Investing in Inventory is Not the Liability it Once Was

In a recent article in the CIE magazine, Adam Fletcher, chairman of Afdec and ECSN, talks about how the opinion on investing in inventory needs to be rethought as it's not the liability it once was.

It's a well known fact that excess inventory is a financial drain on any business. What's not as well known is that moving inventory (turning stock or consumed materials), is a real business asset for the electronic component supply network industries.

Commonly, manufacturers' inventory is measured as being below, on, above or grossly above target levels based on forecasting, results which purchasing departments then need to answer for. The disaster scenario is a 'stock-out' (no inventory) situation, generally caused by unforeseeable technical or supply problems or an unusual increase in demand. 'stock-out' situations have a knock on effect on sales targets and leaves managers wanting to know what went wrong and how quickly it will be removed.

Just-in-time, lean manufacturing is used in an effort to hold inventory in the range between 'below' and 'on' target levels. This approach works best when forecasting is accurate and stable and component lead times are low to stable.

For the last decade lead times for a wide range of electronic components have been low, typically under two weeks, but this has not always been the case. In 2011, when a natural disaster occurred, lead times rapidly increased from 6, to 12 and then to 16 weeks and remained at that level for several months.

During this time, companies reliant on lean manufacturing had to reduce their output in line with availability and faced a huge loss in revenue. Some even had to temporarily close down plants altogether.

Fletcher goes on to explain that authorized distributors support over 95% of electronic component requirements. One of the important but little recognized roles of a distributor is to aggregate multiple customer demand and put the necessary inventory in place to effectively buffer the customer from lead time fluctuations.

Atlantis Electronics, an independent stocking distributor also offers a free Scheduling Service which gives you complete piece of mind, improved productivity and cost savings.

To read about all the benefits of our Scheduling Service, please visit our website.

Or alternatively, give us a call on +1 905 290 1563 to talk through the options we offer.

Electrical and Electronics Manufacturers Face Ever-Increasing Challenges

In a recent article, SGS report that we are on the 'tip of an environmental iceberg' when it comes to implementing processes to effectively manage the collection, risk assessment, and quality assessment of material data across the supply chain.

Electrical and electronics manufacturers around the world are facing an ever increasing demand to be held accountable for every molecule of material contained in their products which may impact the health of the environment, consumers and individuals responsible for manufacturing, recovery, recycling and disposal of end of life products.

The Challenges faced by electrical and electronics suppliers and product manufacturers today include:

• An ever increasing growth of global regulations: Back in 2002, there were about  25 regulations for substance restrictions globally, compared to around 200 presently in 2013. The products in scope of the regulations have also grown due to the impact of legislation such as RoHS and REACH.

• The complexity and volume of material identification and reporting: Materials and substances need to be identified and the data stored and be accessible to the company as well as consumers.

Steps To Help Overcome These Challenges

If you are a supplier of materials, you will need to identify and report the chemical composition of your supplied materials to the capacitor manufacturer. 

If you are the manufacturer you must obtain material composition disclosure information from your suppliers to pass on to your customers. If your material supplier cannot or will not provide the information you will need to take further actions such as removing the supplier from your Approved Manufacturers List (AML) or if that is not possible, having the material analyzed by an accredited materials testing laboratory.

If you are an original equipment manufacturer you will need to have a system in place to store, manage and make available, the data you received from your suppliers, and linked to your product bill of material. These data records, in the case of RoHS II would become part of your Technical Documentation File for your product and must be kept on file for ten years and made available to an EU member state enforcement officer when requested.

To read this article in full, please visit the SGS website.