Buzz words like e-commerce, RosettaNet and Web-based reporting float in a sea of talk about business-to-business relationships, standard protocols for transmission of data and so on. These tools aid in SCM programs, but will they help engineers make better decisions about outsourcing their pc-board manufacturing to a distributor or contract manufacturer? I don't think so.

Needed are tools that help engineers assess the total cost of ownership and evaluate supply chain methods when determining the most efficient way to manage that supply chain as well as component selection. Some design teams do a good job of activity-based costing in conjunction with their purchasing team, but OEMs typically vary widely in terms of how they compare what a distributor is providing vs. what's done internally. Distributors need to supply tools to help OEMs determine the real cost of both.

There's lots of talk about Web-based SCM programs and online marketplaces that promise supply chain collaboration among all partners. But some distributors say customers are struggling with reengineering their supply chains and need help with the internal vs. external equation-whether it's making a decision about implementing electronic data interchange, waiting for RosettaNet or outsourcing engineering and pc-board manufacturing.

One distributor told me SCM has to start at the design cycle. For example, what happens when engineering has already laid out a board and discovers that one of the components has a 52-week lead time? This problem can directly affect almost everything, from inventory management and time-to-market to production scheduling. Once the board layout is complete and spun it's tough to design out a device that's in short supply or near the end of its life without a costly redesign.

The challenge: going back up the supply chain to a point where a distributor can offer help early in the cycle, before the customer asks for assistance managing inventory once a board is designed.