Recent high-technology manufacturing market data and the unpredictable swings in global supply and demand are now pointing to oversupply and inventory build-up in the supply chain, requiring significant cost-saving steps for effective supply chain optimization by manufacturers.
According to Exforsys’s definition, comprehensive supply chain optimization is the application of processes and tools to ensure the optimal operation of manufacturing and distribution in the supply chain. With respect to electronic components’ role in the entire electronics supply chain, ideal optimization activity starts with recording and monitoring various relevant data:
· Demand across products ranges
· Seasonal fluctuations
· Supplier lead times
· Completion of supplier deliveries
· Changes in order volumes
Upon analyzing the data listed above, the next approach to achieve effective optimization includes the following two strategies:
1. Mitigation of at-risk or excess inventory
2. Component cost reduction by taking advantage of lower-cost components’ availability in the global markets
Additionally, the following steps are suggested to reduce the total cost of at-risk or excess on-hand components:
· Identifying at-risk inventory
· Value-recovery analysis
· Effective customized inventory management programs for at-risk inventory mitigation
Substantial savings are highly possible through implementing a smart procurement strategy during the current market condition, where fluctuations between supply and demand are creating notable variations in the total price. Based on the component type and market condition, the difference in price can potentially be significant, thus creating either saving opportunities or adversely impacting OEM and EMS companies’ TCO. By closely watching the critical factors impacting the global market, OEM and EMS companies can proactively plan for an efficient production cycle, therefore, improving their bottom line.
Given the challenges and unpredictability of today’s global electronics supply chain, aligning with a well-qualified supply chain solution partner is critical for successful implementation of such optimization programs. A few criteria to consider when selecting a qualified and trustworthy supply chain partner include:
· Real-time visibility and access to the global markets
· In-depth knowledge of components types
· Strong data-mining capability with a robust IT system
· Global logistics networks
· An integrated system to support programs such as vendor managed inventory, just-in-time delivery, demand-driven fulfillment and obsolescence management
· Close and long-term relationships with customers and suppliers
· Proven experience with similar programs
Obviously, there is no “one-size-fits-all” solution; however, aligning with a credible and qualified supply chain partner to collaborate with on strategies before potential challenges emerge will be the key to success of TCO enhancement for OEM and EMS companies in any market condition. OEM and EMS companies need to partner with a trusted supply chain solution provider to give a detailed analysis of their at-risk inventory to offer customized solutions fitted for the specific needs of the manufacturer.
Advanced MP Technology, with over 40 years of experience in the industry, is equipped with industry experts, global logistics networks and robust data mining capability to be the best supply chain partner and solution provider. Contact Advanced MP Technology experts today to learn more about their customized and effective supply chain solutions.