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Future Electronic Components Supply Chain

When it comes to electronic component suppliers, we would like to mention distributors, agents, original manufacturers and traders, which play important roles in electronic components industry. With big data, IOT, cloud computing, and AI as emerging power and a massive part swarming into various industries, new digitization channel of electronic components connected to Internet came into being, namely online supply chain service platform, which is an inevitable tendency. This article aims to analyze the industry status of electronic components and demonstrate the prospect in the future.

Todays electronic components Supply Chain business model

Now electronic components suppliers catering to end users mainly refer to agents, distributors, traders or even some original manufacturers. If we have to tell their difference, that will involve the circulation chain.

For example, some end users with large quantity will import the components directly from original manufacturers but only for the single product line. Therefore in order to extend their business line, some of them will not only provide their products with original manufacturers but also authorize some agents, which is their mainly business scope.

Thereby, agents can be regarded as the original manufacturers incarnate. But they do not manufacture products, only promote and connect to more partners and customers to customize the brand product. But as for distributors, they have similarities with agents. Most of them have relatively large quantity stock in few materials. So they also be regarded as catalogue distributors, serving large and medium ODM, OEM, EMS factories with single materials but large quantity. Most of the components are from agents, traders even end users.

Moreover, they are always accompanied with shortage and purchase price variance.When the components are under supply, these distributors will search and pick parts for you in the global market, which also means the floating price and high margin. Surely they also extend their business on the future goods whose profit can not catch up with stock, however they can be treated equally as agents by end users when long-term and stable supply is reached. As a consequence, we can conclude that agents and distributor can guarantee the stock for you but they can not totally assured that extensive product line and relatively competitive price. In terms of traders, the biggest difference between agents and distributors is authorization. Obviously, traders do not have the authorization. They have very extensive product line that can guarantee a flexible supply for your project. But that also means the business is along with high risks and complexity. So, there indeed need a detecting system to monitor and regulate the fake ones, which is absolutely unable to avoid. Some traders have their strict standard to test their products because there are so many counterfeits in the electronic components industry, especially for traders without authorization.

Anyway when there is increasing demand for electronic components, some end users even some agents and distributors sometimes extend a business with them when undersupply occurred, which also signify the high price compared with usual ones. We can infer that there are advantages and disadvantages via analyzing these suppliers. But in my opinion, these suppliers’ generation is also a kind of evolution  process of simplify and efficiency in the electronic components industry, but tough problems exist around all the suppliers and customers. Such as sharply floating price, delaying, materials shortage, fake components and so on. Then a new supply chain model of electronic components has been being expected to cater to requirements and standard in the new era.

In order to adapt to the trend and progress of technology and IOT, online supply chain platform of electronic components emerged on a small scale for now. But the model is indeed favored by more and more target customers. So how does this model platform work and what is its prospect and situation? We can conclude that “Direct marketing + Third party entry” simultaneously can be incorporated in the online platform. Direct marketing can be understood that the online distributor platform can directly start the business with customers. But as for the third party entry , It refers to various original manufacturers, agents, distributors or even traders as third-party service providers having access to entering the platform to extend their line of business. Therefore, the two methods integrate with the big data, which facilitates the platform to reach online all-around and overall supply chain service. At the same time, the online platform keeps the whole supply chain team on the same page with ease and security. But how does the online electronic components platform achieve that? I like to analyze it from three points: Big data Artificial and intelligent supply chain  and  Target for SME (small and medium enterprise) .

Big data

With increasing globalization, no body can stop big data era coming. Even fast-food restaurants are using data analysis to optimize customer service. Data analysis can promote growth by providing information that is vital to growth strategies including customer preferences, regulatory differences, competition analysis and more. In the electronic components industry, enough and huge items data and incorporating data analysis into the supply chain can help a company improve visibility throughout the entire chain. Especially for the industry, components’ price floating, quick upgrading and large quantity urge that a new platform can help massive customers find the most suitable and comprehensive components for them, which is involved with a big database to compare, analyze and pick the most appropriate parts and offer more decent price via constantly uploading and optimizing data. Therefore, database is more like a structure of the platform to support the whole well- organized operation.

Artificial and intelligent supply chain

The next one is artificial and intelligent supply chain that is to reduce  length of the chain to some extent by cutting down a middleman. It is well known by us that several materials will be easy for customers to purchase but as for some purchasers, they will need to deal with one or several whole BOM lists that maybe be related to much work for them. At this time, it will be so tiring to get quotations from several distributors, agents or traders for respective materials. But the online platform of electronic components can cater to the demands by shortening  procurement process. So a intelligent components platform enable customers to get a one-off BOM mating within shot time. Besides, they can flexibly deal with BOM issues such as alternative components for  EOL components or shortage components. After matching, the online supply chain platform will take the responsibility of jobs from customers’ enquiries to product delivery, which largely saved the time, cost and resources for customers.

Target for SME

Just as we mention, third party entry is available on the platform. Lots of original manufacturers and agents can enter and cooperate with the online suppliers. But as for the large enterprises’ purchasers, they often directly keep touch with original manufactures due to large quantity. There is no necessary for them to get involved with agents, distributors, traders even some platforms. Single original manufacturers can totally meet the requirements of big enterprises offline. However, for SME, they maybe do not need components in large quantity like big enterprises but with various item, which conduces to the need of a supply chain for their projects. According to the statistics, the SME takes 70% in electronic components trade. Therefore the online supply chain platform is apt to massive market-SME because its overall supply chain service is available to complete materials data for SME.

 

It is firmly believed that more and more online supply chain service platforms will emerge and step into the main electronic market.

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Felix Law
An analytics of industry.

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