Inventory Balance and Supply Chain Insight Elevate as Strategic Assets  - Modern Distribution Management

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Inventory Balance and Supply Chain Insight Elevate as Strategic Assets 

A smart mix of profitable products and agile procurement strengthens a distributor’s competitive position, Avnet’s Peggy Carrieres discusses in a new MDM podcast.
Inventory Balance and Supply Chain Insight Elevate as Strategic Assets

When the pandemic began almost two years ago, the distribution industry struggled – like every other sector – to adjust overnight. Companies pivoted to adapt to COVID-related shutdowns while rapidly managing inventory to meet then-uncertain demand, says Peggy Carrieres, vice president of global sales enablement and supplier development for global electronic components distributor Avnet, in a new MDM podcast (available below). “And that’s still happening today,” she says. “But the conversation’s changing a little bit as we still keep going through this cycle. And we really don’t know when it’s going to end.”

For 2022, the key word could be “mix,” says Carrieres. Companies should review operations or reconsider partnerships to proactively get ahead of the curve; but they also need to understand that managing a mix of inventory needs with fiduciary stewardship has become paramount, she says. “Inventory is an asset, but it’s also a liability from the perspective of your financials,” says Carrieres. “So, you have to balance out the financial performance for your company, and having that optimized mix is important. I think the theme going into 2022 is that it’s still going to be a strong year, but managing that next is going to be very, very important, because we do have some products that are on sale on very hard allocation for a long period of time.”

Carrieres also notes that the shift has been to focus less on individual products and more on supply chain stability, with continued logistics issues. “Because it’s not just about the products,” she says. “It’s now the supply chain. How do we get the products where they need to go? I see the supply chain logistics issue as more pervasive than the products themselves. Our suppliers are expanding capacity. They are putting the capacity in place to expand. Those constraints and logistics are so pervasive, and I think that’s going to last for a while.”

In recent years, nontraditional companies without mature supply-chain or procurement organizations have entered the market, necessitating assistance from companies such as Avnet. “And that’s really the cornerstone of our capabilities,” Carrieres says. “So that design of supply chain is going to last a while, and we’re fundamentally shifting how we get work done and how we think about inventory. So, how long it will last isn’t really just about the market if we’re redefining how we get business done.”

Designing For Short-Term Hiccups and New Normals

The pandemic has presented challenges but also opportunities for change. The practice of designing for manufacturability, for example, existed long before COVID and recent supply chain issues arrived. In Avnet’s world — in the middle of the supply chain between design and production — designing for manufacturability focuses on what the product looks like at the very beginning of the design cycle all the way into production. For value-added suppliers like Avnet, this can mean packaging semiconductor and other electromechanical component solutions so they are easy to implement, change or put into practice effectively and efficiently.

The idea now has added applications, says Carrieres. “You want to make sure that you have enough profitability for that product throughout the product’s lifecycle, and there’s demand from customers,” she says. “Design for manufacturability today has changed even more, and what is driving that is all the shortages that have happened over the last year-and-a-half. We’re almost two years into the pandemic in our current situation.”

Avnet is working with customers to look at redesign options based on what electronic component products are available, which is not always an easy task. Many parts generally aren’t drop-in and replacement-ready depending on the design, so distributors have to work with customers to find more flexibility or use multiple-supplier products to keep the integrity of a design, says Carrieres. “Is it a consumer application? Is it a medical application? Industrial? Automotive?” she says. “Having that flexibility in the front end of the design gives you more choices once the product goes into production based on the availability of product.”

In the podcast, Carrieres also talks about how designing for manufacturability in software is just as important as in hardware for companies who deal in electronic components. In the automotive industry, vehicle production often includes different modules connected by software, and how vehicles are built can depend on whether companies use individual modules or connected, end-to-end products. Having those compartmentalized pieces can give companies more flexibility to swap out and improve components overall. “When you look at flexibility and the functionality of the product, how can you reconfigure that something, not just with the hardware but with the software?” she says. “The software capability is very different, and access is different than the hardware. So, how software and hardware play together is changing.”

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