The results are in from the EBN poll on the Price-Supplier Equation. Fifty-five percent of respondents believe that the premium paid for being single sourced is greater than 10 percent, and more than half of these believe it is greater than 15 percent. This is a significant hike on cost and an unnecessary supply chain […]
Single Source Premium: Unnecessary Cost Read More »
The results of a recent EBN poll regarding the relationship between component price and volume are in — with strong support (75 percent) for the idea that a relationship exists. As reported in my blog a few weeks ago, this is the complete opposite of what I observe using freebenchmarking.com data. Faced with this dichotomy,
Price vs. Volume Poll: The Results Are In Read More »
I am a believer in using second sourcing as a primary security-of-supply strategy. I know some believe that close relationships with a single manufacturer can yield better overall value and better supply security, but I am not of that school. My position is that two sources provide leverage by creating competition, which is good for
Purchasing: Risks in ‘Virtual’ Second Sources Read More »
Out of capacity, lead times at 44 weeks, and price increases: Sounds familiar? Since my blog on volume vs. price last month, there’s been a continuing discussion of what sets the pricing of electronic components, starting with the question: “If not volume, then what?” I will share here some thoughts on component pricing, starting with
Putting the Volume-Price Myth to Rest Read More »
In a recent blog, I attempted to dispel the myth that there is a clear relationship between volume and price of electronic components. Many still find this hard to believe. They hold to the idea that price is somehow tied to manufacturing cost, which is related to volume. This is rarely the case in the
Who Benefits From Component Price Secrecy? Read More »
In a previous blog, I discussed some of the myths surrounding the relationship between price and volume. Another often misunderstood subject is “security of supply.” In analyzing our clients’ component spending, we frequently see unnecessary costs incurred that create an expensive (and often false) sense of “supply security.” Lytica’s freebenchmarking.com reports reveal the exorbitant dollars
Purchasing Strategies: Security of Supply Read More »
For years, I have been telling people there is no relationship between volume and price. Occasionally, I meet an enlightened soul who agrees with me. More often, I am met with blank stares of disbelief. Yes, I agree that, when you buy a few engineering samples, look at pricing on a distributor’s Website, and ask
The (Non) Relationship Between Volume & Price Read More »
Now that the Consumer Electronics Show (CES) 2012 is over and the flurry of Freebenchmarking.com activity resulting from it is under control, I have had time to reflect on the various participants at the exhibition and the issue of vertical integration. I must confess to being most impressed by the Koreans and would give them
Vertical Integration Champions Read More »
Exactly what knowledge do market-leading companies gain from vertical integration? My thought process here considers a very high-level product design process. Though I will portray that process as linear and sequential, the reality is messier, iterative, and probably chaotic. For my purpose, the process starts with a market spec, which defines the customer experience (a
Knowledge From Vertical Integration Read More »
I am in the business of price benchmarking and cost reduction, but even so, I am amazed at what supply chain professionals have achieved. With specials and deals of all kinds during the holiday season, it is astounding the value that is being passed on to customers at very low prices in electronic products. Thirty-two-inch
The Virtues of Vertical Integration Read More »
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