Category: E & O

Posted on

Collaborative Commerce: The Solution to the Worldwide Chip Shortage?

The worldwide chip shortage is the most severe it’s ever been, and some companies are turning to Collaborative Commerce as a solution.

What is Collaborative Commerce?

Collaborative commerce (c-Commerce) involves using new technologies to optimize a company’s supply chain through collaboration. 

Elements of Collaborative Commerce:

  • Typically, c-Commerce is a business-to-business (B2B) transaction involving a trading community or a segment of an industry.
  • Buyers and Sellers might use a common platform to share information, and agree to abide by the rules of the collaboration community. 
  • Often, the buyers and sellers are rated by their peers, just as in e-commerce platforms. 
  • Finally, many of these platforms offer anonymity and buyer protection against fraud and counterfeiting.  

Shortage Crisis- Recent Reports

Here are a few recent reports on the chip shortage crisis:

According to AVNET’s Feb 22′ Lead-Time Guide, lead times have reached 80 weeks for some parts, with 52+ weeks more common than ever.

Intel’s CEO expects the chip shortage to last into 2024

To combat this crisis, many companies are turning to Collaborative Commerce platforms like Silicon Valley-based MOQller.

MOQLLER: A Game Changer for the Worldwide Chip Shortage Crisis

MOQller has created an innovative platform where companies can solve supply chain problems through collaboration. 

Because companies can exchange information online, they can reach a much broader audience. 

This allows buyers of parts they can’t find to locate sellers of parts they don’t need. 

MOQller leverages a simple fact of component supply chains: “one company’s shortage is often another’s excess”.  

Start Collaborating NOW for FREE

Reducing Excess- At a Profit?

According to a recent study by Hewlett Packard, the average salvage value of excess inventory is less than 5%.  

Collaborative Commerce promises to disrupt this common practice by allowing companies to sell parts as soon as they become supply chain excess, while the parts still retain their market value. 

There’s never been a better time to sell off excess material. MOQller customers are selling excess at a profit to eager buyers happy to pay top dollar. It’s a win-win.

CFOs May Be the Happiest of All

Even mid-sized OEMs and Contract Manufacturers have millions of dollars of working capital tied up in excess inventory at any given moment. 

Freeing up this working capital is critical to reducing the cost of capital, storage, and many other costs related to carrying excess inventory. 

Collaborative Commerce Promises True Sustainability

Inventory optimization has been the goal of sustainability programs for years.  One often hears of the “circular economy”.  

By offering true supply chain transparency, c-Commerce offers a true path to true sustainability and reduced excess inventory scrappage that simply has not been possible before.  

Summary

Collaborative Commerce  is the disruptive technology that will forever change the electrical component industry, and for the first time inventory optimization is an attainable goal.  

More and more companies are joining the c-Commerce revolution, eager to leave the old supply chain inefficiencies and waste behind.  MOQller is at the forefront of this revolution.

About MOQLLER

Located in the heart of Silicon Valley, MOQller is a collaborative commerce platform for electronic components  that allows companies to optimize their inventory by selling or buying directly from their peers.  The driving principle behind MOQller: One company’s shortage is another’s excess.  

Join the MOQller Collaboration Commerce Community for FREE.

Posted on

Electronic Components Date Code: Like “Mama Always Said”

“My mama always said, life is like a box of chocolates. You never know what you’re gonna get”— Forrest Gump, 1994. In the movie, Mama (played by Sally Field) uses this analogy to explain to Forrest how life is unpredictable. In reality, we do know what we’re “gonna get” when we buy a box of chocolates or any products. We also know the expiration or use-by date and when and where it was made. As important as knowing what we’re getting, we need to be able to trace back to when it was made. This information is referred to as batch code or date code.

Similarly, in electronics components, the date code indicates the manufacturing date. There is a standard published by the Electronics Components Industry Association (ECIA) that requires a four-digit date code marking on the components. Following the standard becomes impossible when the component size is shrunk to smaller than a grain of rice. According to the ECIA, the date code is marked with the four digits (YYWW); the first two digits stand for the last two digits of the year, and the last two digits are for the number of weeks. When date code marking is not possible, then it falls on the manufacturers to define the format and where customers can get that information. This results in a different format for different manufacturers. 

Why the need for traceability?

“Today, more than ever, customers require component traceability back through the supply chain to the manufacturer as part of their counterfeit prevention policies” — ECIA guidelines. The counterfeit problem has exploded in recent years due to the shortage of parts in the market as demand grows and the sophistication of the counterfeiters.    

During my years as a manufacturing engineer, part of failure and root cause analysis was to look at the date code of the components to figure out if there is a trend. Using date code information as part of the analysis, it helped to isolate the product failures due to defects during component manufacturing, during the assembly process, or inherent in the customer product design.  

“Moreover, date codes may be contributing to one of the supply chain’s biggest problems: excess or obsolete inventory,” according to Barbara Jorgensen. “Components are rarely, if ever, consumed immediately by end customers. Finished products may sit on a warehouse shelf for months or even years. Date codes can expire if components aren’t moving.” (Are Electronics Date Code Practices Obsolete?, EPSNews, August 8, 2017.)

Also, electronics components degrade over time. Some Electronics Manufacturing Services (EMS) companies mandate not to use any components with date codes that are older than 2 years. This is due to the solderability issue. If this catches on and guidelines are established, there will be a lot of excess inventory to be scrapped to landfill. This is conflicts with our global plan in the circular economy to prevent E-waste.  

Solving the date code problem

Perhaps advancements in technology like Blockchain will allow us to trace the component supply chain without the need to mark on the component, solving all these issues.  But for now and in the immediate future, date code is our only way to trace electronics components as they make their way through the supply chain. With the COVID-19 pandemic, companies are beginning to understand the need to collaborate with others in a sharing ecosystem — an ecosystem that allows excess components to be used efficiently rather than sitting on warehouse shelves. When excess components change hands often such that excess and obsolete inventory is eliminated, date code practices may not be important and therefore become unnecessary. 

Posted on

Excess Inventory – Why don’t we talk about it?

“The first rule of fight club:  YOU DON’T TALK ABOUT FIGHT CLUB.”

“The second rule of fight club:  YOU DON’T TALK ABOUT FIGHT CLUB!”

Every time the topic of excess materials is mentioned, I am reminded of Brad Pitt’s quote from the famous 1999 movie “Fight Club.” No one wants to talk about excess because no one wants to deal with it. However, when we don’t address the problem of excess early, it actually leads to more uncomfortable conversations about this perpetual supply-chain pain point.

In my many years in the contract manufacturing industry, I have attended countless meetings with customers and upper management to discuss and debate who ultimately owns the excess-inventory created by customers’ changing demand and how we could resolve this recurring issue. The constant struggle to determine who owned the excess-inventory strained customer/supplier relations and wasted valuable time on unproductive meetings, adding to a program manager’s already long 10- to 12-hour workday.

Sometimes customers agreed to assume responsibility for the excess materials, which helped clear space in my company’s warehouse. However, the excess problem just transferred and wasn’t really resolved, because the materials were moved to the customers’ facilities, taking up valuable space. They often ended being scrapped at a later date.

Today’s excess inventory process

The current procurement process of electronic components is this: The company orders materials based on customers’ demand forecasts, uses what it needs to make the products, then stores the excess parts in the warehouse. If there is no future demand for those excess parts, those materials usually sit there. When the excess materials accumulate to the point where there is no more extra room in the warehouse and the company can no longer ignore the issue, the excess parts are often scrapped, written off, or liquidated at a fraction of their original acquisition costs. And the process repeats.

Companies that try to do the right thing to save the environment and keep electronics waste out of the landfill by selling them to brokers usually find that the cost recovery is so low that they deem it not worth the time and effort. The other problem is aging and obsolescence. Since the materials have a shelf life, other companies may not want to buy these materials at all if they are too old or obsolete.

According to EPSNews, excess and obsolete inventory is a multi-billion-dollar problem.  So why are companies ignoring this huge problem? Is it a resource allocation issue? Is it a cost-recovery issue? Is it the complex and time-consuming process of getting rid of the excess materials? There must be a viable/workable solution to eliminate or at least alleviate this perpetual supply chain pain point!

How does you company deal with excess materials? Maybe it’s time to talk about it.