View fromthe Top
SErvInG tHE EMS MArkEt
EMS providers have distinctive requirements. Avnet’s Gerry Fay, senior vice president, Supply Chain Solutions worldwide, discussesmeeting those needs
In general, how does an EMS order differ froman OEM order, if at all?
The largest differences are the volumes and the numbers of lines sold into EMS versus OEM.
OEMs tend to bemore strategic in their approach and are often
more focused on our demand creation capabilities. On the fulfillment side, theymay ask us to help set up or facilitate their supply chain globally, or request assistance in implementing andmanaging a given supply chain at an EMS provider. In these scenarios,we act as an extension of the OEMwith the EMS provider.
On the other hand, large EMS providers have a tendency to be a
bitmore tactical in their relationshipwith us aswe act as an aggregator in their prescribed supply chain,whereas regional or local EMS aremore collaborative in their approachwith distribution. EMS also tends to gravitate to distribution in order to leverage our supplier relationships and value added supply chain services.
Of course, there are also differences in the OEM’s needs
depending onwhether the OEMis doing their ownmanufacturing or if they are using an EMS provider. If they are doing their own, they have full control over the supply chain and the sourcing tends to be more stable,which reduces some of the complexity. If they are using an EMS provider, they have agreed to let the EMS provider have some level of control over the bill ofmaterials and supplier selection. There can be a bitmore tension in this relationshipwith distribution aswe both have a relationshipwith the OEMand have towork together,while our goals are not alwaysmutually exclusive.
Is there a strategy for buyers to approach a high-mix, low-volume order? Howdoes Avnet assist such customers?
High-mix, low-volume (HMLV) is the sweet spot for distribution as customers are looking for smallerminimumorder quantities and minimumpackage quantities, as well as inventory velocity programs that direct suppliers can’t or won’t always provide.
There is a certain degree of volatility inherent in HMLV sourcing.
As a result, customers typically want to ensure supply chain continuity and will takemore of a total cost of ownership approach to this type of business. Our role is to ensure a consistent supply chain and to have the flexibility to support the peaks and valleys that come fromthe demand volatility of HMLV customers.
Among the strategies we have to accomplish this are: inplant
stores, kanban, buffer inventory and demand sensing and response.We can also provide less than full reel quantities where it makes sense, and our Avnet Express e-commerce offering can also be of value to these buyers by allowing them to respond rapidly and find stock more quickly when they have upside on high mix low volume.
4 | November 2010
Same question for high-volume, low mix…..
Because there tends to be less volatility in the high volume order, our value proposition here is often less clear tomany EMS customers. Purchasers tend to focus on purchase price variance (PPV), so our value proposition here ismore aroundworking capital velocity.We can help these customers deliver productsmore efficiently froma working capital perspective, particularly on those goods that are less fungible (semi-custom).Wemay also be in a position to provide demand creation pricing advantages on semi-customcomponents.
Avnet’s Gerry Fay In addition, Avnet can provide value add capability around
programming, custom cable and connector assembly, etc for HVLMengagements.
Given the fact some lead times are stretching,what should buyers knowwhen they are currently placing an order?
That is an excellent question.We can give customers real time access to inventory positions via our Supply Chain Central offering. This allows themto see their pipeline so they can do ‘what if’ scenarios to determine their ability to increase or decrease their production based on their pipelinewith Avnet.
We also regularly publish commodity lead time trends so the
purchasing community knowswhat is happening fromamacro perspective.We consistently update lead time and delivery information to our customers so they can quickly assess the impact of changes to their supply chain.
I can say that without exception, in this scenario, those customers
who have robust supply chains implemented with their supply chain partners like Avnet have faredmuch better than customers who do not.While no one is able to predict all lead time changes, when customers provide us a regular forecast, our supply chain programs enable us to flex when demand surges come. In cases where the combination of increased demand and extended lead times occur, those customers were able to get a faster,more positive result to their demand shortfalls. In short, customers who take a total cost of ownership approach to supply chain risk enjoy significant competitive benefits as compared with those customers who drive a PPV supply chain strategy.
www.avnet.com www.electronics-sourcing.eu
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52