Imagine coming into work tomorrow: you’ve just gotten settled, grabbed a cup of coffee, and you’re ready to hit the ground running for the day. Then you’re called into a meeting and told that you’re going to have to increase your productivity, but due to market competition your pay will be cut as well. Oh, and you’ll also need to take on additional tasks, as your department has been consolidated and efficiencies need to be found. That doesn’t sound very fun, does it?
Although overly simplified, this basic scenario is what many in the electronics industry have been facing for years. While high-end manufacturers are relatively insulated due to high demand and a relative lack of competition, much of the industry is under incredible competitive and market pressures. We’ve become hooked on free cellphones, bargain televisions, affordable PC components, and the like. Yet electronics manufacturers face not only declining profits as the market matures, but rising costs as well. However, smart supply chain management can help to reduce costs and achieve assurance of supply. Here are a few common strategies:
- Increasing Quantities: Buying in quantity can significantly reduce per unit cost, particularly if production supports tankwagon-sized batches.
- Dedicating Fleets: For less-extensive operations, dedicated fleets of returnable drums, totes, or containers can also see significant cost savings over time. However, it is critically important that these fleets are large enough to account for cycle time, as well as supply disruptions and potential quality issues. Continuous fill does not bend the laws of physics – if there are none to be filled, there are none to be used.
- Standardizing Shipments: Standardizing shipments into full pallets, cases, and other shipping configurations makes handling easier for shippers, distributers, and warehouse personnel. It also reduces the likelihood of material being lost or damaged in transit.
- Establishing Consignment Inventory: Use of consignment inventory can reduce the carrying costs of inventory, freeing capital to be used elsewhere. However, this doesn’t simply reduce tasks for your staff, as proper inventory counts are essential to making a consignment program flow smoothly.
- Leveraging Additional Off-site Storage: Increasingly, companies find themselves with extremely limited storage space. In some cases, already limited space is repurposed to increase production, making proper inventory management all the more important. By using vendor managed inventory (VMI) or stocking agreements, companies can rest easy with the assurance that supply available without having to make additional steep investments in facilities.
- Building Strong Relationships: Developing partnerships with trusted suppliers, and you can benefit from an array of advantages such as: early warning on material supply disruptions, technical advice related to materials selection, special pricing, and customized services.
To gain truly sustainable efficiency, look deeper than line-item pricing. It’s the overall picture of logistics, quality, and support that can bring together all of the above and see smart, strategic cost reductions. A carefully chosen supplier can help you reduce costs, minimize logistical disruptions, and even help you plan for technical and production changes that might lie in your future. With the right partner, you can solve not just today’s problems, but tomorrow’s.