While value-added and supply chain services are not new, their use by customers is growing because they help guarantee continuity of supply and reduce risk, while reducing cost for OEMs and electronics manufacturing services providers.
Brandon Blech, TTI’s supply chain services manager, says forecast sharing, vendor managed inventory, electronic data interchange (EDI), connector assembly and other services are widely used by TTI customers. In fact the majority of TTI’s North American sales involve a supply chain or value added solution and this number is growing every year.
He says one reason for the broad adoption of such services is because assurance of supply is a top concern for customers.
“Any program or service that will help customers mitigate risks such as upside/downside demand variance, extended lead times, etc. are in demand, said Blech.
He said the importance of value added and supply chain services has increased as OEM and EMS customers operate leaner and outsource more.
“Many of our customers and suppliers continue to lean out their operations and this trend has increased the need and importance of using tools that enable more effective collaboration between trading partners,” said Blech.
Blech said TTI has more value-added and supply chain services engagement with more customers than in the past.
“We’re also seeing an increase in the percentage of business going through a supply chain program at existing accounts. Customers see value in the services we provide,” said Blech.
He said services enhance TTI's business model, helping the distributor forge closer relationships with customers and making TTI more valuable to them.
“Using our value added and supply chain services, TTI’s supply chain professionals work with our customers to understand their supply chain challenges and objectives and design tailored solutions that yield quantifiable results, ” he said. “It’s all about enabling our customers’ success. Our value-added and supply chain services help us accomplish this.”
He said many customers view TTI as an extension of their businesses, due in part to value-added and supply chain services provided by TTI.
Blech said services have evolved over time. For instance, there is greater use of data analytics to help improve supply chain engagements with customers.
“We use data to identify imbalances in a customer’s consumption to forecast, to optimize EOQs and to find other process improvement opportunities – all with the goal of improving service and reducing costs for our customers,” he said.
One customer that values TTI services is EMS provider Qual-Pro, based in Gardena, California, Brian Shane, Qual-Pro CEO, said his company uses TTI for bonded inventory, auto replenishment and kanban, connector assembly, tape and reeling and lead forming.
He said his company uses such services because TTI “can perform these tasks more effectively than we can on our own.”
Shane added that TTI supply chain and value-added services help Qual-Pro meet customer expectations in terms of prices and lead times.
“We need partners like TTI to help us provide a reliable flow of components at a reasonable price and support the schedule flexibility our customers demand, said Shane.
He said Qual-Pro wins more business when it has “alignment between ourselves and our distribution partners.”
Part of that alignment means Qual-Pro needs to focus “on what we do well” which is assembly, test and box build integration, said Shane. “We ask our distribution partners to focus on what they do well,” which is value added and supply chain services, he said.
At Manufacturing Resource Group (MRG), a Norwood, Massachusetts-based EMS provider, TTI’s services help the company be more competitive. MRG uses a variety of value-added services, including labeling and parts marking, but uses consigned inventory the most, said Mark Griffith, MRG vice president.
Consigned inventory allows MRG to have the material that it needs on-site, which increases velocity, reducing shortages and increasing inventory turns by 75%, he said.
Griffith added supply chain services help MRG keep its total cost down and its service levels to customers up.
“We are in a very competitive market, manufacturing in Norwood, Mass. and Tecate, Mexico. It is very important to service our customers and remain competitive, so distributor value-added services is one element that helps us achieve this goal,” he said.
He said that MRG does not always receive accurate forecasts from its customers so having distributor inventory on site or in stock at the distributor is important.
“These programs that we have in place also allow us to reduce our inventory levels and increase our inventory turns, freeing up cash and improving profits," said Griffith.