Utilize in-house manufacturing with AMI’s strength in procurement
Let’s face it. Materials management – sourcing, procuring, scheduling, inventory control – isn’t among the core strengths of most middle market customers. Symptoms include too much of the wrong material, not enough of the right material, major jobs held hostage by expedited and seemingly never-arriving eight and ten cent parts, and so on and so forth. It all translates into too much inventory, inefficient start and stop production, unhappy end customers, and reduced sales and profits.
Among the exceptions are middle market customers who’ve outsourced their manufacturing requirements, and along with them, thanks to turnkey manufacturing services, the bulk of their materials operations. But in so doing many have lost knowledge and control of their materials supply chain, which is about the same as losing control of their products. This problem usually lies dormant until things go wrong, at which time the customer typically decides to continue a bad relationship because, thanks to materials, the risk, complexity, and expense of switching to a new supplier seems worse than the problem.
Kitting – a clear cut solution for these and other problems — is at once the outsourcing industry’s most powerful and least available service. In fact, AMI stands nearly alone as an expert supplier of kitting services for the EMS middle market.
For customers with their own assembly operations, the AMI service options include receiving all materials as job-specific kits, which would be a full BOM kit for each production job. This transfers the risk and the complexity of part-level materials management to AMI, as well as most of the raw materials inventory, since AMI first receives and stages the part level material in one of its own warehouses and then picks the kit for shipment to its customer. Further, the customer’s materials and business operations become dramatically less complex, since there is only one supplier to manage, and since each kit – containing multiple parts from multiple suppliers — is only one SKU to order and only one SKU to receive and process.
Moreover, AMI’s full set of manufacturing capabilities can add major benefits to its materials kitting services. For example, if applicable, AMI can build and include in kits the requisite PCB, cable, and electro-mechanical subassemblies along with the other kit BOM materials, thereby providing its customer with everything needed for its top level final assembly, configuration, test, and packaging.
These benefits, of course, are fully applicable on a pro rata basis to customers that choose to retain some or most of their materials operations. Some customers, for example, will have AMI kit only their custom and specialty materials. Indeed, most purchasing operations of most middle market customers spend as much as 90 per cent of their effort on just 50 per cent of their materials. Thus when it comes to partial kits, it’s usually this latter 50 per cent, typically the non commodity SKUs, that makes the most sense for AMI’s kitting services.
Alternately, for customers who’ve outsourced their manufacturing requirements, AMI’s kitting service is the opportunity for a new day of greater control, reduced cost, and increased flexibility. In this circumstance the mechanics are essentially the same, except that rather than shipping the kits to its customer’s assembly operation, AMI will instead ship the kits directly to its customer’s manufacturing services supplier.
The benefits to the customer are extraordinary. Principal among them is that the customer moves back into control of its materials supply chain. This is thanks to AMI’s unwavering policy of transparent costing, which for each kit provides its customer line by line, part number by part number detail, all updated quarterly and including supplier name, standard, average, and last cost, current inventory, purchase order status, and lead time. The associated drill downs include supplier and alternate supplier contact detail and purchase order detail. No longer is this critical and essential supply chain information invisibly buried in the supplier’s product level price, where it has the effect of transferring near-term and medium-term product control from the customer to the supplier.
Not only does this approach re-empower the customer over its own materials supply chain, it newly empowers the customer over its manufacturing services supplier, who would then be clearly and singularly responsible just for assembly and thereby cleanly and directly accountable for assembly performance and price.
Another principal benefit of this approach is that it eliminates most of the risk, complexity, and expense of the customer switching from one manufacturing services supplier to another. At its customer’s direction AMI can simply start shipping the materials kits to the new supplier rather than the old supplier. Or, it can gradually decrease kit quantities to the old supplier as it gradually increases kit quantities to the new supplier until the transition is complete. Or it could redirect kits one product at a time until all products have been redirected to the new supplier.
Under any of these options, the approach eliminates the agonizing and expensive process of one supplier closing down its materials supply stream while the other works frantically to at once ramp up materials supply and introduce new assemblies into production. All this while the customer can’t do much more than sit on the sidelines and hope that it all works out without disastrous disruption to product availability, sales, and profits.
AMI’s kitting service also offers especially powerful benefits for customers who use more than one manufacturing source. These and other benefits are described in Tool Kit for Multi-Sourced Manufacturing.
AMI, an expert supplier of materials kitting services, is the right size and the best choice for the EMS middle market.