Universal Distribution

New concepts. New services.

Drivers of the Evolution of Procurement to Universal Distribution

• Today, component sourcing is a worldwide, capital intensive and depth of staffing activity requiring cross-discipline expertise.

• Sourcing affords the greatest potential total business profit improvement opportunity for component buyers.

• All sourcing cost issues reside in prevailing processes and infrastructures.

Key Issues in the Evolution of Procurement to Universal Distribution

• The buyer’s core competency does not include Universal Distribution’s integrated business solutions needed to solve sourcing problems.

• The procurement process can no longer focus just on buying parts, but rather how they are sourced and the related cost advantages provided by the integrated business solution.

SCM Only Addresses Sourcing Problems.

Sourcing Issues– Inflated prices– Parts allocation– Component shortages– Limited vendor base– Supplier self-interest

Results• Inventory

– Excess inventory/costs– Obsolescence– Aging– Carrying costs

• Logistics– Inaccurate forecasting– Missed ship dates– Complex supply chain– Managing custom

operations

SCM Only Addresses Sourcing Problems.

Infrastructure issues– Overhead

– Materials management costs

– Software expense

– Diversion from core competencies

Results• Staffing

– Excess employee overhead costs

– Purchasing competency– Lack of market knowledge– Component engineering

costs• Systems

– Cost imbalances– Loss of management time– Issues not transparent – Solutions not integrated

Supply Chain Management is not a credible integrated business solution to all of the business issues and total costs involved in sourcing.

Supply Chain Management (SCM)

• SCM only deals with the attempted efficient acquisition of PARTS.

• SCM is a supplier entity tool given to the buyer who bears all the costs of operations and support.

• SCM is a supply entity single discipline response to integrated business problems.

• SCM saves the buyer money at the end of the procurement process.

Universal Distribution • Universal Distribution provides an

integrated solution to all of the business problems and costs of sourcing.

• Universal Distribution, a service entity, provides a suite of value-added services.

• The core competency of the Universal Distribution service entity is to solve integrated business problems relating to sourcing.

• Universal Distribution achieves integrated and expanded business cost reductions.

A Single Tool Versus a Toolbox

SCM Exposes the Buyer to Risk.

SCM

• The costs of SCM are front-loaded.

• SCM benefits are recognized at the end of the procurement process.

• Burden of the cost of SCM’s equipment, training, and operations are borne solely by the buyer.

Universal Distribution• Universal Distribution has no

front-end cost to the buyer, and provides business savings advantages through integrated solutions.

• Benefits of Universal Distribution are realized throughout the process. Services are applied and adapted to compounding benefits.

• Burden of all sourcing work and costs are borne by the Universal Distribution service entity.

Universal Distribution Prevents Problems.

Issues

• Universal Distribution eliminates all customer sourcing burden with virtual inventory.

• The service supplier (Universal Distributor) buys, stores, ships and balances all inventory.

• Universal Distribution logistics simplifies sourcing operations, provides flexible forecasting, and guarantees on-time delivery.

Universal Distribution Prevents Problems.

• Universal Distribution provides broad market awareness, procurement services and component engineering services as core competencies.

• Universal Distribution provides services that minimize total cost, customer inefficiencies and offer integrated business solutions.

Case Study #1- The task A mid sized Defense contractor required a group of 16 integrated circuits of

quantities 600 -7500 per quarter to be shipped compliant with Spec Control Drawings (SCDs) from the original sourceComponents International –

• Purchased the parts• Upscreened the ICs to Mil temperature range• Programmed several of the ICs to specifications• Performed 100% Burn-in to MIL-STD-883 methods• Tested the population over the specified high and low temperature extremes increasing the level of reliability• Applied custom marking labels to all parts to detailed specs• Tape & reeled the parts to a custom requirement• Shipped the parts to the customer’s manufacturing location • Maintains a buffer inventory of compliant parts

Results of Case Study #1• Customer compressed nine operations into one

– One vendor, one point of control• All component fallout was transparent

– Exact quantities ordered were delivered with no additional costs• Parts were delivered on-time per the original quote• No inventory burden• No costs to customer until parts were delivered• Customer expertise required was at the level of one Buyer, one discipline• No burden of receiving parts and correctly re-shipping to different vendors

– No manpower expended expediting multiple deliveries• Reduced possibility of foul-ups

– Errors, if any, were transparent• Customer received credit towards fulfilling their Diversity goals

A clear win for Universal Distribution

Case Study #2 - The TaskIndustrial equipment manufacturer requires 1000 assembled circuit boards/month. BOM consists of 187 parts from 34 different vendors.

Components International-

• Purchases all parts to the BOM - Active and passive components - Bare PC board to customer specification - LCD display modules

• Verifies Asian components on site

• Assembles all parts to the PC board

• Ships completed boards to customer for test and final assembly

• Maintains inventory to meet 1000 boards/month schedule

Results of Case Study #2

• Customer compressed procurement activities with 34 vendors into one vendor, one point of control - Many man hours saved by consolidation

• 23% savings on BOM costs more than covered cost of assembly • Customer expertise required was at the level of one Buyer, one discipline• No burden of receiving parts and correctly re-shipping to different vendors

– No manpower expended expediting multiple deliveries• Reduced possibility of foul-ups

– Errors, if any, were transparent• No inventory burden• No customer costs until boards were delivered

A clear win for Universal Distribution

Case Study #3 - The Task

Consumer equipment manufacturer has severe over-inventory situation and needs warehouse space to expand manufacturing.

Components International-

• Moves all inventory to a local warehouse staffed with Components International personnel. - Virtual inventory now in place

• Structures a consignment program where customer draws upon inventory, if needed.

• Components International offers excess parts for sale via a global sourcing network. - Customer receives 50% of revenue from parts sales

• Maintains accurate records and provides monthly accounting and payments

Results of Case Study #3

• Customer was able to remove inventory from accounting records

– Reduced value of inventory asset by 50%

• Warehouse personnel were reduced by four

• Accounting work load reduced

• Monthly payments further increased profitability

• Over-inventory situation relieved

• Entire obligation to inventory is reduced to one clerk verifying

Components International performance.

A clear win for Universal Distribution

It’s Time To Move Operations into the 21st Century with Universal Distribution

• Shift the burden and cost of integrated sourcing problems including systems, staffing, infrastructure, logistics and inventory.

• Eliminate the cost and risk of supply chain management.

• Prevent problems so you don’t have to solve them with supply chain management.

• Experience a new world of integrated business solutions, new processes and significant savings.

It’s Time To Move Operations into the 21st Century with Universal Distribution.

• Choose the services you need without penalty.

• Enjoy the benefits of Universal Distribution through CI’s core competencies.

• Save money by sampling the new Universal Distribution methodology.

Universal Distribution is Already Solving Customer Problems.

• Customers know the issues preventing them from reaching their profitability goals.

• Components International can tailor programs with a suite of services to suit customers’ needs.

In summary …

Allow Components International, the world’s first Universal

Distributor, to help you increase efficiencies and reduce

problems, so you can concentrate on core competencies

and …

significantly increase your profitability.

About Components International

• Components International was founded in 1979 and reorganized in 2001.

• Conceived and operated as an independent, stocking distributor and full service broker, we have evolved into the industry’s first Universal Distributor.

• We believe that exceptional, personalized customer service and our ability to solve the most difficult customer problems differentiates us from our competitors.

• Our experience and strong financial position insure that our customer's needs always are supported - today and continuing into the future.

• Our primary values are integrity, responsibility and accountability.

Company History and Concept

Core Competencies• Universal Distribution

• Integrated business solutions related to sourcing

• BOM cost reduction

• ISO 9001:2000 registered

• Hi-Rel Services

– Upscreening and re-certification

• Re-screening

• Asian component verification/certification

Core Competencies

• SDB, 8(a) (minority) and HUBZone certified

• Supply components to complex, multiple operation drawings

• Technical consultation

• Global pricing, supply and inventory management

• Market awareness

• Procurement negotiations

• Systems and processes consultation

• Infrastructure consultation

Components International

US Locations• Clearwater, FL• Indianapolis, IN• Denver, CO• Philadelphia, PA• Huntington, NY

International Locations• Montreal, Canada• Chihuahua, Mexico• Petach Tikva, Israel• Vienna, Austria

HeadquartersComponents International, LLC157 Harrison AvenueBrooklyn, NY 11206

Phone: (718) 782-2733Web: www.comp-int.com

Universal Distribution

New concepts. New services.