a source of competitive advantage
Industry Perspective
OEM’s / Brand Owners continue to wrestle with unpredictable market demand, steady price erosion, rapid product-technology obsolescence, and supplier sustainability.
Competition has driven Supply Chains to extremes
Electronics companies have been dealing with a hyper-competitive global market for years. The need to reduce costs and improve product performance has driven companies to re-organize around new global manufacturing facilities on a regular basis. In many cases, this is done through third party Electronics Manufacturing Services (EMS’s), or Original Design Manufacturers (ODM’s). While reliance on EMS/ODM’s has many benefits including improving return on capital and reducing manufacturing costs, it creates some challenges which must be managed in order to achieve success.
Contract Manufacturing presents particular challenges
In these contract manufacturing arrangements, EMS/ODM’s often purchase parts directly from part suppliers. When this happens, OEM’s lose visibility, and the ability to leverage their purchasing power over part suppliers. In an environment where part price/performance improves at a dramatic rate and part costs fall in time, the loss of visibility to part prices by the OEM costs real money…as much as 7-10% of part price. Additionally, EMS/ODM’s have grown quickly and in some cases have very leveraged balance sheets. In the current economic environment, many are experiencing an erosion of their credit ratings due to a reduction in activity and challenges meeting debt obligations. This may lead to higher part prices (as part suppliers incorporate payment risk into pricing) and the potential for interruptions to the supply chain (if part suppliers become uncomfortable with their exposure to their outstanding receivables with a particular EMS/ODM).
How Newview can help
OEM’s can re-take control of their part purchasing process with Newview’s Coordinated Network Procurement solution. This web-based technology solution allows OEM’s to source and negotiate part prices with part suppliers directly, and then “re-sell” parts to EMS/ODM’s directly. Supplier part prices are masked from the EMS/ODM’s, and CNP provides for part payment by “netting” against payments to the EMS/ODMs. This process returns visibility to the purchasing process, and eliminates the adverse cost and risk of deteriorating EMS/ODM credit.
Newview’s Coordinated Network Procurement & ‘Buy-Sell’ Process
Newview provides this capability through a variety of options. CNP can be delivered as a traditional software product, as a hosted (SaaS) solution, or in conjunction with our Business Processing Outsourcing partner, as a fully outsourced service. CNP is proven at volume in the global market, having operated for many very large companies.
