The semiconductor distribution network can create barriers for OEM equipment manufacturers to find and determine weighted excess volume cost/price risk as it relates to components sourcing and product total landed cost. One root cause for this difficulty is inaccurate supply chain planning and poor forecasting.
Add to this, unforeseen supply chain issues. This problem is further exasperated in extended contract electronics supply chains where OEMs outsource procurement activity, relying on EMS manufacturer procurement teams to source components for the OEM’s EMS programs.
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Even for OEM purchasing and commodity managers working with skilled, internal planners, buyers and master schedulers, the risk of inaccurate forecasts combined with having to rely on a distribution network for accurate ‘best pricing’ info (hint: its not), more often than not, still leads to excessive storage fees, and obsolete inventory, or inventory that needs to be reworked to spec.
Contract electronics manufacturing services (EMS) providers make a lot of money on storage and warehousing fees, more than the majority of electronics OEM equipment sourcing managers are aware of. In fact, warehousing and storage costs contribute, significantly, to EMS and CM top line revenues.
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