Larger OEMs turn to distributors for services
Distributors report larger OEM customers are turning to them for design and supply chain services during the downturn
By Jim Carbone -- Purchasing, 4/2/2009 5:43:00 PM
The electronics industry downturn is proving to be challenging for distribution, but large distributors are reporting an increase in demand for supply chain and design services from large OEMs.
While large OEMs have used distribution for design and supply chain support, more are turning to distributors in part because resources that components manufacturers use to provide aren’t available because of the downturn.
Frantz Saintellemy, vice president worldwide advanced engineering for Future Electronics, says that some large OEMs are looking for more distributor design expertise because they have 50 or more design centers in different locations and need design help with semiconductors and other components.
“There is no way a component manufacturer can dedicate resources to every site and every design project,” says Saintellemy. “They have to rely on engineering support from distributors. “Different companies require different skill sets and expertise.”
OEMs want to maintain the direct supplier relationships for strategic reasons, but in terms of support structure, “they must depend on distribution. Component manufacturers will tell them as well,” he says.
Saintellemy says large OEMs may buy 80% of their materials directly from component manufacturers but “fewer component manufacturers can provide customers with the support they need” so OEMs are turning to distributors.
Because of the downturn component manufacturers have fewer resources to provide support to all large OEMs. Such support includes design service expertise, managing component obsolescence issues and component training.
Ed Smith, president of Avnet Electronics Marketing Americas, says with the downturn OEM customers are eager to get new products to market because old ones aren’t selling and are looking for design help.
He adds there is also demand for supply chain services. “We see more supply chain customers not wanting to have inventory on their shelves and asking us for more services. They want us to act like a bank providing them with more favorable terms and more supply chain programs,” says Smith. “Such programs include bonded and consigned inventory and auto replenishment among others.
Also see: Electronics Distribution: Design services aren't just for new products
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