Jellybeans and Revenue Streams: Rethinking Electronic Component Costs for Business Growth
Your business relies on a myriad of components, all of which are necessary, but the overall cost can be hard to keep track of when analyzing your organization’s spending. They end up looking like jellybeans in a jar—the number doesn’t matter, the weight doesn’t matter; they’re simply there.
Electronics companies often overlook the fact that overspending on components, including those seemingly inconsequential ones, can significantly impact their financial performance. Much like jellybeans in a jar, when these expenses are tallied, they can accumulate into a substantial sum, ultimately diminishing revenue significantly.
Analyzing the Value of Your Components
Due to the lack of transparency in the market, you could be overspending on your essential components. In fact, businesses may end up paying more than necessary by retaining components that, while initially low-priced, have significantly increased in cost due to their widespread use across numerous devices. In our experience, many enterprises aren’t actually getting the “bang for their buck” because they’re spending impractical amounts on components without realizing.
Cost-Tracking is Essential to Make the Most of Your Electronic Components
Many businesses find it difficult to analyze what’s essential and where they’re overpaying when faced with the challenge of managing budgets. The more manufacturers and suppliers you deal with, the more difficult this can be. With a wide range of components available, how do you keep track of what’s truly vital for your business and what’s ultimately a waste?
That’s where cost-tracking software comes in.
Historically, tracking expenses on, presumably, lost-cost items wasn’t economically feasible. As a result, many companies took a broad-brush approach that ignored the potential ROI on their individual components for the understandable sake of convenience. What we’ve found now is that not only did such an approach do enterprises few favors, but the spending burden once assumed of cost-tracking is no more.
Today, keeping track of the individual components provided by a range of suppliers—how much they’re costing you and whether you’re truly paying a competitive price–is easier and cheaper than ever. With the help of AI and other budding solutions, businesses can get a fuller and more comprehensive sense of what they’re spending on what components, and whether the price they’re paying is the best price they could get.
Lytica Makes Tracking the Cost of Your Components Easy, Intuitive, and Profitable
While new technologies make tracking the cost of the individual components easier than ever, many businesses still haven’t leveraged these advances. That means they’re likely paying too much and getting too little.
Poor information collection from product manufacturers can sometimes be the main culprit in this struggle, reducing your ability to get an accurate sense of how much you’ll be paying compared to other suppliers. Additionally, while it’s essential to get quarterly cost-materials reports from the manufacturers of your components, this is often easier said than done. Businesses that attempt to do so manually find themselves juggling contracts, sorting through piles of documents, and often missing key areas where they could save money or get better service.
We aim to fix that.
Using Lytica’s spend analytics and risk intelligence products, you can monitor what you’re paying from a commodity and component level. With our solutions, you can get a better handle on your budgeting and cost savings in a number of ways:
- Benchmarking all of your component pricing to see how your costs are tracking with the marketplace and making adjustments when your competitiveness is falling behind;
- Renegotiating the pricing on your “jellybean” components to an appropriate market value if you feel as though they’re not effectively contributing to your success with regard to their cost;
- Improve the relationship with suppliers and manufacturers by demonstrating how much business you’re doing within your target market—regional, national, or global. If you add together the spending on each manufacturer’s components—allowing them to track your consumption against the volumes that you used in initial price negotiations—you show manufacturers and suppliers your value as a customer.
Knowledge is Power: Lytica Helps You Know if You’re Getting the Most From Your Spending
You deserve the best value for your money and strong, mutually beneficial relationships with suppliers. These suppliers are essential to your business, but you want to be certain you’re not overpaying and they’re not under-providing.
With Lytica, you’re partnering with the world’s only provider of electronic component spend analytics and risk intelligence using real customer data.
If you want to get ahead in today’s electronics industry, you need to get the best both for and out of every single component. Lytica provides customers with the insight and analysis they need to improve their electronic procurement teams and build better, stronger, more resilient supply chains. Learn more today by reaching out to us!
