Now is the right time for electronics buyers to develop a new sourcing attitude. Purchasing magazine's latest business survey indicates subtle, but possibly important, shifts in buying conditions. Buyers report that incoming order rates are up slightly. Pricing pressures are growing slightly. Producer delivery performance is declining and leadtimes are edging out for such components as connectors, resistors, some batteries and printed circuit boards. A key Asian indicator, the Singapore Purchasing Managers Index, recently recorded its seventh straight monthly increase. "The latest PMI survey showed that the Singapore manufacturing economy remains firmly on the expansion track," says Philip Poh, chief executive of the Singapore Institute of Purchasing Management. No one is expecting a fast, robust recovery. In fact, the electronics industry probably will take a seasonal dip in the fourth quarter. But keep a close eye on the inventory strategy data tracked monthly by Purchasing and reported in our electronics business data page (page 28 in this issue). Buyers in electronics-consuming industries are still cutting stock levels aggressively. However, stocking strategies for electronic components started to change in August. The number of buyers cutting electronics stocks still outpaced those adding to inventory, but at a lesser rate.

This issue's cover story shows the dramatic changes already taking place at Solectron as it prepares for the eventual turnaround—yes it will come some time. "The leading contract manufacturer (in our newest ranking on page 46) has implemented a number of strategic purchasing and supplier management initiatives designed to improve relationships with suppliers and guarantee Solectron has access to the parts it needs to build products when the economy turns," writes Executive Editor Jim Carbone.

• Strategic sourcing at Solectron is becoming more centralized at both a global and regional level.
• The supply base is shrinking. Some 350 suppliers make up about 80% of Solectron's spend. Four years ago the number was double that.
• Solectron is automating its transactions on the Internet. About 35% of its spend is now on a system it calls WebPro. That will grow to 75% by the end of next year.
• Commodity teams are moving offshore. Five commodity teams will be based in Asia by the end of next year, compared to zero two years ago.

Maybe hopes of a recovery in electronics are wishful thinking. But buyers need to be better prepared for the upturn that they were for the downturn.