PCB purchasing is often a balancing act. You need to have your boards delivered on time, but you don’t want them to arrive too early.
When it comes to managing your supply chain, there are a couple of different methods commonly used in our industry to keep the pipeline moving.
For larger-volume customers such as automotive OEMs, the “Push” supply chain management system operates regardless of current demand. Quantities required are based on the history of previous production needs.
Traditional push system deliveries are based on an estimated annual usage, broken down by weeks or months, with product being delivered on a particular date whether it is needed or not.
The Push method used to be the predominant way of managing the PCB pipeline.
But with advances in technology, our industry has been shifting to more of what’s known as a “Pull” system. In this system, product is made to order and triggered by an event such as due date or minimum quantity level needed.
Pull systems include programs like Just In Time (JIT), Kanban, and Min/Max.
Pull production is based upon actual demand, the raw materials required, and work already in process. It allows the buyer to receive only the required finished items on the customer’s dock by the due date.
As the PCB buyer, your goal is to get the best pricing possible without ordering too much product at once. Either the Push or the Pull system will allow you to do this, but you’ll have to walk a fine line.
I suggest a third supply chain method that combines Push and Pull. Here’s how it works: issue purchase orders based on annual usage, with quarterly builds that are to be delivered monthly or bi-weekly. And every 90 days, you should review actual production demands versus what was forecast and adjust order amounts accordingly.
The 90-day review can be part of the quarterly review meetings you should be having with your suppliers.
This method ensures product availability at competitive pricing, while preventing an overbuild situation.
And that keeps your PCB pipeline flowing at just the right speed.
Want more board buying and supply chain information? Reach out to me at greg@directpcb.com.
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