source: Electronics Sourcing news
Posted on April 3, 2017 by Electronics Sourcing. Mike Wood is vice president of product management and supplier marketing, managing commodity passives, at TTI. Here he explains how careful materials management strategy helps TTI stay ahead of capacitor supply challenges.
Market conditions for some passives can seem puzzling at first glance, with the situation in multilayer ceramic capacitors especially perplexing. TTI works hard to actively manage this challenging situation, helping to set best practices for the industry as these conditions continue into the near future.
Several variables affect why MLCC demand is booming. Continued growth in various sectors is coupled with the fact that one major MLCC manufacturer has curtailed production for internal reasons. This has driven customers to other manufacturers that have absorbed these impacts to the best of their ability, but the situation has been straining capacities and extending lead-times for many months. Lead-times for MLCCs have extended to over 20 weeks, when historically they were 10, while some case sizes and value ranges are experiencing lead-times of over 30 weeks.
As a global authorized distributer of capacitors, TTI manages a well-sustained inventory to meet customer orders. Using proprietary supply chain forecasting systems, TTI’s philosophy is to maintain a sizeable inventory cushion in all products including capacitors. Recognizing the potential shortage early last year, TTI’s MLCC product managers strategically expanded MLCC inventory. As a result, the company is in a good position with its current MLCC pipeline. As the top market share distributor for our ceramic capacitor manufacturers, TTI works closely with them to secure the future needs of mutually important customers.
Just as TTI is positioned favorably with those from whom it obtains products, so TTI’s supply chain program customers are in an advantageous position with TTI. Currently, roughly 35 per cent of our capacitor customer base engages with TTI in a strategic forecast sharing environment. We are working hard to ensure that the tightening supply pipeline does not negatively affect our strategic partners, our remaining customer base or those customers who find their current supplier does not hold sufficient inventory to meet their requirements.
TTI meets this goal by maintaining inventory levels. Our MLCC inventory in the Americas is significant, and, after our program customers’ needs are accounted for, more than two-thirds of existing inventory remains for other customers. The company’s advanced inventory management platform allows TTI buyers to continually assess customers’ historical and forward-looking demands, as well as manufacturer lead times and market trends, to make sure the right pipeline of material is available. With more than 1.2 million square feet of automated warehousing in North America, Europe and Asia, all linked into a global warehouse management system, TTI aims to ensure customer service and overall business efficiency.
In addition to technology, TTI employs an array of materials management professionals whose experiences help them anticipate market trends. Our corporate product managers boast decades of experience managing their products, working with suppliers and dealing with changing market conditions. These dedicated product managers have seen the markets fluctuate over time and they understand the leading indicators of potential disruption or normalization.
Product managers in all passives lines are watching the market, buying ahead and working with suppliers to ensure an adequate inventory. Their relationships with suppliers are key to their success. TTI’s product specific product manager model helps obtain deep insight into the nuances of various products. For example, in tantalum we have three product managers with more than 70 years combined inventory management experience. Warehousing and purchasing systems are fantastic, but at times, personal experience is required to successfully navigate market changes and reduce customer risk.
Just as important as supplier relationships are TTI’s ongoing interactions with customers. The company alerted customers to the MLCC shortage in 2016 and continues to communicate with them about this issue. Continued support of TTI field branch product managers means they receive weekly updates from the corporate product teams, arming them with relevant information to interact with their customers through face-to-face meetings, phone calls and emails. TTI also provides industry information via its MarketEye resource center on the TTI website where customers can learn about current trends in passives and other product lines.
Unfortunately, the MLCC market is not the only one facing challenges; tantalum supply is also experiencing extended lead times in certain case sizes in North America and abroad. The cause of this shortage is different from the MLCC shortage, but the effect is similar. Just as with its MLCC lines, TTI has positioned itself to maintain a broad and deep inventory to serve customers.
Together, TTI believes its products, personalized service and custom supply chain solutions have earned it favorable status in the industry where it works hard to be a valuable distribution partner to many customers.