Business & Technology Nexus

Dave Stephens on technology and business trends

Component Supplier Management (CSM)

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Any manufacturing company measures its success by the products it creates. But not every company looks inside its own products to measure success from its component supply.

Dell is a great example of a company whose very survival depends on staying on top of its component supply. Although Dell definitely has “designers” of its PC’s, it is essentially an assembler of every else’s latest gadgetry. By negotiating great prices and manufacturing to-order, Dell has consistently offered wonderful value in servers, desktops, and laptops.

Dell’s business challenge appears simple compared to Boeing. Boeing has an even greater problem. Management of its component supply has to include long-term maintenance, quality testing, and other material safety considerations. There are legal and regulatory obligations that to a simple person like me appear mind-boggling.

So how do these companies wrestle with their component supply challenges? This post explores the processes and challenges of CSM.

There are several initial CSM questions any manufacturer or assembler should be able to answer. The first is: how many component products do I have under management? In layman’s terms: how many widgets do my engineers have access to & enough information about to incorporate in a new product design? The second is: what is my plan and process to obsolete components and introduce new ones.

CSM is a process, an ongoing program. It’s an approach to managing component parts and a company’s supply base. Done correctly, it can streamline the process of new product design, placing a high degree of value on rationalization and component reuse. Organizations have simplified and improved product quality by reducing the number of discrete components required to build a product.

The amount of work required to keep a company’s component supply up-to-date depends on the pace of change in the materials. Nuts and bolts? Not too often. Flash memory? Almost continuously.

Initial CSM systems focused on the data quality problem. Systems were implemented to bridge the gap between multiple Inventory or Parts Masters and engineering CAD systems. But systems were the easy part. Companies faced massive data cleanup efforts. Specialist vendors such as Aspect offered services to remove redundant part numbers, improve the item description, expand part classification information and optimize categorization.

Some CSM solutions focused on data aggregation. I met with companies that thought their value was the clean, categorized, and classified manufacturing parts list they had steadfastly improved over the years. And maybe they were right. Again, it often depended on the pace of change for the materials in their target manufacturing industries.

The CSM problem found applications outside manufacturing as well. Home Improvement retail was one natural home – where the number of potential SKU’s under management sometimes ballooned into the millions.

So why isn’t CSM a hot topic these days? Some claim the CSM product category disappeared once Aspect’s business was trashed by i2 – and nowadays manufacturers are just doing without part rationalization and content improvement schemes. Others claim it morphed into today’s engineering design system “wars.” On one side you have CAD vendors aiming to broaden their reach into transactional systems by extending their solution to include component supply management. On the other side you have Inventory solutions providers aiming to extend their reach by getting into the new product design process. Manufacturers stand in the middle – looking for the best way to keep their unique components and supply base low while innovating quickly to deliver value to their customers.

CSM – should it re-emerge as a pure category? Time will tell.


Written by Dave Stephens

03/12/06 2:29 PM at 2:29 pm

Posted in Opinion

One Response

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  1. I have a lot of experience building software – and there’s an analogy to draw in building applications – it’s often true that minimizing the number of components your product depends on can improve its quality. And some people believe minimizing the number of code lines through smart component re-use can also help companies build better product faster. But as always, there are differing views on this.

    Dave Stephens

    03/12/06 2:36 PM at 2:36 pm

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