How to choose the right electronic component supplier
It’s not enough anymore to know where your parts come from.
The electronic component selection process for a design typically begins with comparing performance characteristics against technical requirements. A robust trade-off analysis helps design engineers weigh the various pros and cons of candidate parts and pick the best part for the application.
But these steps take into consideration only one dimension of the selection process. Choosing the right supplier is as important as the right components in order to achieve success in the market.
The pandemic was a stark reminder of how vital it is for manufacturers to know the origin of the electronic components that go into their designs. As COVID-19 shutdowns, factory fires, sanctions and earthquakes wreaked havoc, they scrambled to demystify their supply chains, uncovering where their product parts were made and what factors might put them at risk.
“The push for supply chain risk management didn’t begin with the COVID-19 pandemic, but the crisis did accelerate the urgency for companies to adopt a more proactive approach,” says Mohammad Ahmad, CEO Z2Data. Since then, they’ve made steady progress in charting out the origins of products from their Tier 1 and sub-tier suppliers.
However, just as manufacturers begin to understand this complex mapping process, a new challenge has emerged: It is no longer enough to know where electronic components are made and whether they can be readily obtained. Manufacturers must now understand much more about who makes them.
In order to improve the supply chain management experience for our customers and help them gain deeper insights into the suppliers they do business with, Avnet has partnered with Z2Data, the developer of an intelligent data platform for analyzing supply chain risks.
What’s driving the push for supplier transparency?
In an era of growing environmental and trade regulations as well as consumer demands for transparency, device manufacturers need to better understand the suppliers they do business with and their ethics.
Z2Data has compiled research that underscores that the push behind knowing your Tier 1 and sub-tier suppliers is coming from all directions.
- Some 94% of executives feel pressure to prioritize environmental, social and governance (ESG) initiatives, and 87% feeling it was “extremely important” or “very important” to reflect the value of their business
- More than 500 industry-leading companies, including Mastercard, Hewlett Packard, and others, have signed a climate pledge to achieve net-zero carbon emissions by 2040
- A full 76% of consumers say they would cease doing business with a company that neglected ESG principles
- Sales of goods that make ESG-related claims outpace those that don’t
- The EU’s new Corporate Sustainability Reporting Directive (CSRD), which rolled out Jan. 1, 2024, is expected to impact over 50,000 companies
- New regulations, including those like the Uyghur Forced Labor Prevention Act (UFLPA), threaten companies with product seizures for doing business with unethical entities
What are some good benchmarks for a components supplier?
Ideally, electronic device manufacturers should start with component suppliers that have a proven track record of performance and a robust network of relationships. A good supplier should also have a list of customers they’ve successfully worked with over the years–always a good indicator of reliability and consistency.
Evaluating a supplier’s history can help assess their operational stability and ability to meet your specific needs. It's not just about their capability to deliver a product, but also about their reliability and trustworthiness as a business partner. This initial assessment is crucial for building a strong, long-term relationship with a supplier that will support their customers’ growth and success.
Some topics to explore when vetting a supplier:
- Financial stability: Do they have the financial resources to maintain and expand their operations if needed?
- Past performance: How have they historically performed with former and current clients?
- Reputation: What are they known for in terms of reliability and quality?
- Regulatory: How open are they to share their regulatory and industry standards and practices?
- Transparency: How willing are they to share information when it comes to meeting regulatory requirements like ESG or UFLPA? Transparency is key to building a robust partnership, and a lack of it can lead to misunderstandings, hidden costs and compliance issues.
- Responsiveness: How responsive are they when it comes to communications? If a supplier is often late in responding, provides vague or contradictory information, or does not follow up as promised, it may indicate deeper issues with management or operational process and infrastructure.
Cindy Eldridge, Director, Supply Chain, at Avnet contributed to this article.
More insights on electing the right suppliers:
Key considerations for selecting electronic component suppliers
How to manage electronic component supplier selection risk
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Learn more about Z2Data’s intelligent data platform for analyzing supply chain risks