View fromthe Top
Keeping control of costs
With component costs escalating due to raw material price hikes, suppliers are working hard to keep costs low for customers Rapid Electronics explains
Rapid’s head of sales, James Bell
Rising costs for commodities such as copper, tin and oil and subsequently long lead times have been amajor issue for this industry throughout 2010, resulting inmany component buyers having to pass on price increases to customers.
With a core product base in passives, discrete semis,
optoelectronics and ICs,medium-sized distributor, Rapid Electronics, has purchasing offices in China and Taiwan and close sourcing links with the Far East. Optos has been amajor growth area in recent years and this is reflected in the strength of the company’s LED sales.
Rapid has always aimed to keep costs low for customers and price
competitive with higher volume distributors. Rapid’s head of sales, James Bell, explained: “We have seen
significant increases in the prices we pay for components over the last 12months, principally those sourced fromChina and the Far East. This hasmade it difficult for us to forecast ourmargins due to the variable prices we receive fromour suppliers, whether OEMs or intermediaries.
“Despite this, we have tried to avoidmaking price hikes across
the
board.Many of our account customers have placed forward or schedule orders on fixed pricing contracts and we are committed to honouring this in all but themost extreme cases, even if it affects ourmargins. Otherwise we look at price rises on a product by product basis. It is amatter of striking the balance between keeping our customers happy andmaking the right commercial decision for the business.”
Of coursemany OEMs and CEMs anticipate commodity price 4 | April 2011
increases and build them into their price structures to avoid sudden price increases.
Bell continued: “In some circumstances we have been forward
buying ourselves in this inflationary period to try to get the best possible price and protect our customers.”
No distributor has been immune to the allocation issues that
have been affecting the industry since 2009, but Rapid Electronics offers a solution for customers waiting for branded components fromtheir traditional suppliers on long lead times. The company offers competitively priced components under its own Tru brand including capacitors, resistors, LEDs, discretes and terminal blocks.
Bell explained: “These components have been specifically sourced
as close specification alternatives to their branded counterparts. Stock levels are healthy and samples are available for customers to try. Having our own brands gives customers an important option in periods of allocation.”
Despite themarket conditions, Bell is bullish about the future: “I
amproud to say that Rapid has performed well during a difficult year. Overall billings are growing and we are ahead of 2008 levels, our website is achieving record sales and the stock situation is improving all the time.”
www.rapidonline.com www.electronics-sourcing.co.uk
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