VIEWFROMTHE TOP
IncreasIng need for flexIbIlIty
GTK UK’sMD, George Homes, examines electronics OEMs’ changing support requirements and their impact on suppliers
GTK UK’sMD George Homes emphasises business f lexibility and agility
Globalisation has led to increased competition, the removal of borders and a shift in organisational business models. Twenty years ago the OEMbusiness model was comparatively
simple with companies locating all their functional departments such as design, manufacturing and warehousing under one roof: a centralised business model. Increasing competition influenced many OEMs to move their manufacturing to lower cost locations followed by an accelerating trend to outsource services they had previously managed internally. Many OEMs today operate a decentralised business model with design, manufacturing and logistics in multiple locations, often contracted out.
What does this mean for suppliers? Under the old centralised
business model, OEMs would approach a supplier with their finished design and simply procure the components detailed in the BOM. Today, the situation is often very different. OEMs operating a decentralised business model require a significant level of value-added support from their suppliers in all stages of the product development cycle.
What we are seeing is a requirement for a bespoke level of
service. The breadth of value added support is increasing and varies for each customer. Recognising this change, GTK restructured its business model to align with its customers. Product specialists, field sales engineers and project engineers can offer design and production support directly to customers, while GTK’s Taiwan branch office provides a critical link to local manufacturing. Finished product is often then warehoused and
4 | September 2010
shipped to multiple locations. Increasingly customers involve us much earlier in their projects, benefitting from better product design, component selection, packaging and logistics support.
There has been a noticeable increase in OEMs’ support
requirements during the global downturn. OEMs have reviewed and re-engineered their products to remain competitive, while simultaneously driving their operational overheads down to remain profitable. The net effect for suppliers is an increasing volume of new full build projects and more ownership of the operational elements of customers’ projects.
GTK appreciates the need for flexibility and agility.We also
recognise each customer’s requirementsmay be different.We are increasingly engaging in specific deliverymodels. For example, one customer designs its product in the UK,manufactures in China and delivers to the UK, Europe and Far East. For their next generation product, the requirementsmay be entirely different. Other customers have great ideas and need our help to supply the finished product, fully packaged. Each customer selects the elements of our value-added support package that best fits their businessmodel, allowing themto focus on their core strengths andmaximise their competitive advantage.
The shift in our businessmodel to provide customised support
packages has been instrumental in our growth during this difficult economic period.We are expanding our sales and operations teams and forecasting a 40 per cent growth in business. Our ability to remain agile will be integral to this growth plan.
The need for vendors to be flexible in their support and
deliverymodels is paramount to retaining and winning business. Customer demands will continue to change and the best suppliers will adapt tomeet them. The need for flexibility is here to stay.
www.gtk.co.uk www.electronics-sourcing.eu
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