ESE March10 p24 full page 02_Layout 1 26/02/2010 17:18 Page 1
24 OBSOLESCENCE
GETTING ENouGh
PRoDuCT?
It’s a dirty word that no one wants to hear, yet is on everyone’s
tongue – allocation. We asked suppliers to comment on growing
supply, allocation and obsolescence issues
The word on the street is actually loud and clear. Allocation is holding excess inventory
'the' problem of 2010. As far as Virtual Chip Exchange president, or risking penalties to
Michael Wood, is concerned, the levels of available-to-sell stock, smooth production
meaning those parts which are actually to be had as opposed to lines. We see some
reserved for another customer, is falling faster than at any time distribution networks
since 2006. failing to meet contracts
Michael explained: “Some manufacturers are over-reacting to
because they cannot
their own inability to keep up by forbidding inter-distributor sales
back fill their allocated
of their products. This approach never has the desired effect.
stock in time, but we
There is not enough product to go around and limiting access to
guarantee 100 per cent
Marketing man
ager of the Cy
clops Group,
some customer groups always has the same result – the prices go
of orders are fulfilled.” Beverley Sco
tt
up for everyone. Small and middle-sized OEM and EMS producers With demand for
are always hurt the most. components increasing,
“What ever happened to market transparency: show everyone
counterfeiting is on the up, says Beverley, as is obsolescence, with
all of the products which are available to sell and let the market
primary suppliers of components finding it hard to deliver. She
regulate itself. Free trade has always prevailed in our society and
added: “Independent distributors have supply agreements with
will continue to do so in this shortage cycle.”
preferential pricing, supply and delivery relationships, allowing
them to source faster, with, sometimes, better prices, which can
be passed to clients.”
Sourcing solutions
There is no denying that there will be further challenges ahead
Marketing manager of the Cyclops Group, Beverley Scott said:
for buyers and suppliers alike. It seems the only way to keep pace
“AFDEC predicts that slow growth will not appear until the end of is to keep talking, since the flow of demand related information
2010, but personally, I am more positive, primarily because of the ultimately regulates the flow of components.
success of our clients.
“We provide BOMs with six to 12 months requirements, some
even two years, holding stock in an environmentally controlled
www.virtualchip.com
storage facility. This means clients are not bearing the costs of www.cycelect.com
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MARCh 2010 electronics-sourcing.eu
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