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Smart PCB Sourcing Concepts
Whether you are an EMS, or an OEM, defining the right sourcing policy for PCBs and components is an important strategic management task. Making a forward-looking decision creates results that help improve company’s competitiveness.
Take a large EMS companies that has a PCB purchasing volume in the order of half a billion USD. A holistic approach to draw on all available efficiency boosters in the companies’ sourcing environment (organizational set-up and purchasing efforts) will award the bottom line with single or double digit million savings. It is worth pursuing a smart PCB sourcing concept.
Classifying your PCB Purchasing Portfolio
Before defining a sourcing policy one has to know the “DNA” of the purchasing portfolio. One way of analyzing it is to cluster it into two major groups – technology and volume requirements. There is also an additional option to classify into a third major group – business segment – for additional structure.
Recommended technology subcategories are: rigid boards, flexible/rigid-flex boards, heavy copper, HDI, IMS requirements. The 2nd group, the volume category, may be clustered as low, medium and high volume groups.
Having classified your portfolio, you need to find an efficient sourcing strategy which ought to be implemented tactically by the procurement department.
Purchasing Demand meets Market Supply Situation
The requirements of an often highly diversified PCB portfolio (technically and lot sizes necessities) traditionally meets a very different market reality on the supply side. PCB producers are often strong technically and commercially in mainly one particular PCB segment, e.g. low layer rigid boards only, or high volumes only, or flexible boards and low volumes only. This will not cover a wide and diversified PCB portfolio.
Sure there are producer around that offer multiple volumes and technologies from one source. However, one has to answer the question: Does this “Jack of all trades” situation always offer me the most reliable and competitive solution?
If you believe the answer to this question is “no”, naturally your sourcing policy tends to require a multiple sourcing strategy. If you believe the answer to this question is “yes”, naturally your sourcing policy tends to require a single sourcing strategy. Which sourcing strategy is the best and what are the strength and weaknesses?
Sourcing Options
Mainly there are four different approaches to sourcing:
- Sole sourcing (only one supplier in the supplier base – e.g. because of a patent)
- Single sourcing (one single supplier is selected out of a choice of suppliers)
- Dual sourcing (two suppliers are selected)
- Multiple sourcing (multiple suppliers are selected)