Some contract EMS manufacturing companies with deeper engineering and technology expertise are going direct to semiconductor chip manufacturers for their OEM customer programs, and bypassing electronics components distributors altogether. These side deals disrupt industrial search engines and OEM customers of EMS services, in a variety of ways.

And while this trend has been evolving for a while, it challenges most components distributors to put more effort into identifying real value-add for their business models so they can remain relevant in the electronics supply chain. This is not new, distribution has been facing much-needed disruption, for some time.

To help emphasize this trend, for example, EEWeb was acquired by Hearst Media, and later purchased by components distributor Arrow. Arrow then branded the business as AspenCore. AspenCore (Arrow) owns such industry publications and domains such as EETimes, Power Electronics News, EDN, embedded, TechOnline, EPSNews, to name a few.

These changes to how electronics components are identified and being integrated into OEM brands in the electronics supply chains are creating opportunities, and an increased need, for more effective bill-of-materials (BoM) management, while placing distribution on notice.

But few ‘platforms’ and distributors seem to be addressing the real pain points needed for effective BoM management.

Meanwhile, some BoM pain points, such as components unit costing and line-item cost reductions, are being addressed by vendors tasked with taking on these issues.

But how do OEM manufacturers really know they are getting best price? How do manufacturers know, for certain, what is true available inventory?

The electronics BoM drives the production environment. And so do MES and ERP systems. But supplier priorities for these systems and platforms are not fully aligned to address the real pain points expressed by OEMs. Unaddressed concerns in the supply chain still keep OEM brand manufacturers up at night.

Many of the components platforms and quoting software tools in electronics industry today simply act as pre-BOM scrubbers, using half-baked technology.

There is good reason why software companies like Oracle and SAP are wanting to perform acquisitions. These vendors are dying to build value into their monolithic systems.

Inadequacy creates opportunity

There is real opportunity for vendors wanting to tackle some of the larger problems in electronics industry. Doing so will enable these vendors to get on the radar of the SAPs and Oracles of the world – and possibly lead to acquisitions.

And while these larger vendors are finding the only way to grow their top line is by acquisition or, lay offs, which also help improve earnings per share, real innovation seems dead.

Why is this?

I believe there is real lack of understanding of the extended contract electronics supply chain and its many nuances. This assessment is based on years of client engagements, talking with OEM and EMS decision makers.

In order to get to the root of the problems its important to understand the value, and target market users, of the industrial search engines and parts platforms, to then understand how these tools and platforms are positioned – correctly, and incorrectly.

Venture Outsource remains surprised electronics components distributors and electrical design platforms like Octopart, SupplyFrame, Altium and others… have not yet identified and produced more value with service offerings especially for OEM equipment companies aligned with primary pain points concerning electronics OEM equipment design and sourcing professionals.

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If you look at the electronics component procurement platform market, incumbent platforms are jockeying for position based solely on accuracy and speed of information.

Yet they each still fail to address information silos aimed at deeper supply chain concerns with real material impact.

This bifurcated, disjointed jockeying-for-market of services will continue, I believe, for some time – until a solid solution is introduced to capture defensible market share.

For example, SupplyFrame was acquired by Siemens. Siemens now owns Findchips (and other SupplyFrame domains). Their focus is OEM and manufacturing decision makers, electrical engineers (EE) and production run design houses.

Then there is Octopart. Octopart is focused on prototyping for both EE and mechanical engineers; hardware and software, ranging from serious prototypes to hobbyists and students working on their capstone projects plus, a broader audience now that Octopart added MRO distributor pricing and availability to their engine. Again, reaching for value.

Then there is Grainger. Grainger integrated into their parent company software – Altium via Altium Designer, automated software packaged for designing printed circuit boards (PCB).

SiliconExpert adds to this with lifecycle planning, supply chain support, and risk mitigation. SiliconExpert’s focus is on design standards.

To help frame perspective, SiliconExpert is not a real industry vertical search engine like Octopart and Findchips.

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Not to be ignored, there is also Nexar, IHS Markit/S&P Global… Knowing their target markets is also key. What is their intended purpose and how do they fit into the electronics value chain? Where is savings captured? It’s evident even some incumbent vendors do not fully grasp the value chain and the various side deals between vendors and suppliers.

Electrical engineering is a broader field, and includes electronics engineering and areas like power systems, signal processing, and communications.

Whereas, electronics engineering is focused on the design, optimization, and management of electronic devices.

While knowledge of networks and power systems can be valuable, these are not common areas of focus for electronics engineers.

The understanding that pain points in the electronics value chain are different for different professionals inside OEMs vs EMS companies vs distributors is key to understanding solution fit, and opportunities. Real value-add enable better tools and search engines, which leads to more informed decision-making in electronics supply chains.

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