While there are many reasons it makes sense for electronics manufacturers to keep their component sourcing, inventory, and kitting in-house there are also many compelling reasons to outsource these important facets of the manufacturing process. Let's look at the Pros and Cons of utilizing a 3PL for Sourcing, Kitting, and Fulfillment:
PROs of 3PL Supply Chain Management
Save Warehouse Space
Additional Real Estate on the production floor is always at a premium and eliminating the need for at least some racks and secure cages frees up room for production.
Reduce Personnel Cost
Depending on the number of builds you outsource, complexity of your BOM's (Bill Of Materials), and quantity of line items, hundreds of work hours can be saved monthly. This will effectively reduce the cost of your BOM and for many CEM that extra cost-reduction can give them the competitive edge that enables them to win the bid and the contract.
Consolidated Shipping Costs
The "hidden" fees eat up the bottom line. While sourcing hundreds of line items sometimes electronic component purchasing people can feel like they are working their grid pricing and getting the best per unit price but on many passive components the shipping cost alone can double the per unit cost. When the dust settles what looked like a huge savings may end up costing more. Even if you try your best to buy from as few distributors as possible the fact that typical Franchised distributors are limited to the lines they are authorized for. That means no one stop shopping no matter how hard you try.
Ideally, try to deal deal with an Unlimited Franchised Distributor who is franchised for many lines but not limited to those lines. That enables you to have the confidence that comes with dealing with a franchised supplier but the flexibility of them being able to source your entire BOM.
Cons of 3PL Supply Chain Management
You lose a bit of control, some companies crave and highly value a "hands on" approach to their inventory. If money, space, and efficiency are less important than the need to have hands on, 3PL might not be your best solution. You can still utilize CBS (Complete BOM Sourcing) to streamline your purchasing effort, generate cost-savings, AND consolidate shipping cost. You just maintain the inventory in your facility.
Ultimately, an Unlimited Franchised Distributor who can offer cost savings and additional savings on shipping and resource utilization can be a big enhancement to your supply chain. To find out more about EarthTron and what we can do for your company:
Compliance, Quality Control, Tracking, and Recording
EarthTron offers a stable, predictable, and reliable solution to Inventory Control challenges.
As of March 2008, every part that enters EarthTron's VMI or stocking warehouse has been bar-coded and a representative photograph of each lot will be stored in our database along with the receiving info.
These supply chain support processes increase reliability and put us on the leading edge in these areas. We have strict buying and receiving guidelines that enable us to filter out sub-standard product and prevent it from contaminating your supply chain. All our inventories are stored in our ESD compliant, environmentally controlled and secure facility.