Strategic Sourcing


The SX-SDCAG card module is a highly integrated system for 802.11a/b/gWLAN that has an integrated Atheros AR6002 single-chip design and very low-power consumption


"The role of the procurement teaminvolves


coordination between suppliers and our development team," said Odani. "Sometimes our development teamrequests custom components. Purchasingmeetswith suppliers to get newideas and any information that our development department is seeking," he said.


In some cases, the


procurement teamat Silexwill learn of a newtechnology froma supplier and bring the supplier into Silex tomeet with the development team.


For example, Silex is aggressively developing


products related to audio/visual (A/V) connectivity products forwireless LAN. "Sowe try to getmore information concerning those products and are looking for suppliers that have technologies related towireless LAN or A/V connectivity," said Odani. Some of those suppliers are distributors.


Support fromdistributors


"They (distributors) sell components, but at the same time they give us technical support," Odani said. "It's on a case-by-case basis, but the Silex development teamsometimes expectsmore in-depth support fromdistributors andwe get it," he added.


Itmakes sense for Silex to use distributors for technical expertise


because the company buys about 50 percent of its components fromdistributors.


"The higher percentage of what I buy is fromdistributors," said


Doug Smith, operationsmanager, who is responsible for buying electronic components at Silex America Technology's Salt Lake City, Utah operations and for the company's operations in Japan if there are component shortages. He buys semiconductors, passives, connectors and bare circuit boards for prototype builds and production.


"There is a small percentage that goes directly to the


manufacturer. Our volumes are small.We're talking less than 1,000 inmany cases," he said.


Smithmay buy fromcomponentmanufacturers when the quantity is 5,000 ormore. "In that case, I can get a better


The Silex SX-500 serial server family allows sharing serial devices on traditional or wireless networks


price fromthemanufacturer rather than from


a distributor," said Smith. While some OEMsmay use two dozen ormore


distributors for electronic components, Smith said he uses 10 or fewer distributors. Inmany cases he


uses just four. “I have the top four that I look at first. They


commonly carrywhat has already been spec'd in by the development projects. Rather than try to spec in a newproduct or newvendor for the products, it is


easier to gowith the already spec'd in part," said Smith. Smith has blanket POswith Avnet to purchase 10,000


chips or so and the distributor ships themat different times as they are needed. "Thatwaywe get a better discount as


well asmeet the needs of our customers," said Smith. Avnet holds the parts in inventory for Silex. "This is done


for specific semiconductors thatwe need," he said. The final word


Whether a part is purchased from a distributor or directly from a component manufacturer, buyers often have the final say in terms of which suppliers will be used if there are several options, Odani said.


"Our buyers have the authority to choose the distributor


channel, but it depends on the project. In some cases, our customers already have agreed upon a supplier for a certain component so we have to respect that," he said.


Odani said about half of the company's parts andmaterials are


directly sourced fromcomponentmanufacturers because "by purchasing directly fromthemwe can get a price advantage. However, the componentmanufacturersmay request that we purchase through their distributors," he said.


While Silex often uses suppliers that have a technology that


the company needs, suppliersmust alsomeet the quality, cost and delivery requirements in order to win new business and keep existing business.


"Cost is not ourmain concern," said Odani. "Quality always


comes first. If the suppliermeets our quality requirements than we consider the cost." Silex also factors in the quality of the business relationship with a supplier.


Smith said Silex has screened suppliers over the years for


quality and has a preferred supplier list. "Over time Silex has come to know the distributors and


manufacturers that we order components fromthat provide the best quality of product and the best cost," Smith said. "We have been able to weed out those that we don't get good quality from."


Price arrangements and delivery performance also help


determine which suppliers Silex uses and howmuch business each supplier gets.


www.silexamerica.com 22 | June 2011 www.electronics-sourcing.com


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