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Maximize Efficiency and Save Money: Signs You Need an Electronics 3PL - Part 1

Should you make the move to an electronics 3PL? If boxes are piling up or kitting delays are common, now might be the time.

Introduction

If component distributor boxes are starting to pile up in your office or delays with kitting and consigned materials are holding up your PCBA builds, you might be starting to consider whether you should outsource your component inventory management. Perhaps, you’ve even come across this article while looking for a solution! In this post, I’ll break down when it might be a good time to start working with an electronic component 3PL. In Part 2, I’ll dive deep into best practices for selecting an electronic component 3PL to work with.

Whether you are rapidly prototyping, or scaling to volume production, managing your inventory of electronic components is crucial to the success of your product and process. Electronic components are particularly small, sensitive, and hard to keep track of, so even minor breakdowns in inventory controls can have a ripple effect that brings your production to a halt.

Alternatives to Electronic Component 3PLs

Before we discuss some signs that it might be time to partner with an electronics 3PL, let’s look at what the common alternatives are:

1. In-House Inventory Management

Some manufacturers choose to keep their electronics inventory management in-house. Succeeding with this approach typically requires dedicated inventory management personnel with appropriate training for handling electronic components, equipment such as ESD safe storage and vacuum sealers, and some sort of software system to track materials.

2. Distributor Value-Added Services

Many electronic component distributors offer inventory management services such as scheduled shipments and reserved stock. If you are able to source the majority of your parts from a single distributor and are mostly dealing with mid-to-high volume production and longer lead times, these programs can be a valuable resource. For manufacturers that source from multiple distributors and are frequently manufacturing many different designs, these programs typically are not flexible enough.

3. EMS/CM Services

Your EMS or CM partners may provide inventory management services. If you have a long-term relationship with a single EMS provider, it can make sense to have them manage your inventory for you since the parts will already be near the production line, but managing inventory isn’t the same skill as assembling PCBAs, and this approach can be less flexible and accurate than many manufacturers would hope for. We recommend evaluating an EMS/CM inventory management service the same way you would evaluate any electronic component 3PL.

What is an Electronic Component 3PL?

An electronic component 3PL is a partner that you work with to store and manage your electronic component inventory. A 3PL should provide services such as:

  • Secure, ESD-safe parts storage
  • Inventory tracking and reporting for your team
  • Kitting and shipping of your parts to your production locations

Additionally, an electronic component 3PL might provide additional services such as:

  • Part quality control, such as anti-counterfeiting inspections
  • Part procurement and supply chain optimization
  • Supply chain data and software to help manage your inventory and procurement
  • Kitting services such as reeling, repackaging, MSL reset bakes, and IC programming
  • Part counting with equipment such as an X-Ray component counter
  • Compliance and traceability tracking and document management
  • Working capital and cashflow management solutions

Signs It’s Time for an Electronic Component 3PL

Wondering if now is the right moment to make the move to an electronic component 3PL? If any of these sound familiar, now might be the time to make a change:

1. Piles of Boxes

Are boxes of electronic components piling up in your office? If so, it’s probably time for a more scalable, reliable solution. Leaving inventory management to individual electrical engineers, procurement, or operations team members increases the risk of losing traceability, limiting inventory visibility and accuracy, and issues with part mishandling.

2. Material Consignment & Kitting Delays

A quality electronic component 3PL can go from BOM to a fully prepped kit of parts in as little as a few hours, and give you the assurance that your parts will be ready to go on the line at your CM the moment they arrive. If your team is taking days or weeks to fully kit parts, or kitting inaccuracies are leading to delays during the receiving and kit audit process at your CM, outsourcing to a 3PL will improve your production efficiency and reduce delays.

3. Lack of Experienced Personnel

Handling electronic components correctly requires trained team members. Incorrect handling can lead to ESD events that reduce part reliability in the field, excessive moisture exposure that can cause part failure during manufacturing, and a loss of traceability that can impact regulatory compliance. Unless your warehouse team has experience handling electronic components and is trained to relevant standards like ANSI ESD S20.20, you may be better served by leaving your parts to a team of specialists.

4. Limited Inventory Visibility

Do you know where all of your parts are right now? Are you absolutely sure that the quantities and traceability data are correct? If you have multiple locations, teams that share parts, and/or multiple CM partners, it can be difficult to have a single, accurate view of how many and what parts you own, where they are right now, and whether they are truly production-ready. Bringing all of your inventory together with an electronic component 3PL can be an ideal solution to give every member of your team real-time accurate data on all of your inventory. Some electronic component 3PLs, such as Cofactr, will even provide software tools that your team can use to access this data in real-time, manage kitting, and more.

Conclusion

If you're struggling with any of the above issues, it's time to consider partnering with an electronic component 3PL. They can help you streamline your inventory management process, provide you with secure ESD-safe warehouse space, and ensure that your electronic components are handled properly. Check out Part 2, where we'll discuss how to choose the right electronic component 3PL to work with.

Matthew Haber

CEO, Co-Founder

Matthew is the CEO and Co-Founder of Cofactr.

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