP&E products. Since TTI has invested more than 20 years in the development and continual improvement of our supply chain solutions, implementation is virtually turn-key for our customers.
Drew Curtis, CSCP, CPIM, is a 20-year veteran with TTI, and has spent more than 25 years in the field of high-tech procurement and supply chain management. Currently Drew is the Director of Supply Chain and AIM Services for TTI.