Smoothing out bumps during supply-chain expansion
Electronics manufacturers are expanding their supply chains across regions which means significant and often costly disruption to the OEM supply chain.
Barbara Jorgensen, EBN Community Editor -- EDN, October 6, 2011
Electronics manufacturers are expanding their supply chains for one of two main reasons: They design their products in one region but manufacture them in another, or they want to accelerate growth by expanding organically. In either case, expansion across regions means significant and often costly disruption to the OEM supply chain.
“The biggest challenge we
see is expectation,” says Ravi
Kichloo (photo), head of the
global business-migration team
at Avnet Electronics Marketing. End
customers expect the same
level of quality from their manufacturers,
no matter where
the vendor built the product.
OEMs expect consistent pricing
and delivery from component
suppliers, no matter the
location of the manufacturing
facility. So companies face a
choice: Duplicate their supply
chain from scratch or outsource
the portion that makes
sense. Increasingly, says
Kichloo, suppliers and customers
are turning to distribution to
manage business migration.Global distributors, such as Arrow Electronics, Avnet, Digi-Key, Future Electronics, Mouser Electronics, TTI, and WPG, have invested in the necessary infrastructure to duplicate services across regions. “We already do BOM [bill-of-materials]-analysis, pricing, programming, proximity-warehousing, inventory-pipelining, VMI [vendor-managed- inventory], and buffer programs,” says Kichloo. “We have made an effort to support those services globally and maintain the nuances of regional practices. We have the skill, the scope, and the team in place to be able to do this.”
Distributors are also helping
customers anticipate the types
of problems they’ll encounter
as they make the transition.
Component availability
and pricing differ from region
to region, and transferring IP
(intellectual property) for programming
purposes puts that
IP at risk. “Now that they have
multiple locations, they have
to look at planning and forecast
management, aggregating
demand for multiple sites, and
new business partners,” says
Kichloo. “We can make recommendations
[on those partners]
based on our experience with
EMS [electronics-manufacturing-service] providers and contract
manufacturers.”Distributors also must consider supplier relationships during a supply-chain transition. Suppliers may lose visibility into customer forecasts as business moves overseas. “We collaborate daily with our suppliers,” says Kichloo. Distributors can also help smooth out some of the pricing differences that occur from region to region. “More suppliers are providing global pricing, but we still have a way to go,” he adds.
According to Kichloo, the profile of the global customer is changing. Large manufacturers and OEMs with high-volume, low-mix profiles were the first to expand overseas. Now, second- and third-tier manufacturers—typically, low-volume, high-mix vendors—are also expanding. Because of that complexity, few of these companies are developing their supply chains from the ground up.
“This initiative is important for us and an activity that continues to grow as it becomes more global,” says Kichloo. “It’s important for suppliers, distributors, and manufacturers to collaborate very closely among themselves. In this way, we can guarantee the transition will be smooth.”
This story was originally posted by EBN.
—by Suzanne Deffree
Smartphones, tablets drive MEMS market
The market for MEMS (microelectromechanical-system) devices in consumer electronics and mobile communications devices should reach record growth in 2011, according to IHS iSuppli, which notes that the MEMS blockbuster this year is the three-axis gyroscope.
Consumer- and mobile-MEMS devices make up the largest sector of the market. Revenue should hit $2.25 billion in 2011, up by a record annual-expansion rate of 37%. This rate compares with the previous rate of 27% in 2010, when revenue reached $1.64 billion. Overall, the five-year revenue forecast starting from 2010 calls for growth by a factor of nearly three to $4.54 billion in 2015, equivalent to a compound annual growth rate of 22.5%.
“From the accelerometers and gyroscopes that provide intuitive motion-based displays, to the microphones that allow people to talk on the phone, to the bulk acoustic-wave filters that facilitate wireless-Internet access, MEMS devices provide many of the basic functions that make tablets and smartphones such compelling products,” says Jérémie Bouchaud, director and principal analyst for MEMS and sensors at IHS iSuppli.
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