FEATURE DISTRIBUTION & SUPPLY CHAIN MANAGEMENT


DEMAND? THEN SUPPLY The benefits of partnering with a distributor on your supply chain programme


Words by Sarah Blix, senior manager, supply chain solutions, Digi-Key Electronics A


s manufacturers deal with ever- fluctuating customer demand and orders, it can be tricky to know what parts to supply and stock, and how much to order and when. From handling scheduled orders, to material requirements planning (MRP) share programmes, there are a variety of supply chain programmes available from distributors to aid the manufacturer. From improved efficiency to cost savings, the benefits of outsourcing supply chain management are providing contract manufacturers with smart options to boost their bottom line, and peace of mind that they receive products when they need them.


TYPES OF SUPPLY CHAIN PROGRAMMES Handling scheduled orders is a basic service, where a customer might place an order with monthly, or weekly, release. Then every month or week, a set amount of stock items are shipped to them. Frame contracts or blanket purchase orders provide an opportunity for contract manufacturers (CMs) to avoid release dates or quantities. For example, at Digi-Key, a bond programme is put in the system, and we’ll bond stocks so that when they are ready to release something for production, the order is loaded and shipped from the bond. Digi-Key will also bond parts and set up a quantity based on both an estimated annual usage (EAU) and the lead time of the part.


Being able to provide mini reels as


part of supply chain programmes is of value to CMs; whether it’s standard component manufacturer quantities or set increments, to meet their quick- turn production needs. In special cases, the right distributor creates a depleting


6 SEPTEMBER 2019 | ELECTRONICS


bond programme: with the threat of obsolescence but the demand both still present for an item, a programme such as this can ensure a smooth transition to the new part, as the stock for the desired items depletes.


BENEFITS OF PUTTING YOUR SUPPLY CHAIN ON A PROGRAMME There are several significant benefits to the customer or manufacturer for partnering with a distributor on their supply chain programme. The biggest two are efficiency gains and cost savings. An example of efficiency gains could be the allocation of stock to a customer, without releasing it until production is ready, as forecasted. Committing that inventory to the customer is key to both efficiency and cost. From a cost savings perspective,


the price is locked in a supply chain programme, so manufacturers know what they’ll be paying for a part, depending on its demand. Pricing won’t fluctuate, which is a benefit to everyone from a forecasting perspective. And there’s no need to spend time searching for stock, because you know the distributor running your supply chain programme has the stock and is ready to ship it when needed.


Sarah Blix, senior manager, supply chain solutions, Digi-Key Electronics


FORECASTING CONSTRAINTS With customers who participate in an MRP share, their forecast file is imported on a weekly basis, and can be read up to 30 weeks ahead of forecasted demand. The benefit of this is that distributors can pre-empt constraints, expediting any necessary orders to ensure coverage. This is especially important to a contract manufacturer that has customers who tend to pull in production demand, helping them with planning. And since the stock is hard allocated


to the customer, no one else can scoop up their stock when demand is tight. There can be a lot of stock out in the channel. But the benefit of putting parts on supply chain programmes is the peace of mind, knowing the stock is committed to the customer and the price is locked, ensuring bottom line improvements through time and cost savings. Look for experience with supply chain programmes and dedicated supply chain analysts when looking for business partners. Can they work closely with their local business development staff? Can they provide same-day service to customers in your region? You should expect an active relationship from your business partner when it comes to supply chain solutions.


Supply chain programmes serve a valuable role to a distributor’s customers, helping them go from the start-up phase to mass production. The value for forward-thinking companies on their supply chain programmes could be a competitive edge and time-to-market advantage. Are you currently leveraging these options?


Digi-Key Electronics www.digikey.co.uk


/ ELECTRONICS


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