by Tony Molina, Sales & Marketing Manager at Affinity Components International, LLC.

Localized sourcing and asset management offers key benefits to businesses in the electronic manufacturing industry.  Because of parallels in test equipment, parts inventory, computer systems, tools and even machinery, such assets can be retired at one factory yet highly useful in another.  In this article the five greatest benefits of local procurement will be discussed to address how these advantages can help your business.

 

1. Cost Savings -  Many companies have that designated spot labeled "no longer in use" or "excess inventory" in their warehouse that becomes the final resting place for assets of little to no value.  Obsolesce in manufacturing can affect more than just parts. This can come from upgrading existing equipment, overstocks, excess parts, process revisions, production delays, or even canceled orders. These assets can span from board level components to test equipment, tools, machinery, computers, peripherals and other related electronic manufacturing assets.

The conditions for a discounted sale are very favorable when the asset holder can no longer use these items and has little or no ability to recover value from them.  When a buyer can be matched with an asset holder, the item can often be purchased at a substantial savings to the buyer while the seller has an opportunity to liquidate such items.  Asset holders can then take advantage of their fossilized inventories by recovering some of their investment.  Eliminating these stored items frees space for current projects, reclaims lost revenue, as well as potentially reduces inventory tax and storage fees.

2. Reduced Lead Times -  Naturally, local companies are physically closer to the buyer thereby cutting transit times and reducing delivery delays.  With shorter distances to cover the unexpected conditions such as whether delays, transit accidents, and product holds are less likely.  Communication times are also positively affected as the window of connectivity broadens when working within similar time zones.  International communications can often increase lead times as the lack of concurrent working hours tacks on extra days to the ordering process.

3.  Enhanced Quality - In a time where counterfeiting and unethical practices are prevalent across the electronics industry it has become increasingly important to trust your supplier and develop close relationships with them.  Consider the feeling of buying from an online auction service.  There are many sellers offering what you want.  Some sellers are very far away and it would be hard to verify if their offerings are legitimate due to distance or expense.  Buying from a local seller not only offers the opportunity of inspection prior to purchasing in many cases, but it also imposes a greater level of integrity.  A seller knows that a local buyer is more capable and likely to verify the offering prior to a sale.  This gives the local buyer an upper hand when quality is a concern.

4.  Improved Communications - Not only does being close facilitate faster responses, it can also cultivate greater cooperation between companies, their departments, and their customers.  Ease of communication when dealing local comes in many forms.  Being able to catch someone "out of the office" is more likely when you are not calling out of your own country code.  Employees may be more willing to offer direct contact information such as private cell numbers or email addresses.  Options such as face to face meetings become more cost effective.

5.  Increased Rapport & Value - This is perhaps one of the most overlooked benefits of local procurement.  Underlying forces exist when people entertain the, "we're in this together" notion.  This effect helps develop strong bonds between businesses through shared culture.

Being local means doing business with neighboring companies.  As a result the sum of all economic activities including revenue, tax collection, and even grant funding directly enhances the local community.  Another hidden value in local sourcing includes environmental impacts where shorter transit routes reduce fuel consumption.

As the future of Electronics Manufacturing races forward there is no doubt that many manufacturers will face sourcing challenges.  With increased consumer demands in both wearable and portable electronics factories around the world will continue to adjust to the ever changing needs of their clients.  Versatility within the supply chain will become increasingly critical to profitability and longevity.  Taking advantage of sourcing and asset management at the local level can add new depth and flexibility to almost any electronic device manufacturer.

Please feel free to comment below and add why you agree or disagree with the information provided within this article.  We always encourage dialogue with our subscribers and clients alike!

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