Global procurement professionals are facing more challenges than ever — tariffs, trade wars, environmental regulations and patent/IP protection. Fortunately, they are up to the task.
Worldwide, electronics purchasing managers have an average of 16 years on the job, according to EPSNews’/Aspencore’s first global procurement study. They work more than 40 hours a week; spend a lot of time with designers and engineers; and aren’t afraid to veto component selections. More than half – 54 percent—of all purchases and vendor selections are made from an approved vendor list, but 21 percent of the time engineers specify non-AVL products or vendors in designs.
Still, many buyers fear they don’t have enough training to maneuver complex regulations and escalating trade tensions. Manufacturers are now seeking vendors outside of China, but they must be vetted. U.S. imports and exports are getting more scrutiny at seaports and boarders. A potential boycott of China’s Huawei Technologies may shift supply chains further. Only 14 percent of respondents rate themselves as “very experienced” in coordinating global supply chain activities.
Procurement department are also struggling with a supply chain that’s not truly global. Eighty percent of respondents prefer a partner that offers consistent products, pricing and services around the world. For electronics distributors—still the main source of components and supply chain services for the industry—that’s not always possible. Prices may differ region-by-region; global franchises aren’t always available; and now the U.S.-China trade war has increased scrutiny on certain international shipments.
In fact, “think global, act local” is the reality for buyers in the Americas; Europe, Middle East and Africa (EMEA) and Asia-Pacific. International manufacturers still manage these regions as separate profit-and-loss (P&L) centers and, of course, customer requirements differ country-to-country.
Both buyers and distributors say they could use more support from suppliers. Few procurement professionals feel they have the needed know-how to effectively manage complex global supply chains without supplier assistance. Only 19 percent of respondents feel “very experienced” in establishing international or global supplier relationships; 14 percent are confident in their global supply chain coordination skills. Eighty percent want partners that can support their global supply chain operations.
Buyers are also contending with a growing schism between distributors and suppliers. Texas Instruments Inc. – one the supply chain’s most prolific brands – will drop six distributors by the end of 2020. Many component makers are moving away from programs that incentivize distributors to push their particular products. As component margins continue to decline, these partners are playing tug-of-war over who best serves customers.
Customers seem to be leaning toward component makers. Thirty-two percent of respondents rely on component suppliers for their supply chain requirements versus 22 percent that rely on distributors.
That said, authorized distributors remain the top choice for component supplies around the globe. Sixty-eight percent of buyers prefer distributors that offer the same products and services worldwide. Fifty-eight percent want consistent global pricing for the products they buy.
Regionally, buyers differ on where they find their information. Asia-Pacific managers consume most of their information from FAEs, events and social media. Their colleagues in North America are more likely to use distributor and product aggregator sites; those in EMEA are most reliant on ODM websites. Asia-Pacific buyers prefer manufacturers who provide accurate and timely technical reference materials and are less swayed by AVLs than others.
Buyers’ skill sets also differ by region. Americas-based purchasing managers have almost twice the experience of their peers in Asia-Pacific. Asian procurement professionals are less apt to disagree with their peers and managers than buyers in EMEA and the Americas. But most buyers – 87 percent—exercise some level of independence.
They also share the same gripes:
- 65 percent have been asked by their company to do more with less
- 58 percent say they have too much work to do everything well
- 55 percent feel ‘disconnected’ from professional communities outside their companies
Americas/EMEA buyers say they are “deeply concerned” with a slew of issues, including vendor management; global trade; regulatory mandates and legal dilemmas. Asian procurement professionals are concerned with honing their skills; keeping on top of global trade issues; and achieving a work/life balance.
Twenty-nine percent of respondents have manufacturing operations in the Asia-Pacific region. Buyers in the Americas, however, are more likely to manage supply chains rather than sourcing commodities. This group views procurement as a strategic asset and spend significantly more time than others solving logistics and inventory challenges, negotiating with vendors and staying on top of global business and economic conditions.
Based on the vast array of skills required by procurement professionals, relative newcomers to the profession hold “white belts;” highly experienced managers are considered “black belts.” Thirty-five percent of respondents fall into the “brown belt” category: They’ve moved beyond mastery of basic buying behaviors to include vendor relationship management, including performance evaluation and how suppliers can help them lower costs and gain competitive advantage.
Electronics procurement professionals, who continually hone their skills, will need all of them in a challenging global market.
EPSNews conducted a survey via e-mail between May 30 to July 15, 2019 of individuals personally involved with purchasing electronic component products or services and those that manage supply chain activities for their organization. It received 298 responses worldwide.