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The Right Time to Mitigate Supply Chain Risk is Now
Quoting season is the perfect time to review costs and evaluate your approved vendor list (AVL). Commonly referred to as an approved supplier list or approved manufacturer list, an approved vendor list can save you time and money while minimizing supply chain interruptions.
In an industry where products can become obsolete quickly, and supplier risks are on the rise, your AVL is the key to ensuring quality, compliance, and risk management.
Suppliers Pose Risk for Every Link in Your Supply Chain
According to research by Statista, the number of supply chain disruptions worldwide rose from 3,700 in 2019 to 11,642 in 2021.
While no one can predict the future, companies should anticipate the risks associated with rising disruptions. The 2023 Gartner Balancing Sustainability and Resilience Survey found that 53% of respondents experienced suply chain disruptions 50% of the time or more!
Some supplier risks like obsolescence are anticipated, while others are less obvious and therefore underestimated, such as:
- Financial
- Sustainability
- Quality
- Geopolitical vulnerabilities
- Security
The good news is you don’t have to prepare for these inevitable risks alone. Our experienced team can help you optimize your AVL and improve your supply chain resilience.
An AVL Provides a Competitive Edge
The importance of an approved vendor list cannot be overstated. As products become outdated quickly due to technological advancements, shifts in consumer preferences, or regulatory changes, a well-maintained AVL can deliver:
- Quality Assurance: An AVL makes it easier to use only suppliers that meet stringent standards, maintaining product quality and reliability.
- Risk Management: Clear documentation of thoroughly vetted and approved suppliers allows organizations to mitigate risks associated with supply chain disruption while ensuring regulatory compliance.
- Cost Efficiency: Because relationships with approved suppliers often improve over time, utilizing an AVL can lead to better pricing through negotiation.
By carefully selecting vendors that not only meet immediate needs but also have the capability to grow and adapt alongside your organization, you can ensure a more resilient and responsive supply chain. This strategic approach helps maintain a competitive edge in the market, allowing for quicker adaptation to new opportunities and challenges.
Who Needs an Approved Vendor List?
No matter the business model, preventing production disruptions is a top organizational goal. An approved vendor list (AVL) can benefit all types of manufacturers, including:
- Original Design Manufacturers (ODMs): Companies that design and manufacture products which are eventually branded by another firm for sale.
- Original Equipment Manufacturers (OEMs): Companies that produce parts and equipment that may be marketed by another manufacturer.
- Contract Manufacturers (CMs): Companies that are hired to produce goods for other companies, often on a contract basis.
Having an AVL helps these manufacturers ensure a reliable supply chain, maintain quality standards, and manage costs effectively, thereby minimizing the risk of disruptions.
Multisourcing is a Winning Strategy
Relying on a single factory or site exposes businesses to additional supply chain risks, such as extreme weather, labor strikes, or facility shutdowns. A multisourcing strategy yields many benefits, including:
Risk Mitigation
Diversifying the suppliers in your supply chain helps reduce risks associated with relying solely on a single source for mission-critical components.
Cost Management
Engaging multiple suppliers gives businesses purchasing options and facilitates competition, which can lead to better pricing, more favorable terms, and the ability to negotiate effectively.
Innovation and Quality
Various suppliers may offer unique strengths, technologies, or processes that enhance product quality or innovation. For example, MCC utilizes the integrated device manufacturer (IDM) model, maintaining control over the production process from start to finish to reduce disruption risks and provide speed to market, quality, and reliability for customers.
Flexibility and Responsiveness
A diverse supplier base can help businesses scale operations more efficiently. It also enables companies to adapt quickly to changes in demand or market conditions, which can dramatically impact supply levels.
MCC has consistently helped customers scale up or get to market faster with better-than-average lead times in some of the most popular discrete semiconductor categories:
When several products need replacements, it can be time-consuming to source materials from multiple suppliers. MCC can assist with BOM reviews through our experienced support team or the self-service parametric search and cross-reference tools on our website. The web cross-reference search results even note whether the product would be a direct replacement or require some PCB tweaks. Categories include:
- Level 1: Direct or drop-in replacement (no PCB modification)
- Level 2: Same package, slightly different electrical parameters (no PCB modification)
- Level 3: Similar electrical parameters, different package (requires PCB modification)
Utilizing an AVL helps companies quickly pivot or respond to evolving demands and risks, helping them remain competitive and minimize long delays.
Using Authorized Semiconductor Distributors is Crucial
With rising counterfeit risks and increasing demand for electronic components, it’s imperative to only obtain components from authorized distributors. Authorized semiconductor distributors offer significant advantages when sourcing electronic components:
- Reliable Quality: Authorized distributors guarantee the authenticity of the parts with proper documentation.
- Access to Manufacturer’s Warranty: Purchasing through authorized distributors assures the manufacturer’s warranty, protecting against defects and failures.
- Flexibility in Supply: Acting as a true partner, authorized distributors maintain diverse inventory to provide various parts faster and at lower costs than manufacturers could obtain on their own.
- Enhanced Customer Service: Authorized distributors prioritize relationships with manufacturers, providing superior customer support and industry expertise.
- Wider Component Variety: Managing a diverse selection of components allows authorized distributors to help with hard-to-find parts and alternatives.
At MCC, we partner with some of the most trusted authorized semiconductor distributors in the industry:
Working with authorized distributors helps ensure compliance and reliability. On the other hand, using unauthorized dealers can create a supply chain filled with issues detrimental to the bottom line and your reputation, including:
Strengthen Your Supply Chain
Navigating the global electronics supply chain can be challenging. Utilizing an approved vendor list, combined with a multisourcing strategy and working exclusively with authorized dealers can help secure your supply chain in 2025 and beyond.
If you need help sourcing discrete semiconductor components or quickly finding replacements for competitor parts, contact our team or utilize our web tools designed to make optimizing your AVL easy!
