With 2016 proving unpredictable, supply chain flexibility is a primary concern for OEMs going into 2017. Against this backdrop, Electronics Sourcing’s Thomas Smart discusses industry trends with Future Electronics’ corporate vice president Karim Yasmine.
On the subject of unpredictability, macro economic affairs have caused a fluctuation in currency exchange rates, triggering component prices to move with them. In response to this purchasers should look for a fixed price on continual purchases. In addition to economic instability, rapid technological developments are also shortening product life cycles, which means distributors require contingency plans to help identify obsolescence issues early to allow for replacements to be found or, in some cases where no immediate replacement can be found, for a redesign.
Karim explained further: “We have a sales system which can identify six to twelve months in advance when a component is reaching end-of-life. This allows us to work with customers to find replacement components or re-design the product.”
The story doesn’t end there. In addition to economic and obsolescence issues, the rapid acceleration of new industrial applications is also feeding into the unpredictability of the supply chain process. For example, distributors need to react quickly to emerging market disruptions driven by concepts such as Internet of Things and autonomous vehicles. This can place heavy demand on particular component types, which, in turn, leads to shortages. Being able to make decisions rapidly is key for purchasers and should be reflected in their distributor of choice. Karim said: “Future is always looking out for the next emerging market being able to identify a potential emerging market allows us to react.”
Recent trends
Another recent trend has been the consolidation of the component manufacturer base. This was driven by a large number of mergers and acquisitions narrowing the market to fewer manufacturers, which in essence, gives purchasers’ less choice. With component lines falling under fewer manufacturers, access to lines is diminishing and becoming more restrictive for distributors.
Karim thinks differently: “We are seeing the opposite, when component manufacturers merge, our relationships with them allows us to gain access to the lines they have acquired, ones which we may not have had access to.”
Ultimately, understanding your supplier’s capabilities is the most critical process. Knowing they can be able to adapt with you can minimize downtime and reduce time to market. Karim concluded: “As Future is privately owned it allows us to make decisions quickly. If a client needs six additional months of stock, of a soon to be obsolete part for example, we can get the finance for it.”