Dan Haines, Supply Chain Manager at FermionX takes a look at how opportunistic the electronic component distribution marketplace has become.

Component prices have risen dramatically in the last 12-months.  Increasing demand and lack of availability has led many distributors to increase their prices accordingly, knowing many manufacturers have no choice but to pay.

But just how honest are these distributors being? A new trend is emerging, where advertised stock levels are often false or massively inflated. These distributors seemingly have no intention in keeping stock levels accurate on their online portals. Instead, they’re continuing to advertise non-existent stock to help drive traffic and enquiries to them.

As manufacturers, we’re also finding that distributors are now consistently asking us to commit to higher, longer-term scheduled orders in order to release quantities of existing stock to satisfy (sometimes only partially) our short-term supply issues.

The underhand tactics being used by some distributors merely highlights the lack of loyalty they show to their existing customers. More often now we’re seeing distributors claim that all current stock is reserved for existing customer demand. However, they’re prepared to release some of that stock if we commit to these longer-term schedules. If true, this means the stock reserved for their existing customers is being used to fulfil our demand, leaving the original customer short.

Is this the kind of activity we want to engage in when we’re all working so hard to ensure the UK electronic manufacturing industry gets back on its feet after 18 months of uncertainty?

Adding to this, distributors rarely update their customers when stock availability or delivery dates against an existing order changes, leaving many businesses expecting delivery and planning manufacture around phantom delivery dates. This creates a knock-on effect for their customers, who will be let down when the stock ultimately doesn’t appear.

Sadly, the only people who benefit from these tactics are the distributors and their finances.

Collaborative solutions

So, what can we do as an industry? How we can we support one another to ensure stock supply for our customers without effectively pinching it from someone else’s order?

At FermionX, we’ve always been very proud of our strength in supply chain management and we have a dedicated team who work hard to manage customer expectations. We don’t want to see that slip and we certainly don’t want to let anyone down. Which is why we’re diverting our requirements to more trustworthy sources where possible and working closely with our customers to forward plan. We’re also looking at our business model to reduce the burden of cost on our customers.

Now is a time for CEMs to work collaboratively, to share information on their excess stock availability which may benefit another manufacturer. If we can turn this into something which would unite us rather than falling for the distributor tactics which leaves us all fighting in the dirt, then we will come out of it a lot stronger.

If any CEMs want to get in touch and see how we can work more collaboratively, please do feel free to get in touch on 01903 524600 or email  danhaines@fermionx.com.

You can also read this article in the November 2021 edition of Electronics Sourcing Magazine.