Globalisation, cost pressures and time-to-market comprise a string of factors that forces manufacturers of electronics equipment to find the best possible solution in managing their individual electronics supply chain. Steve Stafford, managing director of EBV-Electrolink, describes in this interview, how semiconductor distributor and service provider, EBV Elektronik is expertly managing this by offering a package of tailor-made supply chain programs, flexible world-class tools and experienced experts to implement it all. Watch out for it: it’s called ‘logistics on demand’.
Q: Can you describe the typical situation you find within customers in the electronics market place, with particular regard to globalisation?
A: Generally, our customers are concerned with the effect of an on-going globalisation process, which leads to an unprecedented pressure on prices and product life cycles. In order to stay competitive against known as well as unknown contenders, they are forced to increase their speed of innovation whilst at the same time reduce their costs at all levels of activity.
Q: What does that mean for customers' supply chain management?
A: For the supply chain behind a new product it basically means that they have to cope with four challenges: cost, flexibility, efficiency and risk. Cost comprises materials handling costs and working capital tied up in their inventory; flexibility describes the dynamics of their materials (inventory turns) and potential changes in their demand; efficiency spans from administrative processes to the organisation of their supply-chain-related information flow; risk includes everything from excess inventory and allocation to designed-in problems like end-of-life parts. All these challenges are highly intertwined and could cause the so-called domino effect that ultimately leads to production stoppage, rework and cost explosion.
Q: What can customers do to reduce their supply-chain exposure while maintaining a competitive position in the market?
A: Firstly, they could look at all links of the chain internally and externally to determine their individual set of challenges. It could span from a very advanced SCM process already in place, to a very basic one. Then they could determine their individual supply chain goals and a roadmap to achieve them. It basically leads to a situation where they leave no stone unturned in their SCM process to find hidden costs, problems, liabilities and inconsistencies. This would include their own organisation and all external partners who own a link of the chain in some form or another.
Q: What can a specialist distributor like EBV do to support its customers in their supply chain management strategy?
A: We offer a comprehensive program for SCM support - called 'logistics on demand'. It spans from providing consultation to customers and analysing the actual situation with our supply chain specialists, to potentially implementing a Web-based replenishment system that helps them transparently manage the supply chain more effectively. Whether customers are looking for an isolated solution for specific parts or a complete TCO (total cost of ownership) analysis with subsequent component standardisation, vendor reduction, process automation and finally the definition of tailor-made supply methods like just-in-time or Kanban - we have the answers.
Q: How did EBV develop this program?
A: Materials management and automated processes for increased efficiency have been, and still are, core differentiators for a leading components distributor like EBV Elektronik. We have worked with supply chain management ideas and concepts for many years. Examples are backlog and forecast management, information management (for PCN or EOL), supplier reduction, inventory programs, EDI and many more. What has changed over the last few years is the pressure to increase the performance of our offerings through even more automation while reducing the cost of working with us. It is important to understand that this is not about components pricing but about total cost of ownership. And this comprises a variety of factors, as described before and as can be seen in our TCO checklist.
Q: Can you describe how your supply chain experts operate and how the implementation process works?
A: Our supply chain experts work closely with the EBV sales force and our customers, from the discovery or qualification phase through the evaluation, definition, implementation and review phases of an SCM project. The combination of an analysis, the TCO checklist and a specifically agreed safe passage transition plan for the actual implementation of an SCM project ensures that all areas of potential problems/savings are considered and made transparent. The safe passage transition plan is the core to the success of a project since it comprises all required actions by both us and our customers, and highlights areas of risk with other supply chain partners (suppliers) as well as ours. Our experts will drive the plan and act as a consistent point of contact. The plan is the basic reference point on all levels within each organisation.
Q: What areas of the supply chain are most affected by LoD?
A: It depends on the customer requirement. Everything is possible from a simple, specific solution to a fully-fledged project but the core areas affected are procurement management, physical inventory, quality, materials management, manufacturing and invoicing. That includes the actual purchasing, forecasting, order management and many subsequent steps, which are significantly improved by our solutions. Within the inventory, stock values can be reduced while increasing the flexibility for manufacturing or machine utilisation with maintained quality levels and reducing rework cost and/or work-in-progress stock. It all boils down to finding the hidden cost, time and inflexibility that requires the customer to spend unnecessary financial or other company resources on fixing things that should not have been broken in the first place.
Q: Can you be more specific about tools and services within LoD?
A: LoD is a program that encompasses many services and a variety of tools that can be seen in a discrete but also in a combined way. The logic behind it is that the customer is enabled to choose what they need. When it comes to a longer list of requirements they should be safe to assume that these items fit together in a transparent chain of services, information and/or tools. It starts with simple things like special handling/packaging requirements or individual bar code labels. It then continues with value-added services, shipment consolidation and buffer stocks. Finally, it grows into relatively complex topics like EDI, forecast management, consignment and JIT/Kanban and automated Web-based replenishment, as you would find with POURS.com. The more complex a topic is, the more responsibility is shared between customers and EBV to make it work, and this makes it worthwhile for both partners.
Q: Are there any solutions that particularly stand out, not just in LoD but also in supply chain management in general?
A: Since customers have different sets of challenges, solutions must be individual. What we have seen working quite effectively with a variety of customers is the combination of buffer stock at our premises, forecast management and just-in-time delivery. You can add services to that as you see fit, to serve additional benefits like improved information management, more effective incoming inspection and lower inventory levels. By the way, all this works with our POURS.com solution. Customers can precisely choose what they want to run via POURS.com and get exactly what they want.
Q: How exactly does POURS.com work?
A: POURS.com is a Web-based replenishment platform that supports the majority of replenishment models like JIT, Kanban and VMI (vendor managed inventory) and can be used across a customer's multiple sites. Together with the supply chain experts, customers can define their specific rules in a POURS installation. Then, all they need is a POURS bar code scanner for the data feed, which automatically triggers EBV action. And POURS, as a platform, is not limited to EBV or its sister company. The requirements of other companies can also be handled via POURS.
Q: What are the potential benefits?
A: We believe that POURS.com is the most advanced SCM platform in the components industry, and as such, specifically opens up the process of commodity purchasing to a variety of improvements: higher inventory turns and therefore lower inventory values, higher machine utilisation in the production process and faster incoming goods inspection. The typical result is cost reductions and increased flexibility that can easily add up to 10% of purchasing volume. This process releases the procurement team from the daily purchasing processes and enables the focus to be on high value and strategic parts - allowing time for concentration on supplier relationships and strategic activities.
Q: EBV traditionally positions itself as a specialist broad-liner for the distribution of semiconductors. How does this program fit with your highly technical reputation and support strategy?
A: True, we are highly specialised in semiconductors, and represent the leading suppliers in the industry. Across Europe we employ nearly 100 application specialists of all technology areas to support the complex projects of our customers. However, in order to get technology to market in a competitive way, our customers need more than just excellent technical support. Supply chain management and technology support are highly intertwined. An example is the question of which components should be designed into an application to differentiate and to stay price-competitive? This has technical dimensions as well as logistical ones, especially when it comes to the supply-chain friendliness of components, previously a completely underrated aspect. When our engineers talk to customers in the early stages of projects, this aspect might make it worth including in the discussion, an experienced salesperson, a supply chain expert, or the use of tools that can help determine 'supply chain friendliness', like our Pròmiere suite of SCM information tools.
In the end, modern component distribution as EBV lives it, is neither one nor the other alone - neither technical support nor SCM as a single offering. It is both! And the more and the better of both that we offer, the better it is for our customers.