As OEMs and CEMs continue their migration to lower-cost manufacturing regions, their distribution partners are following.
TTI Inc., Fort Worth, Texas, last week announced the addition of two new Integrated Logistics Systems (ILS) centers, one in Guadalajara, Mexico, and one in Livingston, Scotland, to its three existing ILS facilities. TTI created its ILS unit in 1994 to provide logistics systems and services to a specific set of customers.
Separate from TTI's other value-added operations, ILS focuses largely on customers that have direct relationships with component suppliers but want to leverage the distribution channel's materials-management capabilities. Special units such as ILS have been developed because the cost structure associated with servicing this customer base is different from the norm, in which core customers may derive a large portion of their bills of material from distributors' line cards rather than from other sources.
ILS currently has relationships with several large OEMs and CEMs in Europe that wanted TTI to provide procurement, warehousing, logistics, and point-of-use replenishment of components and production supplies in the United Kingdom. The facility in Scotland also has its own fleet of trucks and drivers.
ILS Guadalajara will provide the same suite of services for TTI and ILS customers and suppliers in Mexico.
While the majority of the product handled by ILS is within TTI's core IP&E product area, ILS typically handles a much broader range of product, said Craig Conrad, TTI's senior vice president of sales. "ILS is called on to implement the customer's contract with their full range of vendors," he said.
"What we're seeing is a high concentration of global customers and CEMs that want the same type of relationship [in other countries] that they have with TTI here in the States," Conrad said. "These are existing TTI customers that have asked us to move into areas where we typically haven't been in the past."
There's no question that Mexico is shaping up to be one of the most important manufacturing markets in the world, Conrad said. And Scotland "seems to be where many multinational companies have settled as far as their European operations go," he said.