| In reviewing the distribution of electronic components, buyers seem to be served by two distinct types of distributors, says Howard Venning, MD of specialist RF & Microwave distributor Aspen Electronics. |  |
On the one hand, you have the multi-national, broadline distributors who represent hundreds of manufacturers, many of whom are multi-national companies, making semiconductors, or passive products such as chip resistors or capacitors. These components are the bread and butter of any electronic assembly or system and make up the majority of items on a typical Bill of Materials (BoM).
Then you have specialist distributors, who, perhaps, only supply one or two components on a BoM. The components they supply are sometimes unique, critical to the overall system design. Often, they will be amongst some of the more expensive products, finding themselves at the top of a BoM if sorted by price. These components may not be in stock and typically have long lead times, as they may need to be manufactured on demand. Broadline distributors will not stock them, or want to sign up the manufacturer of this type of components, as turnover will be low and that sort of product just doesn't fit a broadliner business model. So, why do these components find themselves on the BoM, when from a buyers perspective, they may prove to be the most difficult, time consuming and costly to source?
Why do components find themselves on the BoM, when from a buyers perspective, they may prove to be the most difficult, time consuming and costly to source?
Typically, this type of product is specified by a design engineer as being that one component that makes the product feasible in the first place. Or, perhaps it is a special design that is required to give the end product its unique place in the market, or capture an all-important order from a customer who wants some specific feature. Either way, it's the design engineer who establishes exactly what the buyer has to purchase, without exception or variation from the detailed specification they demand. No doubt, the engineer will specify exactly where that component needs to be sourced. Faced with such rigid guidelines, there is little a buyer can do but comply with the design engineers recommendations.
If we look at the wireless world, and the ever increasing range of products that are being designed to take advantage of everything this technology has to offer, then the problem expands. Whilst many high volume applications can now be implemented using a radio frequency (RF) system on chip components, lower volume products will ultimately need to use more conventional RF components. Certain RF components are only available from smaller specialist manufacturers as the larger manufacturers have trimmed their product portfolio to concentrate on the high volume products. These smaller manufacturers fully understand RF technology and the " black art" techniques involved in manufacturing components that meet the unique specification needed for that special product. It is these specialist manufacturers that tend to be represented by specialist distributors.
Looking at market developments over the past twenty years, whilst the number of specialist manufacturers have remained the same, the number of credible specialist distributors has reduced, especially in the RF world. This is worrying, especially for the buyer who is under increasing pressure to procure BoMs in even shorter timescales, plus demonstrating they are on the top of their profession by showing they can deliver those all-important cost savings.
When we look at sourcing methods, the internet, and on-line catalogues providing buyers with multiple sources for common items, international boundaries do not exist. With pan-European and international suppliers offering multi-currency pricing, massive stocks and efficient logistics support to get products from anywhere in the world to your goods-in dock. However, these efficiencies only apply to mass produced components.
When we look at those specialist RF products referred to earlier, it might not be that easy to find the manufacturer, let alone that illusive part number. Whilst they may have an on-line presence, these manufacturers may not have the sales support network to respond to a buyer's enquiry from a different country and/or time zone. Of course, e-mail will typically work for both the RFQ and quote, but actually placing an order may involve all sorts of complications as you deal with payment by wire transfer in advance, plus shipping.via UPS ("...not FedEx as the FedEx van doesn't come this way too often, so we don't use them...") and then dealing with the importation when the shipment gets held up at customs. Thankfully a good specialist distributor will help with all these issues.
If we look at the wireless world, and the ever increasing range of products that are being designed to take advantage of everything this technology has to offer, then the problem expands. Whilst many high volume applications can now be implemented using a radio frequency (RF) system on chip components, lower volume products will ultimately need to use more conventional RF components. Certain RF components are only available from smaller specialist manufacturers as the larger manufacturers have trimmed their product portfolio to concentrate on the high volume products. These smaller manufacturers fully understand RF technology and the " black art" techniques involved in manufacturing components that meet the unique specification needed for that special product. It is these specialist manufacturers that tend to be represented by specialist distributors.
Looking at market developments over the past twenty years, whilst the number of specialist manufacturers have remained the same, the number of credible specialist distributors has reduced, especially in the RF world. This is worrying, especially for the buyer who is under increasing pressure to procure BoMs in even shorter timescales, plus demonstrating they are on the top of their profession by showing they can deliver those all-important cost savings.
When we look at sourcing methods, the internet, and on-line catalogues providing buyers with multiple sources for common items, international boundaries do not exist. With pan-European and international suppliers offering multi-currency pricing, massive stocks and efficient logistics support to get products from anywhere in the world to your goods-in dock. However, these efficiencies only apply to mass produced components.
When we look at those specialist RF products referred to earlier, it might not be that easy to find the manufacturer, let alone that illusive part number. Whilst they may have an on-line presence, these manufacturers may not have the sales support network to respond to a buyer's enquiry from a different country and/or time zone. Of course, e-mail will typically work for both the RFQ and quote, but actually placing an order may involve all sorts of complications as you deal with payment by wire transfer in advance, plus shipping.via UPS ("...not FedEx as the FedEx van doesn't come this way too often, so we don't use them...") and then dealing with the importation when the shipment gets held up at customs. Thankfully a good specialist distributor will help with all these issues.
| Perhaps the most valuable function of a specialist distributor can perform is as a procurement consultant. This may be needed when an item goes obsolete, or when the manufacturer has delivery issues, or when a lower cost alternative is needed. |  |
If buyers develop a good working relationship with dedicated specialist distributors, then many of the problems in sourcing specialist components will be dealt with. By using the knowledge of your chosen specialist distributor, you can ask it for support on a number of levels. Firstly, it will supply those products manufactured by the suppliers for whom it is the authorised representative. Next, providing it truly knows the market, the distributor will be able to source products where there appears to be no authorised representative, which is sometimes the case for very niche suppliers. Perhaps the most valuable function of a specialist distributor will be able to perform is when it acts as a procurement consultant. This may be needed when an items on the BoM goes obsolete, or when the manufacturer has delivery issues or when a lower cost alternative is needed. The buyer, working in partnership with the specialist distributor will be able to review the specification of a difficult to find product and, having found an alternative, ask the distributor to work with the design engineer, who will typically be ultimately responsible for component "sign-off", to ensure the alternative product suggested will work in that particular application. Good distributors will provide full specification details, plus test results and, where you are working with a very good distributor, it should be able to conduct it's own independent tests to further verify performance.
Our experience tells us that when a buyer and distributor work together, significant savings can be made, not only in time, but also cost. By reviewing the BoM, sorting by value and reviewing those products that occupy the top 10-15% of the BoM, a specialist distributor will quickly identify cost saving opportunities.
Thinking about a recent example, a buyer approached Aspen Electronics, having noticed that something as simple as a BNC connector had gone up in price and was now towards the top of the BoM, which it had sorted by price. Reviewing the part, it was discovered that it had a demanding IP rating. This was becuase this variant of the end product being manufactured needed to have a higher IP rating as it's customer had asked for a waterproof version of the product it offered. Aspen reviewed the specification, determined the key performance parameters, identified a supplier, provided samples, worked with the engineer to get the product approved and not only sorted the buyers problem, but saved them money in the process. This example clearly demonstrated that working together, the buyer and the specialist distributor can solve such problems. In cases like this, a specialist distributor will provide a valuable service as not only a supplier of niche products, but as a procurement consultant, advising and helping to make the buyers life a little easier.
Our experience tells us that when a buyer and distributor work together, significant savings can be made, not only in time, but also cost. By reviewing the BoM, sorting by value and reviewing those products that occupy the top 10-15% of the BoM, a specialist distributor will quickly identify cost saving opportunities.
Thinking about a recent example, a buyer approached Aspen Electronics, having noticed that something as simple as a BNC connector had gone up in price and was now towards the top of the BoM, which it had sorted by price. Reviewing the part, it was discovered that it had a demanding IP rating. This was becuase this variant of the end product being manufactured needed to have a higher IP rating as it's customer had asked for a waterproof version of the product it offered. Aspen reviewed the specification, determined the key performance parameters, identified a supplier, provided samples, worked with the engineer to get the product approved and not only sorted the buyers problem, but saved them money in the process. This example clearly demonstrated that working together, the buyer and the specialist distributor can solve such problems. In cases like this, a specialist distributor will provide a valuable service as not only a supplier of niche products, but as a procurement consultant, advising and helping to make the buyers life a little easier.
