Get the latest updates from our blog

19 Mar, 2020 / BY Neil Sharp

What's new in global electronics manufacturing procurement?

procurement-electronics-manufacturingWith the material cost of an electronic product frequently accounting for anything from 50% to 80% of a product's total outlay, and 'standard' lead-times currently ranging between 4 and 24 weeks, skillful leverage of the global supply chain has never been more critical.

Worldwide, the electronics manufacturing industry continues to bear the brunt of component shortage issues, new environmental regulations, tariffs, the US-China trade wars and more recently, the impact of the Coronavirus.

And there is little doubt that electronics manufacturing procurement professionals are facing increasing pressure.

The challenges of material procurement

A 2019 global procurement survey, conducted by electronics purchasing and supply chain experts EPS News and electronics industry media company Aspencore, provides some compelling insights into the issues currently impacting the global electronics manufacturing supply chain.

One of the key themes of the study was an exploration of what the concept of "global" really means for those tasked with material procurement.

What it reveals is that, for many buyers, the mantra "think globally, act locally" would appear to be far closer to the truth.

This is in part down to varying customer requirements from country to country, along with inconsistencies in pricing across different regions, and a lack of availability of global franchises.

Regional variations in approach

Where and how buyers choose to source their information varies quite significantly depending on their geographic location.

Buyers operating in Asia-Pacific, for example, tend to be more influenced by intelligence gained from exhibitions, events and social media.

Those based in Europe, the Middle East and Africa (EMEA) meanwhile, place greater emphasis on information gleaned from distributor and product aggregator sites.

The survey also cites some interesting variations in buyer skill-sets from region to region.

Worldwide, those in electronics purchasing management positions have an average of 16 years' experience in the role, with 87% reporting that they were able to exercise some level of independence.

Buyers based in the Americas, however, were shown to have nearly twice the experience of their Asia-Pacific peers, with those operating in Asia-Pacific also tending to disagree less with their managers and peers than those in the Americas and EMEA.

Despite some regional differences, however, there is a lot more common ground to be found when it comes to buyers' pain-points.

Sixty-five percent of respondents report they feel pressure from their company to "do more with less", while 58% believe that their workload is negatively impacting on their ability to do well.

Fifty-five percent also express feeling a disconnection between themselves and the professional communities outside of their companies.

The distributor-supplier relationship

There are also signs of a more distanced relationship between distributors and suppliers, with many component makers shifting away from programmes that incentivise distributors to promote particular products.

At the same time, customers are leaning more towards component makers - with just 22% relying on distributors, versus the 32% that are looking to component suppliers to deliver their supply chain requirements.

Despite all this, authorised distributors still remain the first choice for the significant majority of global component supplies - with 68% of buyers opting for distributors that provide the same products and services worldwide and 58% prioritising the consistency of global pricing for the products they procure.

Supply chain support

What the ESP News study also highlights is that both buyers and distributors are looking for a greater degree of support from their suppliers.

Just 19% of respondents said they feel "very experienced" when it comes to building international supplier relationships, while 14% said they have confidence in their global supply chain coordination abilities.

Interestingly too, 80% of buyers say that they would prefer to work with partners who could take over the management of their international supply chain operations.

With so many pressures currently impacting the electronics manufacturing supply chain, there can be much to be gained from partnering with an Electronics Manufacturing Services (EMS) company that has the resources, focus and leverage to get the best out of the materials procurement process.

Minimising supply chain disruption, and achieving a competitive advantage, will rely on having an agile, hybrid and multi-faceted procurement approach - whether it's through the scouring of regional markets, the securing of last time buys of strategic parts or the accessing of excess inventory.

Ultimately too, the right procurement methodology will depend on the the unique service requirements of each customer to ensure deliveries are achieved on-time and in-full.

New Call-to-action

Click subscribe now to consent to instant blog updates

Pathgray-2

Comments

Currently, there are no comments. Be the first to post one!

Comment on this blog