Hongfa America’s director of sales and marketing, John Clayton, shares advice and tips for relay buyers, with communicating forecasts, lead times and end-of-life timings as priorities
Q: What are current relay lead times?
Current relay manufacturing lead times range from eight to 44-weeks, with the majority of standard automotive, plug-in type and general-purpose relays having around a 10-week lead time. For specialty automotive relays and modules, including solid state relays, the lead time can be more than one year. With that said, lead times for relays have been decreasing to normal levels and procurement professionals should have an easier job of getting what they need in 2023. The moral is to prepare and order in advance, so as not to affect sales.
Q: How can buyers avoid common relay purchasing mistakes?
There are three common mistakes buyers can improve on. First, the buyer should always try to create a positive partnership with their suppliers. Providing accurate forecasts, communicating lead time changes and end-of-life timings are important for suppliers and buyers as market demands change. In times of product shortages, good relationships with suppliers can assure a continuous supply of material.
Secondly, while buyers are charged with finding the most competitively priced components, there is often the expectation that suppliers can reduce prices each year. Unfortunately, year-on-year component discounts are not always achievable and annual supplier price-cut requests for two to four-years after production starts are not actually the smartest long-term strategy.
These cost savings, typically from two to five per cent annually, are sometimes added to the piece price at the start of the program to level the playing field for the supplier. Unfortunately, buyers are often graded and/or rewarded on their year-on-year cost-cutting, which may not be in anyone’s best interest from a time and quality standpoint. Manufacturers should look at the entire relationship with suppliers and the positive impact it can have on their bottom line.
Lastly, and possibly most importantly, engineers sometimes misunderstand the technical and quality differences between relay manufacturers and a component’s impact on their finished product. Too often components are chosen based on a tenth of a penny difference in price, which later may cost thousands in addressing quality complaints, returns and poor ratings by customers, resellers and channel partners. This negative press is often irreversible and can have an impact for years. It is not worth the fraction of a cent difference.
Q: What advice would you give to buyers sourcing relays in the supply chain?
Our first tip is to honor the supplier’s lead time requirement and provide forecast information that reaches as far into the future as possible. We suggest providing a rolling six-month forecast at minimum, preferably 12-months. Share as much program life information as possible and be sure to notify the supplier when the product’s end of program life is near. Don’t be afraid to sign long-term agreements and consider safety stock agreements as a buffer for sudden and/or unexpected surges in market demand. Appreciate the manufacturer that provides the best overall value: component price, timely delivery, few or no quality complaints and ease of doing business are most important.