Five Benefits of Working with a Digital Electronic Components Distributor

The semiconductor industry is returning to a new normal, and procurement teams need an edge. Partnering with an electronic components distributor benefits OEMs, CMs, and EMS providers of any size to dominate the competition.

The electronic components supply chain is changing. As the industry stabilizes after years of shortages and gluts, original equipment manufacturers (OEMs), contract manufacturers (CMs), and electronic manufacturing service (EMS) providers are reexamining their previous market strategies and operations.

During the Covid-19 pandemic and following the global semiconductor shortage, vulnerabilities previously overlooked evolved into massive disruptions. The lack of diversity amongst manufacturers, the overreliance on just-in-time (JIT) manufacturing, and loyalty to unfavorable contracts–particularly for aerospace and defense companies–proved to be formidable challenges.  

To prevent such a wide-scale event from occurring in the future, original component manufacturers (OCMs), OEMs, CMs, EMS providers, and even governments have been reassessing previous supply chain operations. One of the most notable solutions was increased diversity among geopolitical areas and the manufacturers themselves to boost multi-source availability.  

However, that is only one solution to a single problem. Labor shortages, rising instant obsolescence, and reprioritization by OCMs have further complicated the supply chain. It can be difficult for companies to manage these challenges independently, especially when it requires various tools and strategies.  

There is a way organizations can overcome these problems in one fell swoop. Partnering with a global electronic components distributor like Sourceability can help OEMs, CMs, and EMS providers combat supply chain challenges in any industry.  

1. Real-Time Market Analytics

Sourceability has a portfolio of robust digital tools that provide comprehensive data on the electronic components market. This data is gathered from our network of franchised, authorized, and qualified third-party suppliers. Sourceability has a collected data history going back over eight years on pricing, availability, inventory, and demand, allowing our data team to perform deep analyses of historical information. Our team can then identify market trends and their possible impact on the electronic components industry landscape.

Sourceability’s market intelligence tool, Datalynq, breaks down this heavy data into easy-to-understand risk scores. These risk scores alert users to design risk, market availability, multi-source availability, inventory, and price so engineering and procurement teams have more visibility into the electronic components supply chain.  

Similarly, Datalynq’s predictive analytics can help warn users of upcoming chokepoints during market shifts. Datalynq’s market intelligence comes directly from the global e-commerce site for components, Sourcengine, ensuring the information is accurate and current.

With real-time market analytics, design engineers and procurement teams can work together to create more sustainable product designs and boost cross-team transparency.  

2. Global Distribution Network

One of the complexities of the electronic components supply chain is its global footprint. The electronic components supply chain is a behemoth that stretches across oceans and continents and sometimes gets wrapped up in various regulations and other red tape. Trade restrictions, tariffs, and other laws may prevent some components from being shipped to your location. This can be especially troublesome when components are sole source with no alternates available.

As a global distributor, Sourceability has warehouses worldwide, allowing the company to ship globally. This gives Sourceability customers the added benefit of being able to purchase components that are not available through suppliers due to trade agreements or other restrictions. This ability can benefit many companies should a particular component be hard to find.

Sourceability’s e-commerce site, Sourcengine, consistently adds new suppliers and components to its marketplace. Sourcengine hosts over 1.6 billion component offers from more than 3,500 franchised, authorized, and qualified third-party suppliers. Beyond Sourcengine’s extensive catalog, Sourceability’s global team of sales experts can help locate or identify part offers that match customer specifications through our RFQ contact form.

3. Decreased Counterfeit Risk

Suspect counterfeit or non-conforming electronic components are becoming more sophisticated. During the global semiconductor shortage, lockdowns shuttered facilities, and lead times for products extended months, if not years, out. Many OEMs, CMs, and EMS providers had to go outside their usual suppliers for parts. Often, this desperation led many buyers to seek out offers that, if the market were more stable, they would avoid.  

Unfortunately, organizations lost stock and capital when these suspicious offers delivered non-performing counterfeits. Even outside the constraints of the pandemic, counterfeits are constantly evolving, and finding new ways to enter the global electronic components supply chain. During crises like the worldwide semiconductor shortage, it just makes it easier.

In a recent article by EPS News, 86.7% of surveyors agreed that counterfeit components were a significant issue within the industry. Similarly, 87.8% agreed that the damages allotted by counterfeit components often exceeded $50,000. This survey was taken between November 2023 and January 2024, meaning that even outside the desperation of the shortage, counterfeits were still causing considerable damage to organizations.

To combat this problem, OEMs, CMs, and EMS providers sometimes resort to an old, incorrect mindset: that counterfeits can be avoided by purchasing only active parts or buying outside China. The Electronic Resellers Association International (ERAI) reported that 32.5% of counterfeit parts originate within the U.S., and 32.8% of reported counterfeits were active components with extended manufacturer lead times. The remaining 13.2% of reported counterfeits were active components that were readily available.  

Due to the global expanse and complexity of the electronic components supply chain, many OEMs, CMs, and EMS providers lack transparency of each point in their supply chain. This lack of visibility makes it easier for counterfeits to slip in. Organizations should prioritize purchasing from suppliers with the appropriate certifications and testing methods to diminish counterfeit risk adequately.

Sourceability considers counterfeit components a severe risk. To properly address this threat, Sourceability uses the latest testing equipment and certifications to weed out non-conforming parts. Every part sold through Sourceability and Sourcengine, undergoes rigorous testing to ensure authenticity. Likewise, Sourceability is certified in ISO 9001, which establishes a robust quality management system for its workforce to abide by.

Furthermore, should any part not perform as expected, Sourceability offers a 3-year warranty on all components sold through it or Sourcengine. This ensures buyers won't lose any money or time if any counterfeit or otherwise nonfunctional component slips through its stringent authentication process.

4. Solutions to Market Challenges

The electronic components supply chain is bound to experience dramatic market shifts. The global semiconductor shortage and the following market glut are such examples. Even before the pandemic-spurned shortage, the market experienced another scarcity in multi-layer ceramic capacitors (MLCCs) when OCMs issued end-of-life (EOL) notices amid increased market demand.  

Likewise, periods of excess inventory are just as impactful as shortages on a company’s operations and revenue. 2023 proved to be a challenging year for most companies despite the help from booming demand for artificial intelligence. Strategic production cuts helped tighten supply, but inventory overhang challenges continued into 1H2024.  

Black swan events, or surprise events that cause significant impacts are becoming more commonplace. Rising geopolitical volatility, billion-dollar weather events or natural disasters, evolving technology, and other factors can cause disruptions worldwide in the electronic components market. When these events occur, it can take time for a company of any size to adapt rapidly. This is especially true for small or mid-sized OEMs, CMs, and EMS providers that don’t have the same connections or purchasing power as Tier-1 companies.

Fortunately, electronic component distributors can offer solutions to these shifting problems. Sourceability provides solutions to help with all challenging market shifts from scarce components to inventory overhangs.

Sourceability’s global team of experts can quickly source hard-to-find components during strenuous market conditions like shortages. Similarly, our FAE team's expertise can conquer other factors contributing to component unavailability, such as instant obsolescence.  

In contrast, excess inventory can be sold through Sourceability’s selling models on Sourcengine. For companies interested in the market value of their excess, representatives can use Sourcengine’s Excess Estimator to calculate their maximum cash return for selling their excess on the market. With this information, organizations can price their excess appropriately to then sell on their own site or Sourcengine’s.  

Remaining aware of market trends is half the battle. Sourceability’s market monitoring tool, Datalynq, can help organizations proactively prepare for shifts, helping companies avoid challenges.

5. BOM Management

It can take hundreds, if not thousands, of parts to complete one product. Growing demands for device connectivity, customization, and other features increase the demand for electronic components for various products. As the bill of materials (BOM) grows, it becomes more difficult for procurement teams to manage.  

Procurement teams spend most of their time shifting between supplier websites or calling representatives to compare the best component deals. These manual processes can take hours, days, or weeks, depending on the BOM's length and the parts' availability. There is often an increased human error rate in stressful and repetitive tasks, leading to inaccurate or outdated information infiltrating BOM management. This can lead to time waste, loss of revenue, and even stalled production.

To circumvent these issues, having a streamlined BOM management tool integrated into a market monitoring platform and e-commerce site can help procurement teams automate processes and make more informed decisions.  

Sourceability’s Datalynq allows users to monitor each component on their BOM with a simple upload. With Datalynq’s comprehensive library of technical and historical market data, procurement professionals can see which components are more at risk of disruption and plan accordingly. Likewise, Quotengine, Sourcengine’s BOM management tool, allows users to quickly find matches for components on their BOMs from Sourcengine’s over 1.6 billion offers. Users can then filter these offers to fit their specifications or request an RFQ if none fit the bill.  

Organizations can make more informed decisions faster through efficient BOM management and streamlined processes. Sourceability’s Sourcengine API allows companies to run the marketplace within their enterprise resource planning (ERP) system, where offers can be revealed to organizations for parts as they appear on their BOMs. This frees up time and resources so the organization can focus on more intense or involved tasks.  

Get Started with Sourceability for These Benefits and More

Working alongside an electronic components distributor provides more than just a new supply of electronic components to purchase. Electronic component distributors like Sourceability offer solutions to growing problematic trends within the industry, such as labor shortages or component unavailability. This can immensely benefit small and mid-sized OEMs, CMs, and EMS providers that might need more resources to combat all the challenges that typically impact the electronic components industry. Large organizations can benefit from these solutions even with the additional resources they may possess.

Sourceability continuously looks for new ways to improve its tools as the industry evolves. Our experts are ready to offer their expertise and knowledge no matter how complex the problem. With the quick shifts from shortage to glut over the last few years, we know the industry is about to enter a “new normal” rather than the stabilization we are used to. To navigate these changes, Sourceability will seek new ways to provide solutions to all OEMs, CMs, and EMS providers.  

Ready to get started leveraging Sourceability’s tools? Contact our experts to learn more here.  

Author of article
Kathryn Ackerman
Kathryn Ackerman is a senior copywriter with experience in the electronic components and tech industry. She works alongside Sourcengine's experts and engineers to provide the latest and most accurate updates within the electronic components industry.
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