A good distributor will try to minimise risk and maximise supply chain solutions for its customers, but how do you know who to trust?
Choosing a distributor partner to hold inventory for you requires a great deal of trust. You must have confidence that your distributor will deliver high-quality products in the timeframe promised, will be responsive to your needs, and will provide solid support. So how do you know who you can count on?
A good distributor will try to minimise risk and maximise supply chain solutions for its customers. The two most common methods are in-plant stores of finished goods or bonding finished goods. Long lead-time items, however, like connectors and power supplies require long inventory pipelines and large buffers built into the supply chain. An engineering change notice (ECN) can instantly turn an in-plant store or supply chain solution into a major liability.
Distributors also have different levels of tolerance for holding inventory to support supply chains. Holding large inventories of dedicated finished goods to cushion lead time can be risky. Some distributors approach this problem by reserving shared pools of inventory for customers who use the same parts. Unfortunately, this means that not all of the customers will actually have their needs covered by the bond. Most inventory solutions will not buffer total lead time or the total quantity necessary to truly protect supply chains from inventory risk.
Built-to-order
As an assembler of connectors and power supplies, PEI-Genesis, has chosen an alternate approach. It builds virtually all of its products to order from component parts, giving customers precisely what they need, not simply what is in stock.
The company is able to assemble tailored connectors in 48 hours and modified standard power supplies in five days, regardless of order quantity. Buyers get the full flexibility of choice with a low risk of obsolescence. With a build-to-order model, it is logical for PEI to make large inventory investments that truly protect the supply chain. During the recent recession, this approach allowed PEI to actually increase its component inventory, putting it in a strong position to support customers as the economy recovered.
Schedule solutions
Trust is a major plus point for customers using the company. In a third-party customer survey completed in December 2011, almost 700 respondents were asked: what do you find most valuable about PEI-Genesis? The most common answer by far, was excellent customer service. One person replied: “PEI offers better customer service and solutions than any other company I’ve used. I can always count on its help and availability to solve my crunch schedule needs. My rep is the best. PEI is my go-to connector house and has been for a long time.”
Today, many manufacturers and distributors are cutting inventories and raising minimum order quantities (MOQs). They have fewer customer-facing employees, less engineering support and longer and more complex supply chains. A skillful distributor can bridge this gap by providing excellent service, engineering support and a nimble response to supply chain changes. The world is evidently changing, so it’s important to make sure you pick your partner accordingly.