TAKING AN INDEPENDENT PATH strategies for low sourcing of components in a constrained market

distributor, an OEM partner or direct from the factory.” To verify the chain of custody,

traceability documentation can be provided that identifies the name and location of all the supply chain intermediaries from the part manufacturer to the direct source of the product. If this traceability is unavailable, a risk mitigation plan is required. Finally, visual inspection, testing and physical analysis are performed on all incoming products.

The challenges of a highly stressed supply chain are forcing many medical device OEMs to rethink the way they source components. With parts such as multi-layer ceramic capacitors (MLCCs) and other low-cost components in chronic shortage with extended lead times for delivery, manufacturers must be able to get these parts on-time at the lowest possible cost without assuming additional risk


s a result, many are turning to independent or hybrid distributors for

long lead-time parts. For many companies, sourcing parts from the independent channel requires a significant shift in mindset. It also requires a comprehensive strategy for identifying and working with reliable independent stocking distributors to ensure they get components they need, when they need them. “For medical device manufacturers there

has been harmony in the supply chain for most of the past decade, so the need to identify alternative suppliers has not been as pressing as it is now,” says Mike Thomas, vice president and global general manager at Classic Components, an independent distributor based in Torrance, USA. “That means many companies have not invested a lot of time or attention strategizing about how to use independent distribution channels effectively.”

KNOW YOUR SOURCE According to Thomas, the mantra in his industry to eliminate risk is “know your


source.” To accomplish this, leading independent distributors invest millions to manage global supply networks, rate/prioritize suppliers, establish preferred supplier relationships and acquire the latest inspection equipment and utilize effective Quality Management Systems (QMS). “Over time, companies like ours have

developed a very complex method of identifying and eliminating risk,” says Thomas. “That includes knowing how to inspect and test components that come in to our facility, but also goes well beyond that.” It also means analyzing and inspecting

sources with an investigative diligence. What path did the parts take to get there? Only thorough examination and assessment of all these factors, in conjunction with traceability, can the risk be truly mitigated. “When we purchase components like

MLCCs, for example, we are purchasing from a direct source,” explains Thomas. “That could be a regional or foreign

Only thorough examination and assessment of all these factors, in conjunction with traceability, can the risk be truly mitigated

PURCHASING POWER The truth is that many of the shortages were predicted some time ago. As a result, leading independent stocking distributors like Classic Components have spent the past few years engaged in a long-term strategy of identifying, and investing in, directly sourced critical electronic components. By doing this, independent distributors

protect the supply, but are also able to lock in lower prices by making purchases before the inevitable changes driven by reduced supply and increased demand. To protect high-volume orders, a distributor can lock in prices and delivery dates for many months at a time. This ensures that the inventory will be there when the customer needs it and is not sold to someone else. In some cases, they can even make

speculative purchases for a customer and/or provide financing to purchase inventory when a qualified client has capital constraints.

RIGOROUS VETTING Another way to ensure the reliability of the independent distributor is to ensure they are thoroughly vetted. Established companies are used to complying with frequent requests for audits. In fact, some of the robustness of the quality systems implemented by independent distributors can be attributed to this activity.

CONTINUING SHORTAGES With significant shortages in many high usage electronic products needed in the medical device industry expected to continue for at least the next two-three years, the independent distributors’ seat at the electronic components sourcing table has never been more relevant.

Classic Components T: +44 (0) 1217 444 466


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