The advantages to transitioning your company to a supply chain program with your component distributor are well known – lower total cost of ownership, reduced inventory requirements, as well as the component cost advantages realized by longer term, larger volume contracts. However, some purchasing departments are hesitant to utilize these programs because of misunderstandings about how difficult these programs can be to set up and manage, the volumes of part numbers required, or the integration of inventory and ordering systems.
The truth is a well-developed managed inventory supply program can be tested on a small number of parts to show just how easy it can be to establish and to mange a program that brings value throughout the entire business – procurement, inventory, production and finance.
ESNA spoke with Cynthia Bova, a TTI Regional Supply Chain Manager about the many advantages starting small can bring to a company.
“At TTI, we offer many different value added supply chain solutions to help customers manage inventory, reduce costs, mitigate risk and save time and effort. These services can be extensive with a high degree of integration between TTI and the customer’s supply chain processes,” Bova said. “Many companies benefit from TTI’s Advanced Inventory Management (AIM) platform, which includes services such as: Material Requirements Planning (MRP), Forecast Management, Vendor Managed Inventory, Auto-replenishment and Stockroom Management. TTI has fine-tuned its supply chain solutions for more than 40 years and has helped tens of thousands of customers manage and optimize their sourcing of IP&E and discrete components.”
However, not every company is ready – or truly needs – these robust supply chain solutions. There are several reasons this might be the case. For example, a smaller company could have experienced dramatic growth in a short period of time and its processes and systems are still trying to match the pace of their growth. Or, a very established company may simply not yet have implemented technology, process and systems that capture enough data to allow for reliable forecasting solutions.
How can these types of companies determine if a supply chain system is worth the time and investment required to build a relationship with a distributor partner? One key way is to look to your current vendor list. You may already be working with a company such as TTI that offers years of experience with the types of services Bova outlines above.
She explains, “The great news is that you don’t have to have a complex supply chain solution to take advantage of TTI’s expertise and value added services. Even for smaller accounts, TTI can go well beyond serving as only a distributor of electronic components and can provide actionable insight and supply chain data that will help customers create efficiencies and reduce costs.”
Given that pricing in the industry is currently very tight, there isn’t much any distributor can do from a component-pricing standpoint, but that doesn’t mean a customer can’t lower its Total Cost of Ownership (TCO). By identifying specific opportunities within their processes where costs can be reduced, such as purchase order consolidation, shipping lot sizing, optimizing inventory spacing and turns, or amalgamating payables, the assessment phase of developing a supply chain program can uncover areas for significant savings. As Bova says, “Much like a doctor will fully evaluate a patient, develop a diagnosis and prescribe the right medication, TTI prescribes only the solutions that are a right fit for the customer.”
Customers that want to test supply chain solutions by starting out small have the complete flexibility to do so. They may choose to implement forecasting and inventory management on just a few components on their BOM to test the effectiveness of the tools. This process then becomes an ongoing testing and evaluation of the program, and refinement of individual areas where efficiencies, savings and improvements can be made.
A quality supply chain program needs to have qualified personnel evaluating the system on a consistent basis. Fortunately, there are certification programs such as the Certified Supply Chain Professional (CSCP) and Certificate in Production and Inventory Management (CPIM) offered by The Association for Operations Management (APICS); and the Certified Professional in Supply Management (CPSM) from the Institute for Supply Management (ISM). Look for these certifications when evaluating your supply chain partners.
“TTI believes in the power of knowledge transfer.” Bova says, “Our supply chain specialists are happy to work with customers to share what we’ve learned in our decades of building effective supply chain solutions. In fact, many customers that benefit from this expertise report that they extend that knowledge to other vendors to optimize other aspects of their supply chain.”
Can a supply chain program deliver benefits for your organization? Bova believes so, “Regardless of size, ability to generate forecast data and purchasing process, customers should look to TTI to offer solutions right-sized and built just for them.”
Getting started with a supply chain evaluation program doesn’t have to be a daunting task – it can be as simple as finding an experienced distributor partner and sharing the amount of forecasting data you are comfortable with. After that, a good program is designed to give you clear results showing savings, performance and opportunities for improvement every month.
A version of this article appears in Electronics Sourcing North America, www.electronics-sourcing.com/north-america.