Tools for EMS manufacturing quote pricing analysis - Optimize total landed cost savings for your contract electronics outsourcing programs

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Tools for EMS manufacturing quote pricing analysis - Optimize total landed cost savings for your contract electronics outsourcing programs

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Electronics distribution: Choosing a global or regional distributor in a flat world

By Ping Wang

Your corporate procurement team manages your global distributor strategy while also observing situations in each country. In doing so, the team can better identify competitive distributors performing well. Two strategy methodologies the author suggests are bottom-up distributor selection and top-down distributor selection.

With globalization comes the understanding and acceptance that new ways of doing businesses are emerging every day.

More and more choices are becoming available to decision makers and there is also an ever-increasing number of the types of business engagements that can impact your company’s overall supply chain strategy that are also more likely than ever before to extend beyond the boarders of the country where your corporate headquarters is located.

Companies must think globally. From purchasing and pipelining components and materials, to sales and after-sales support. Accepting this, you should be eager to define a distributor selection strategy that benefits not only one country but also your enterprise supply chain which you manage from a global perspective.

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In your distributor selection process, one of the most important decisions you will make is based on which geographical level you want to consolidate and leverage your spending: country-based, regional-based or globally.

Some questions executives must ask themselves include: How many facilities or branches do we have around the world? What are the functions, hence purchasing needs, of each branch? Which countries do we have branches in? Which factors can influence my purchasing strategy specific to a particular country? Should I be looking at a broader region than my current local market or, perhaps globally?

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Depending on the differences in your geographical needs relative to narrow or wide scope, you can have varying degrees of leverage you can use on your distributor. Your scope requirements also determine the set of selection criteria used to select your distributor.

Two strategy methodologies I suggest are bottom-up distributor selection and top-down distributor selection.

Bottom-up distributor selection

As global procurement officer, you respect the distributor selection criteria, and resulting decision, emanating from the branches within a country. Essentially, one country selects its own core distributor independent of concerns from a global perspective.

In tandem, your corporate procurement team manages your global distributor strategy while also observing situations in each country. In doing so, your corporate team can better identify competitive distributors that are performing well compared to others in various countries.

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In your search results, you can add more Industry Markets, additional Services, and more Geographies to widen your search.

Your team documents these observations to later use during negotiations with incumbent distributors at the global level to generate opportunities to further consolidate distributors across countries.

Once the incumbent distributor becomes willing to work with you globally and commits his efforts to improve sales in targeted countries where you have requirements (all of this while he does not currently cover the specific products adequately in the specified country, yet), it is still the country team’s responsibility to perform next-round selection and decide whether this distributor is finally competitive, and selected. Or not.

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