The Electronics Industry Today

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The Electronics Industry Today
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Electronics Industry Supply Chain
Contract Manufacturer
Rep Firm
Factory
Distributor
Factory Direct Sales Force
End Customer / OEM
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Factory

• Manufactures Standard Products
• Manufactures Custom Products
• Markets Products
• Designs New Products
• Grants Franchise Agreements to Distributors.
• Provides Sales Engineering Support.

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Direct Sales

• A Direct Sales Force means that the factory
  employs their own salespeople.
• They are either located in the territory, or work
  from headquarters and travel into the territory
  at various times during the year.
• Direct Sales People sell to Contract
  Manufacturers and End Customers / OEMs as well as
  support the Distributors in their territory.
• Direct sales people can take orders direct or
  push them through distribution.

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Distributor

• Franchised Distributors purchase products at
  discounted rates from the factory and distribute
  it into the marketplace.
• Distributors make money by marking up the price
  of the products they sell. This markup is called
  Gross Profit.
• Customers are willing to pay the marked up price
  because in return, we provide special services to
  them.
• Factories need distributors to get greater
  exposure in the market.

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Distributor (CONT)

• Provide Value Added Services
• Customer Service
• Order Processing
• Transportation
• Warehousing
• Inventory Control
• Packaging
• Materials Handling
• Marketing
• Plant Warehouse Location

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Rep Firm

• A Rep Firm is a company or an individual that is
  hired by a factory to act as their sales force in
  a territory or a series of territories.
• Reps generally call on engineers in an effort to
  get a manufacturers products designed in.
• Reps coordinate with Purchasing.
• The Rep Firm supports the Distributors in their
  territory
• A Rep Firm can steer a customer to place orders
  direct with the factory, or have them buy through
  distribution.
• A Rep Firm is paid a commission by the Factory on
  both direct sales, and sales that go through
  distribution.

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Contract Manufacturer

• A Contract Manufacturer is a company that builds
  products or parts of products for other
  companies. They will often have many different
  customers from diverse industries.
• Turnkey means the CM buys all the components,
  manufactures the product, packages it, and ships
  either to the OEM or directly to the end user.
• Some OEMs hire contract manufacturers to build
  only a portion of their product, and then ship it
  back for final assembly.

• Most CMs purchase the components needed to
  manufacture, but in some cases, the OEM buys all
  the components and ships it in Kits to the CM for
  assembly.

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End Customer / OEM

• An End Customer / OEM (Original Equipment Mfg) is
  a company that designs, markets, and builds an
  end or complete product.
• Some OEMs use a CM to build products or a part of
  a product for them.
• Example Whirlpool is an End Customer or OEM
  that manufactures household appliances. They use
  SCI Sanmina as a contract assembler for their
  circuit boards. Once Sanmina completes the
  boards they are shipped back to Whirlpool and
  assembled into complete machines.

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What does all this mean?
The most important thing Atlantic Components
does sell and serve our customers. The gross
profit that is generated from our sales is how
our company survives. An equally important
aspect of our business is maintaining Rep
Vendor relations. By forming strong partnerships
with our Suppliers, Direct Sales People, and
their Rep Firms, we can gain an advantage over
our competition. Our strengths have always been
excellent vendor relations customer service.