Feature
Many large electronics companies are buying fromdistributors more to reduce total cost By James Carbone
It’s no secret that "Some of ourmost strategic suppliers are
distributors," said TomLinton, chief procurement officer at Flextronics.
the breadand butter customers for electronics distributors are small tomedium sized OEMs and electronics manufacturing services (EMS) providers that lack the purchasing volumes to buy directly from electronics
componentmanufacturers. Such companies typically buymost of their component
requirements fromdistributors and take advantage of the valueadded, supply chainmanagement and design services that distributors offer. However, while smaller companies buy the bulk of their BOMs (bills ofmaterial) fromdistributors, even some of the world's largest OEMs and EMS providers purchase semiconductors, passives, connectors electromechanical devices buy fromdistributors.
Some large OEMsmay only buy fromdistributors
authorized and independent during times of component shortages or to support new product development efforts. But other large electronics equipmentmanufacturers purchase
38 |May/June 2013
EVEN THE BIG GUYS BUY FROM DISTRIBUTORS
parts fromdistributors regularly, and some are increasing their use of distributors to take advantage of inventory stocking programs and favorable payment terms the distributors offer. More largemanufacturers are looking to distributors to help themreduce total cost and view themas strategic supply chain partners.
“We do business with a couple hundred distributors, some
of themon an asneeded basis, but other big distributors are very strategic to us,” said TomLinton, chief procurement officer at Flextronics, the second largest EMS provider in the world with $29.4 billion in revenue in its last fiscal year. "In fact some of ourmost strategic suppliers are distributors."
Linton said Flextronics uses a lot of distributors because it
has about 10,00015,000 active suppliers at any time and about 1,000 customers andmoves about 600,000 part numbers per day.
“We need distributors that have large product coverage,"
which is why Flextronics uses big distributors including Arrow, Avnet and Future among others.
“One of the advantages of some large distributors is they
have suppliermanaged inventory programs,” said Linton. “They will carry inventory for you and you pull it into your factory as you need it."
Many distributors also offer inplant stores and auto
replenishment programs, which help reduce cost for OEMand EMS provider
customers.Many also have extended payment terms for customers.
“Our business with distribution is dictated by a number of different variables," said Linton. “Sometimes it is cost,
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