Bigger is not always better

Sometimes smaller UK distributors offer better value than the big guys. Electron Electronics asks whether it’s time for a BOM audit.

There is a perception that purchasing products and services from the biggest companies will get us the best deal. You only have to look at the high street to see how the four biggest supermarket chains claim to be the cheapest for those everyday essentials, yet it is often possible to buy cheaper and better quality with a little effort.

If we look at the electronics consumer market, Comet has gone into administration . Despite this, there are still many smaller independent electrical retailers who, although they admit trading is tough, are growing their business. So why has this happened?

Price isn’t everything

For a long time, the notion has prevailed that big is beautiful. This runs right across society with bigger schools, hospitals and businesses all operating under the premise that by being bigger, we have greater buying power and can reduce costs, with the aim of passing on the savings made to the customer, or in the case of public services, to the tax payer. Well that’s the theory anyway, but price is not everything.

Recently Electron Electronics was asked to source a component for a customer. the customer was purchasing from a global distributor who was quoting £2.48 for a quantity of 250 pieces. A quick look at the manufacturer’s website listed four catalogue and internet distributors. Visiting the smaller UK based distributor’s website revealed that for the same quantity, the price was £1.55.

By anyone’s standards, this is a significant cost saving! But what about availability? The global distributor had the full quantity ex stock, the smaller distributor had some stock with a lead time of five days for the balance. For the vast majority of businesses, a lead time of five days is more than acceptable. Both companies were offering free delivery.

Time to audit

The question is, which supplier would the majority of purchasing professionals choose to supply the product? The answer, according to Electron Electronics, is that many would still use the global distributor because it is easier to purchase materials from a known supplier, or there is no time to do the research. As a professional you have the opportunity to influence the profitability of the products you manufacture by the decisions you make. Ask yourself when did you last do an audit of your BOM to ensure best value?

Smaller distributors, like Electron, will stock products that customers want from current manufactured components to obsolete components as well as niche products.”Bigger is not always better”