Managing USD $50 Million in Spend for an Electronic Components Manufacturer – A Strategic Sourcing Study

Overview of the Electronic Components Market

The world around us is constantly transforming, thanks to the rapid development of modern technologies. The rate of change and advancement in electronics is startling to be modest. If you look back a decade, you’ll notice how far we’ve come in terms of electronics making groundbreaking strides in various industries. In the midst of such rapid developments, maintaining profitability, market share, and leadership becomes a major concern for the manufacturers of electronic components.

To survive, companies in the electronic components market must be as flexible as they are quick.

However, just being flexible isn’t enough for companies looking to dethrone the current heavyweights in the market. The supply market today is extremely competitive, and to stay a step ahead, companies in the electronic components market must learn to adapt to uncertainties in demand and short product lifecycles. In addition, the emergence and acceptance of regulations and standards that compel companies to focus on Corporate Social Responsibility (CSR) will force companies to keep tabs on the amount of e-waste generated by them. 

The Business Challenge and Journey

Client background: A fortune 500 multinational corporation, the client is engaged in producing a multitude of products in the electronic components market. Headquartered in the United States, the company employs over 30,000 employees while providing services to customers in over 40 countries.  

• Client issue: The largest challenge to overcome was ensuring that the correct hardware was purchased from the best quality source while still achieving the lowest price possible and guaranteeing the quickest delivery time.
• Client journey: The client identified global suppliers by measuring the quality, price point, and delivery time of the part suppliers. They also implemented industry best practices across the supply chain to manage and provide: parts forecasting, contract administration, global fulfillment, small parts sourcing and other direct material procurement, product quality engineering, product returns, value product engineering, logistics, and program management.

Research methodology: To help the client in ensuring that the correct hardware was purchased from the best quality source while still achieving the lowest price possible, the strategic sourcing experts at SpendEdge devised an integrated research approach. The approach included primary research methodology coupled with qualitative and quantitative data collection methodologies. The experts also congregated information from a wide array of secondary sources such as paid, company presentations, industry forums, and industry database within the ICT industry space.

Key questions answered in this strategic sourcing engagement include:

The Results

The electronic components manufacturer managed USD $50 million in spend. Additionally, they delivered continual cost reduction from 2% to 10% annually and oversaw and managed over 30,000 part numbers.

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