There are times when I wonder why companies have purchasing departments. Wouldn’t it be a great cost reduction to get rid of the overhead for this group and just let designers pick suppliers and set component pricing? A demand planner could interface with contract manufacturers that would keep costs competitive and take care of all […]
Turning Ordinary to Great Read More »
Based on some of the replies to my blogs and conversations with customers, I have noticed that some individuals are confused over single and sole sourcing. I will start with definitions and then share some observations and thoughts on the subject. Sole Sourced: a component for which there is only one manufacturer capable of making
Thoughts on Single and Sole Sourced Components Read More »
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 »
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 »
In our work at freebenchmarking.com, one of the surprising findings is the amount of cost reduction available to companies by just implementing pricing that they have already achieved with suppliers. In times of economic uncertainty and with price reductions getting more difficult to achieve, companies can’t afford to let profits leak away. We see two
Savings in Your Backyard Read More »
Knowledge chains enable supply chain performance. They bring together the information and context that let you make decisions and take actions. Gaps in a supply chain are noticed and fixed immediately, but holes in a knowledge chain often go undetected. This is because supply chain gaps are usually catastrophic, but knowledge gaps are performance-limiting. How
Many Advantages of a Strong Knowledge Chain Read More »
