Smith & Associates: Strategic Diversification a New Standard for Manufacturers
Inventory and Asset Risk Management Must be Revisited for Success in 2012
HOUSTON, TX – (April 9, 2012) – Last year, traditional inventory management faced unprecedented challenges. Electronics and semiconductor manufacturers contended with natural disasters and economic conditions that caused severe disruptions to supply chains. Many corporations realized that their sole- and limited-source supplier strategies simply could not keep production lines moving. Among the most pressing conditions were:
- Regionalized disruptions caused by the tsunami in Japan and the floods in Thailand which damaged and destroyed facilities, respectively. In the case of Thailand, many manufacturers were forced to relocate, re-equip elsewhere and/or re-prioritize order fulfillment. Many smaller suppliers were dislocated from supply chains or went out of business.
- Shrinking profit margins due to an uncertain global economic climate, lack of consumer confidence in the US and EU, conservative enterprise spending and increased global competition.
- Lowered component availability caused by conservative capacity, increased consolidation of suppliers and manufacturers and tightening inventory management.
- New market demands, particularly in the expanding mobile device sector , which require faster device and component lifecycles.
When in Peril, Diversify
The severe supply chain disruptions forced manufacturers to revisit their inventory and asset risk management approaches. They found that diversified sourcing is the best strategic position for both mitigating risk and retaining competitive advantage in today’s volatile manufacturing environment. When applied in concert with agile, targeted and lean inventory management, strategic diversification enables manufacturers to excel, even in unstable pricing and availability conditions.
Diversification Means More than Multiple Sources
To drive competitive advantage, diversification requires a range of supply sources and a suite of specialized capabilities. Manufacturers increasingly turn to Smith & Associates, a long-standing open-market leader, to be a turnkey partner in maximizing assets, inventories, and new market opportunities.
"Manufacturers today are faced with the dual task of qualifying new channels and creating strategic buffers against a difficult market,” said Marc Barnhill, Chief Trading Officer at Smith & Associates, a trusted partner to many leading electronics manufacturers. "Today’s inventory management and asset disposition strategies must meet the global and complex demands of intense competition, even under trying conditions. Additionally, having shortage solutions in place is also critical. Smith & Associates addresses these needs, harnessing an agile supply chain rooted in deep, historical relationships with vendors and component suppliers, as well as providing much-needed expertise in asset management and inventory solutions. With full transparency, testing, and certification of all products, Smith supports global manufacturers with customized, short- and long-term supply-chain solutions.”
New Capabilities for 2012
In response to client demand, Smith has expanded its strategic inventory and asset management services to meet the needs of an ever-changing market environment. These expanded solutions include:
- Updated and expanded Purchase Price Variance (PPV) program. PPV Plus+ is a new, customizable, analytic toolset that captures optimal market prices and demand trends for components, facilitated by a dedicated PPV expert.
- Vendor managed inventory (VMI) program that enables more accurate cost planning, reduces carrying costs, and minimizes the effect of future price increases and supply shocks.
- End of life (EOL) inventory management solutions that carefully evaluate assets and determine future market opportunities, including refurbishing, remarketing and recycling. These solutions maximize returns from asset disposition and divestment of low margin lines.
A New Definition of Supply-Chain Success
As the global economy continues to show signs of stabilization and growth, supply-chain strategies are also moving into a new standard, one of strategic diversification and agile inventory management. With a partner like Smith & Associates in place, these new strategies can be leveraged for ongoing success.
For more information on trends in global supply chain management and best practices in inventory management services, see Smith’s newest Marketwatch Quarterly Review and Analytics.
About Smith & Associates
Founded in Houston in 1984, Smith & Associates is a leader in the independent distribution of semiconductors and electronic components to electronics and high-tech manufacturers. Smith offers shortage sourcing for commodity and obsolete parts, innovative purchasing and inventory management solutions, redistribution of excess inventory, and component stocking for warranty and repair programs.
A privately held company, Smith & Associates employs more than 350 people worldwide, with annual revenue in excess of US$500 million. Smith's regional hubs in Houston, Hong Kong and Amsterdam are ISO certified and IDEA compliant. In addition, sales and purchasing offices are located in Silicon Valley, Barcelona, Guadalajara, New York, Shanghai, Shenzhen, Seoul, Singapore, Taipei, and Denver. For more information or to reach a Smith representative 24 hours a day, please call: 1.800.HOUSTON or +1 713.430.3000.
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Smith & Associates
V.P. of Marketing
i Smith MarketWatch Commentary, “Japan Continues to Rise from Challenges,” 13 March 2012. <http://www.smithweb.com/en/20120313929/market-blog/japan-continues-to-rise-from-challenges>
ii Smith MarketWatch Commentary, “UPDATE7: Thailand Floods to Adversely Affect More than PC Sector,” 18 November 2011. <http://www.smithweb.com/en/20111118844/market-blog/update7-thailand-floods-to-adversely-affect-more-than-pc-sector>
iii IHS iSupply, “Semiconductor Inventory Declines as Suppliers Adjust to Slow Market Conditions,” 4 January 2012. <http://www.isuppli.com/Semiconductor-Value-Chain/News/Pages/Semiconductor-Inventory-Declines-as-Suppliers-Adjust-to-Slow-Market-Conditions.aspx>
iv ECN, “Smartphones, Tablets and Notebook PCs to Grow at 24% CAGR Through 2015,” January 2012. <http://www.ecnmag.com/News/2012/01/Smartphones,-Tablets,-and-Notebook-PCs-to-Grow-at-25-7--CAGR-Through-2015/>