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Supply Chain By Tom David, Vice President of Supply Chain & Operational Solutions, Riverwood Solutions
ost think that strategic sour - cing should start when it’s time to introduce product in-
influence from vendors. Often the latest in component
to production, making decisions about where to source components and what the assembly strategy should be, right? Wrong! The component sourc-
ing strategy needs be aligned with the overall business strategy, a fact recognized in countless publications but missed by many OEMs. The de- tailed work should begin during the product design process. Developing the sourcing strategy
in parallel with the new product devel- opment will encourage component se- lections that match availability and the application requirements of the product life cycle. It’s tempting to work with the local manufacturer or distrib- utor to design their latest device into your leading edge product, but they have a vested interest and bias in making their product attractive, and this may not be advantageous to your product. These critical decisions need to be made without time pressure and
technology is designed into a new product without considering avail- ability for volume manufacturing in time to support the production ramp. Sometimes the component manufac- turer has quality issues that arise prior to general market availability that stalls the entire release process, endangering not only their product introduction, but also those of any- one designing in that device. A design department might find
this themselves, but a Supply Chain Strategist can be focused on such matters and assist in identifying al- ternate sources to mitigate the risk of such an event occurring. Being the vigilant and slightly pessimistic lot that they are, Supply Chain Strate- gists will most always be planning for the worst and hoping for the best, knowing that a “Plan B” should al- ways be available. This is an example of where a
Supply Chain Strategist can provide enormous value. By working side-by-
More Parts. Less Waiting.
side with the product engineering team, they can develop a supply chain that is consistent with product de- mands, and recommend relationships with suppliers that bring specific, ap- plicable expertise. This strategy may provide co-development opportunities with suppliers that can result in best- in-class products, reduced time to market, and integration with the sup- ply chain from the very beginning. This strategy can yield an efficient, low cost solution because both compa- nies are working together, aligned to one common goal.
agreed upon at the beginning of the relationship, driving both parties to a common set of goals. l
Expectations are set and formally
times be shared with the supplier. l
can provide the best solution or mul- tiple solutions to a given design challenge. l
The cost of development can some- With the supplier’s expertise, they
Supply chain authority Tom David.
oped in parallel with the product, which significantly reduces the de- velopment lead-time. l
The supply chain is being devel-
contingency planning in regard to component supply from the very be- ginning.
The supply chain can allow for
The supplier wins because: l
business if their design is approved by the client company. l
They have assurance of future
ship with the OEM. This can be the perfect scenario,
They have a more robust partner-
but only if certain elements are man- aged very carefully. The supplier selection process is
High Quality NTE and ECG Products
Semiconductors Capacitors, resistors
Heat shrink tubing, solder products
Chemicals, much more
No minimum order Cross-referencing for thousands of parts
Prepaid ground shipping on orders over $50
obviously very critical. At a mini- mum, the right supplier will be fi- nancially stable, with a long history of such relationships, able to protect your IP and theirs, and be willing to design beyond its own manufactur- ing capabilities. The design should not maximize
the supplier’s product content at the cost of compromising product quality or features, but should meet the OEM’s desired goals. After selecting the best suppliers
and design partners, the entire supply chain can be developed and managed during the design process itself. In conclusion, a component
sourcing strategy should not be an afterthought or derivative of the de- sign process. Because the supply chain for any given product can drive between 35 and 80 percent of the cost of goods sold (COGS) and most of the time-to-market constraints, sourcing must be seriously considered during the product development cycle in or- der to be effective and provide opti-
ity, and the overall sustainability of the product life cycle. Never underestimate the value
and importance, or overanalyze the cost, of early inclusion of your supply chain team. These supply chain guys can have a hugely positive impact on your product’s ability to meet its goals in terms of performance, mar- ket penetration and of course cost of manufacture.
Editor’s Note: Tom David is Vice Pres- ident of Supply Chain & Operational So- lutions. He came to Riverwood Solutions with over 30 years of executive manage- ment experience in supply chain, opera- tions, electronics manufacturing, pur- chasing, and materials management. He has held executive management positions at Alcatel, Flextronics, Sanmina-SCI, Norvell Electronics, and GSCS. Tom has directed EMS operations and internation- al manufacturing with annual outlays in excess of $400M; has managed full P+L responsibilities for a $24M operation; managed supplier negotiations, planning, purchasing, engineering, product design and production, materials, quality and repair. Tom has also had repeated success creating, developing and implementing operations for electronic manufacturers’ entry, execution, and/or expansion into international markets. Riverwood Solutions’ mission is to
provide OEMs and Brand Owning Enter- prises with the critical expertise, proven processes, and the broad experience re- quired to make supply chain execution a competitive advantage. Riverwood strives to make clients more competitive by lever- aging its expertise and experience to im- prove the clients’ manufacturing and sup- ply chain performance. For more about Tom David and River wood Solutions:
www.rwsops.comr
March, 2015
Strategic Sourcing: When Do You Start? M
mum performance. Supply chain specialists should
be involved early in the product cycle to prevent issues from negatively af- fecting product cost, timing of mar- ket introduction, production scalabil-
The OEM wins because: l
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