Supply chain solution blog

Glossary

Original Equipment Manufacturer (OEM): is a term used when one company makes a part or subsystem that is used in another company's end product.

Original Design Manufacturer (ODM): is a company that designs and manufactures a product which is eventually rebranded for sale by another company.

Contract Equipment Manufacturer (CEM): is a company who manufactures electronic products, on a contract basis, for other companies.

Electronic Manufacturing Services (EMS): is where a company designs, tests, manufacturers, distributes and return/repair services for Original Equipment Manufacturers (OEMs).

Contract Manufacturer (CEM): a hiring company approaches a CM with a design. The CM will quote the parts based on the following costs: processes, labour, tooling and material. A hiring company may request quotes from various CMs. Once the bidding process is complete the selected CM will act as the hiring company’s factory, producing and shipping units of the design on behalf of the hiring company.

Original Component Manufacturer (OCM): is a company which design, market, and manufacture individual components. The part and/or its packaging are typically identified with the OCM’s trademark.

End-Of-Life (EOL): one definition is the final stages of a product’s existence. Other definition is when the equipment no longer satisfies the initial user’s need. This does not necessarily mean that the product is in poor operational condition or has become obsolete. Instead this could be an opportunity for its life to be extended by being used for the same purposes by other users whose needs can be satisfied with this equipment. Or the components could be used by companies for alternative products.

Bill of Materials (BOM) is a list of the raw materials, sub-assemblies, intermediate assemblies, sub-components, parts and the quantities of each needed to manufacture an end product.

Approved Vendor List (AVL) This ties into the BOM and typically offers multiple options for each internal part number on BOM. It is common practice to have 3 or 4 options from different manufacturers wherever possible to ensure continuity of supply. This allows you to continue to build your product if one supplier fails to supply the component parts needed.

Printed Circuit Board (PCB): is an electronic circuit consisting of thin strips of a conducting material such as copper, which have been etched from a layer fixed to a flat insulating sheet and to which integrated circuits and other components are attached.

Printed Circuit Board Assembly (PCBA): is where electronic components are attached to a completed printed circuit board (PCB). PCBAs can be constructed in two different ways. In through-hole construction, component leads are inserted in holes. This is older technology compared to surface-mounted (SMT - surface mount technology) construction where the components are placed on pads or lands on the outer surfaces of the PCB. In both kinds of construction, component leads are electrically and mechanically fixed to the board with a molten metal solder.

Excess & Obsolete (E&O): excess and obsolete stock is a supply chain management problem for manufacturers, distributors and retailers. Stock represents a large investment for companies and revenue is affected by on-going storage and depreciation costs of excess and obsolete stock.

Line Card: is a printed brochure that lists the names, descriptions and manufacturers of products sold by a third party such as a distributor. These line cards are a useful reference for comparison of product specifications and costs.

Request for Quotation (RFQ): it is a document that a company submits to potential suppliers for particular stock.

Waste Electrical and Electronic Equipment (WEEE): The Waste Electric and Electronic Equipment (WEEE) Regulations 2013 became law in the UK on the 1st of January 2014 and replaced the 2006 Regulations following an update to Directive 2012/19/EU. Further still the directive covers a wider range of products to be effective from 1 January 2019. The regulations require for the recovery, reuse, recycling and treatment of WEEE. This legislation is in place to address the vast amounts of electronic waste (e-waste).

Reduction of Hazardous Substances (RoHS): RoHS Directive 2002/95/EC sets restrictions upon European manufacturers in the production of new electronics components as to the reduction or no use of lead and other hazardous substances (Mercury, Cadmium, Hexavalent Chromium, Polybrominated biphenyls and Polybrominated diphenyl ether). RoHS is closely linked with WEEE.

Independent Distributor: They are very good, professional companies that supply good quality products. They are not directly authorised or franchised. Stock may be purchased from Original Equipment Manufacturers (OEMs) or Contract Manufacturers (CMs) who are selling off excess stock, or from other Distributors (Franchised, Authorized, or Independent). Independent distributors purchase stock with the intention to sell it back into the market usually to OEMs, CMs, or other Distributors.

Stocking Distributor: They are Independent Distributors who have large quantities of stock large inventories typically purchased from Original Equipment Manufacturers (OEMs) and Contract Manufacturers (CMs).

Broker Distributor: Companies would contact a Broker Distributor with stock requirements specifying details such as part number, quantity, date required and ideal price. This type of Independent Distributor searches the marketplace matching the customer requirements on a Just in Time (JIT) basis.

Chip Broker: This type of Broker is like an Independent Distributor who specialises in buying and selling anything to do with Integrated Circuits (IC). They are quite often not a stockist.

Approved Supplier: A company would formally assess suppliers to determine if they were an acceptable risk of providing counterfeit parts and then they would be added to an approved suppliers list.

Supply Chain Management (SCM): The supplier aims to have the most economical and efficient supply chains and to provide maximum value to the customer by improving the delivery of goods, services and information. It allows for all companies involved to better manage current resources and plan for their future needs.

International Organization for Standardization (ISO): ISO develops and publishes international standards. Benefits include: cost savings through increased productivity and ensuring operations are as efficient as possible; access to new markets; environmental benefits and improved customer satisfaction.

High-volume, low-mix (HVLM): Some companies focus on manufacturing a limited range of high-volume products.

Low-volume, high-mix (LVHM): Some companies focus on manufacturing a wide variety of lower volume products.

Lead free (Pb free) Manufacturing: There are now a number of global initiatives and directives introduced to eliminate lead (Pb) from the electronics supply chain. Two important EU directives for manufacturers are Waste Electrical and Electronic Equipment (WEEE) and Reduction of Hazardous Substances (RoHS).


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