Electronics Supply Chain Management Tips: Cost Reduction

When asked about the most basic goal of nearly any business, most will give the same answer: maximize revenue while minimizing costs. You may not realize it, but inefficiencies and issues within your supply chain might be eating a big chunk of your profits each year. Thousands or even millions of dollars might be falling through the gaps in your supply chain strategy, and that’s a big problem for your bottom line. But, that doesn’t have to be the case. There are plenty of things you can do to optimize your supply chain. Here are some tips for electronics supply chain cost reduction.

Consider Your Customers’ Needs First

Customer service and satisfaction should come first, and believe it or not, this can really help with cost reduction in your electronics supply chain. Consider what your customers actually want and need, rather than offering services and perks that they don’t. For example, free shipping as an apology for orders gone wrong may seem great, unless you’re not addressing the root problems. If the problem continues, you could lose money on a large number of orders when you could have fixed the problem from the beginning, which would have meant fewer complaints, happier clients, and more loyal customers.

In the same token, you don’t want to provide your clients with perks they neither need nor want. Consider the typical concept of “buy $50 of (product) and you’ll get a free (item or service).” There are a number of times where the free incentive isn’t something that clients actually want, so it ends up sitting in their closet or otherwise remains unused, wasted money for the business and wasted space for the customer. The same thing can happen in your supply chain. For example, if you offer free two-day shipping or similar services to all clients, regardless of whether they want it or need it, you could be losing money where you don’t have to.

Instead, think about or even ask your clients what they want and need. What kind of manageable incentives will motivate them to work with you more? How can you maximize your customer service to satisfy both clients and your bottom line? It’s no easy feat, but once you figure this out, you might be surprised by how your profit margin, and customer happiness, grows.

Outline Your Objectives, Then Build Your Supply Strategy

Your electronics supply chain is just that: a chain. You cannot build or find a chain without first knowing how it will be used. If you do, you risk not knowing how long it needs to be, how many links it needs to have, and how to make it work for what you need to get done. Look at your clients’ wants and needs, your budget, and your company size to determine what objectives you should be using to develop a supply strategy. Your supply chain strategy needs to be outlined in enough detail to make it clear, while still making it flexible enough to adapt to changes in your industry. Remember, an electronics supply chain management strategy isn’t a set-it-and-forget-it process; the business world is always in a state of flux, and your goals and plans should reflect that.

Refine Your Space Utilization

One of the biggest problems in electronics supply chain management is how a company utilizes its space. If the majority of your space is filled with unused raw materials or unsold finished products, you cannot fill that space with more readily usable/sellable inventory. If that’s the case, you will likely need to either buy/rent more space or slow down production. Either way, misused space is bad news for your bottom line. You’ll want to better manage your excess inventory in order to reallocate that space for more imperative purposes or scale down your space to pay less in rent, electricity, etc.

Another space utilization issue stems from how organized (or disorganized) the space is. If your employees are spending more than a few minutes to find the items they need in your inventory, it is too disorganized to be productive. There should be a system in place that dictates what goes where, allowing needed items to be found quickly and easily. Without a coherent system, you miss out on the increased productivity that comes with efficiency.

Regularly Assess and Adjust Your Ordering Process, if Needed

When you need to order supplies, you may have processes in place where certain people use certain programs to order certain things. However, if you have multiple people placing multiple orders on different kinds of software, you might be over-ordering, leaving you with a lot of excess inventory. One way to prevent this is by creating a unified requisition system complete with a digital, shared document or checklist that details what has been ordered, what needs to be ordered, and who is assigned to order what. Furthermore, it can be helpful to create an approval process where requisitions need to be verified and authorized before they can be completed. This way, you are more likely to only end up with what you need.

Utilize and Establish Multiple Supplier Relationships

Having working relationships with multiple suppliers means that you create competition for your orders. When suppliers are competing on price and delivery time, you’re more likely to get the best deal. Plus, with multiple suppliers, you shield yourself against electronics supply shortages or supply chain interruptions due to natural disasters. If one of your suppliers is affected by a natural disaster or runs out of the electronic parts you need, you have others lined up to prevent your supply chain from stalling.

Outsourcing Electronics Supply Chain Solutions

If supply chain management isn’t the center of your business and it feels more like a “distraction” to managers, outsourcing your electronics supply chain management might provide more benefits than just cost reduction (though that can be a big part of it, too!). There are companies, like Braun EC, that specialize in electronic supply chain solutions that can find inefficiencies, locate suppliers, and get better deals more quickly and affordably, making your job a lot easier.

If you’re interested in outsourcing for customized electronics supply chain solutions and supply chain cost reduction, Braun EC can help. We are a trusted, established supplier of electronic components and we believe you should be completely satisfied with the parts and services you receive. Whatever issues you face in your electronics supply chain, we can help you solve them, reduce costs, and realize greater returns. For more information, call us at (608) 338-0082 or contact us online, and one of our experts will be happy to help.

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