7 Ways Authorized Distribution Helps OEMs
7 Ways Authorized Distribution Helps OEMs
A wide array of products now include electronic technology, so original equipment manufacturers (OEMs) are scrambling to understand how to navigate the supply chain landscape of buying high-quality components. Then a disruption threatens and there’s a temptation to source electronics content from unauthorized sellers in order to avoid shortages and manufacturing line shutdowns. As demand for electronic components goes up so does competition– and demand can outstrip fab capacity causing more chaos.
Shortages demand smart planning to balance availability, economics, and a host of other factors. Lead times were up to 40 weeks for microcontrollers and sensors as of Q2 2023. Meanwhile, CPUs and DRAMs were in surplus. McKinsey and Co. postulates that waves of supply and demand mismatches across chip sizes, industries and production centers are just part of the sourcing landscape for the foreseeable future. By partnering closely with authorized distribution partners, OEMs can alleviate shortages and balance oversupply/undersupply across component types while lowering the risk associated with unauthorized or third-party sellers.
The argument for authorized distribution
High-quality components require precise production and handling. Modern OEM processes are precisely calibrated to protect profits. Substandard components or unfilled orders threaten an OEMs business. Let’s explore the many advantages associated with sticking to authorized channel distribution.
- A is for authenticity: Avoiding counterfeits
Unauthorized sellers are a tempting path in a manufacturing trust, but this short-term fix can cause long-term problems. A quick fix can seem like a godsend when parts are in short supply elsewhere. Avoiding a manufacturing shut down in this way can lead to irreparable damage associated with product failures, safety hazards or recalls. Furthermore, using counterfeit components can lead to legal actions and financial liabilities. Unfortunately, counterfeit electronic components are rampant, as scarcity makes them lucrative. From 2021 to 2022, there was an increase of 35 percent in the number of reported counterfeit parts despite global semiconductor sales remaining flat during that time, with analog, programmable logic and microprocessor ICs topping the list. Using authorized channel distribution guarantees components are genuine and that they meet their manufacturers’ high quality standards.
- Supply chain consistency
Lead times for electronic components can extend well beyond 300 days during peak demand. Authorized channel distribution helps OEMs avoid stockouts and delayed deliveries with a stable and uninterrupted supply chain. Reputable distributors offer consistent, timely deliveries and help OEMs avoid sudden disruptions that could halt production. This reliability is vital when it comes to meeting production deadlines, aligning to customer needs and maintaining a competitive advantage.
- Technical support & expertise
Authorized distributors provide expertise on technical and supply chain issues to help OEMs make informed decisions about the components they incorporate into their products. These distributors possess in-depth knowledge and certifications for the brands they represent, and can help with product selection, specifications and integration in order to improve product quality, limit design errors and enhance customer satisfaction.
- Quality control & compliance
Substandard electronic components can result in higher failure rates, increased warranty claims and customer dissatisfaction. The manufacturer may be liable to lawsuits and lost reputation due to damages caused by faulty product.
Authorized sellers adhere to rigorous quality control standards, so that parts meet manufacturer specifications and industry standards. In addition, authorized distributors also comply with each country’s legal and environmental regulations.
- Retain manufacturer warranties
Manufacturing warranties don’t apply to products that travel through unauthorized channels, leaving OEMs exposed to potentially expensive defects and failures. Authorized distributors provide direct access to manufacturer warranties for ultimate peace of mind.
- Supply chain transparency
Authorized channel distribution enhances supply chain transparency by allowing OEMs to trace the origin of components, verify authenticity and ensure compliance. Transparency helps OEMs to build a reputable and socially responsible brand and avoid harm to business and supply chain partner relationships through breaking regulations governing unethical and politically-sanctioned sourcing practices.
- End-of-life support
The end of life of an electronic component rarely if ever aligns with the decommissioning of the products being made. This is especially true in certain industries, such as aerospace and defense, industrial and medical equipment. Customers spending large sums on a piece of equipment want to know that they can be repaired or refurbished well into the future.
From guaranteeing genuine electronic components to providing technical expertise and reliable supply chains, working with authorized distributors helps ensure a successful and efficient manufacturing process. By prioritizing the building of relationships with authorized channel distributors, OEMs can build better businesses.
To read the article on EPSNews.com, click here: https://epsnews.com/2023/08/28/7-ways-authorized-distribution-helps-oems/