According to a Q1 2018 survey of distribution companies by Morgan Stanley, signs of double ordering has reached an all-time high and shows no signs of stopping. 46 percent of distribution company respondents have reported double orders versus just 24 percent in Q4 2017.
There are two primary factors driving double ordering within the electronics manufacturing supply chain:
1. Speed
Manufacturers are looking to receive parts as quickly as possible to keep up with growing consumer demand.
2. Cost
As the price of electronic components rises, manufacturers are looking for the best possible prices to build their products.
Consumer demand for technologies like drones, wearables, and IoT continues to increase. However, supplier availability of the materials to make these items has failed to keep up, leaving electronics manufacturers scrambling to acquire the needed components.
The lack of supply leaves electronics manufacturers in a deadlock, unable to keep up with high demand and searching for solutions to automate electronic component purchasing and alleviate this problem.
Commonly, manufacturers are placing not-cancellable and non-returnable (NCNR) purchase orders with distributors. However, manufacturers continue to break these NCNR orders once they locate the same part from a different distributor at a lower cost or quicker. Distributors often avoid enforcing the NCNR agreements out of fear of harming relationships with existing customers.
Since distributors independently place orders and don’t share details with each other, they lack the transparency to monitor what their competition is doing, making it difficult to manage double orders.
“Sometimes working with your supplier, you can figure it out where they see significant upside on a particular part number or family of parts and then we can have conversations and compare notes,” explains Dan Casey, Executive VP at Global Distributor Future Electronics.
While communication between distributors and suppliers can be helpful, the lack of centralized documents makes it difficult to compare orders and gauge how many placed double orders are in the system.
Inventory and pricing for parts are impacted across the board when customers place double orders with different factions of the same company. These inconsistencies make it difficult for electronic manufacturing distributors to gauge the exact amount of parts in inventory and provide customers with accurate, real-time pricing for billing.
Electronics Distributors are turning to streamlined technology solutions to track and handle double orders.
Orbweaver Advance is a Request for Quote (RFQ Process) and PO intake software built specifically for the electronics manufacturing industry. Analyze’s innovative duplication detection capabilities analyzes your RFQ, PO, and line items to prevent your customers from placing double orders, saving your organization valuable time and resources.
To learn more about how Orbweaver Advance can prevent your customers from placing double orders, request a consultation with our electronics manufacturing experts today.
Sources: https://epsnews.com/2018/04/25/component-double-ordering-hits-all-time-high/
