Economic downturn affects the electronic component manufacturers’ and distributors’ ability to carry large inventory stocks which produces increased lead times and affects MOQ (Minimum Order Quantities) requirements. This creates additional challenges for smaller companies while outsourcing the required production components. This is especially true in specialty custom cable assembly where non-standard connectors and custom-made wire are used frequently.
When the economy is down and the demand for specialty components is uncertain, even large manufacturers and distributors avoid plentiful inventory stock because it becomes a dead weight of excess supply. Not only are excesses are bad for business, but in many cases they are unaffordable. As component manufacturers and electronics parts distributors cut down their inventory counts and item availability, procurement departments around the world find themselves in a predicament of getting the required parts on time.
To keep smaller clients happy some manufacturers team up with their distributors balancing their inventory loads, some have adapted a model of maintaining larger stocks of auxiliary parts, such as single-piece connector components allowing them to quickly produce required cable connector and in turn deliver it in a timely fashion for the custom cable assembler. This offers an advantage to clients in terms of MOQ and lead time. The wise balancing act of auxiliary parts inventory allows connector manufacturers inventory cost reduction and robust production. Such approach offers flexibility in connector assembly. By having required parts on hand, the connector assembler can produce a variety of complex units without resorting to finding alternatives.
As an example of the manufacturing capabilities, one of the connector assemblers, PEI-Genesis reports that using their 30,000 SKUs inventory of connector components 43% of all production were unique items made exclusively from on-hand auxiliary connector parts inventory.
When OEM buyers are confronted with making a decision on whether to wait a month or two to get the required components or order a minimum quantity that exceeds their needs or look for a close substitute, this type of supply management can significantly shorten lead times and reduce costs.
Therefore when an OEM procurement department outsources a custom cable assembly manufacturer, it is recommended to learn about their supply chain which helps to set realistic expectations of the date of the custom cable assembly arrival.
Connective LLC logistics department is well aware of the current trends and when working on specialty items involving non-standard connectors, they use sources that can accommodate tight production schedules of their clients. To shorten lead time on cable assemblies, Saison Electronics Ltd, a Japanese custom cable assembly manufacturer has invested in its own wire production. Such diversification is a direct response to a rapidly changing supply structure of the electronics components industry.
Another helpful strategy in shortening lead times for custom cable assemblies is to collaborate with engineering support team of the selected provider. If such help is offered it could be very instrumental in the cable assembly design, cost reduction, prototyping and shorter lead times. An experienced cable maker knows the components market and can make valuable suggestions to accommodate the buyer’s needs.
Since a vast majority of electronic components are manufactured in China, it is helpful to find a reliable partner who understands the Chinese market and has close ties with preferred sources. This has become a standard with large companies where the main manufacturing and outsourcing is done in Honk Kong or mainland China. If your company does not have a physical presence in this part of the world you may find it easier to communicate through a local North American branch office of the manufacturer representative.
Tighter economic conditions dictate new rules and new, more efficient, business models. As a buyer, you may find that the previous outsourcing strategies have become less effective and without sacrificing your standards and expectations you may discover new, more effective ways to accommodate your production needs for custom cable assembly using suppliers who are on the cutting edge of today’s supply chain models.