And when you consider passives and connectors represent only 10 – 15 per cent of total cost dollars, but total 80+ per cent of the electronic items in an OEM’s end product, that’s one component area that has to be monitored closely.
The same holds true for the passives distributor. For instance, when a company maintains over 190,000 part numbers in active inventory, totaling more than 3 billion pieces in stock, and the average cost of the components sold is 3.5 cents each, keeping transaction costs low is not only trendy, it’s a matter of survival. Fortunately, TTI Inc. has that situation under control.
Through its Advanced Inventory Management (AIM) system, the Fort Worth, Tex.-based passive components distributor claims to provide the lowest transaction cost in the electronics industry. Through a combination of depth and breadth of product, just-in-time inventory management, bar code scanning, and electronic data interchange (EDI) systems,? TTI manages to maintain sufficient inventory levels to satisfy its customers worldwide, while keeping transactions costs to a minimum. That benefits both TTI’s and its customer’s bottom lines.
According to Dan Heath, TTI’s general manager in Toronto, AIM has lead to great success for the company. "Business grew 24 per cent last year," Heath reports, adding, "When prices were falling our revenue increased." That only happens when transaction costs are kept in line, says Heath.
However, while the larger companies, through their activity based costing (ABC) analysis programs, possess a keen understanding of the benefits of reduced transaction costs, there’s still work to be done convincing management at the mid to small business levels. "There remains a lot of evangelising to do," Heath says.
In the distribution business you can evangelise about cost cutting all you want, but the transaction will always come back to one factor: on-time delivery.
"The window is three days early, zero days late," Heath says. To meet those expectations, TTI maintains a 92,000-sq.ft. automated warehouse facility in Fort Worth, with shipments leaving its docks daily.
This month TTI is featuring the Molex HSSDC2 connector. The HSSDC2 connector was chosen as the 1X interface for the next generation of InfiniBand I/O applications. This shielded I/O system is designed on 1.27mm (.050") pitch with 7 circuits to provide a 2.5 Gbps controlled impedance signal path for data transfers over long distances.