Powering the Hi-tech Value Chain through Collaboration

The challenges faced by the distributors in handling this are many, considering the numerous ways that suppliers may give this information to the distributors on one side, and on the other side the queries that distributors need to handle from their customers in order to understand the hazardous substances carried by the components. Therefore, distributors are now focusing on providing the following critical information and services:

• Possible effects of lead-free parts on end product reliability
• Advice on how to handle lead-free soldering and related technical information
• Inventory control mechanisms to expedite and consume non-compliant parts on time
• Standardized way to communicate RoHS-compliant information
• Participate in the "Design for Environment" process early in the product development lifecycle

In-plant Stores

Due to the perennial cost and inventory pressures on electronics manufacturers, just-in-time supply of the right parts directly to production lines is a requirement. Large distributors provide the required logistical support to achieve this by maintaining in-plant stores in a vendor-managed inventory program, generally with preferred customers. The in-plant store allows the manufacturer to reach out to the inventory easily on-site, but at the same time not have it reflect on their balance sheet. A more collaborative case may be when personnel from the distributor run the in-plant store, thus being more in control and more responsive to the inventory requirements.

Summary

The term "component distributor" in the hi-tech value chain may have become more of a misnomer as such companies have come a long way from just distributing parts and providing logistics/material management support to being valuable partners in the industry. This was possible initially due to the dispersion of certain business functions by suppliers and customers, and more recently due to the pro-active approach of distributors in understanding the needs of an evolving industry and structuring effective collaborative mechanisms to tightly integrate all the nodes in the hi-tech supply network. Demand for top-end services like design support have prompted distributors to contend that these are in line with their core competencies, and in the times to come, they are expected to play a much greater role in managing industry critical issues like regulation and globalization, and continue to drive the hi-tech industry into higher levels of maturity.

About the Authors: Subramanyam Venkataraman, Venugopal G. and Balaji N. are senior consultants with Infosys, a global end to end Business solutions and IT services provider.