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Publication Date: 02/1/2010
Archive >  February 2010 Issue >  Special Features: Components and Distribution > 

Distributor Turns Contract Mfgr. & Does It All
Hand-soldering is one of many value-added manufacturing services offered by this distributor.

In the late 80s and early 90s many Tier 1 aerospace, aviation, and defense systems providers redefined their own roles in the industry and subsequently that of their supply chain. These Tier 1 suppliers began to identify themselves as System integrators and as such focused their efforts on becoming final assembly and test facilities for their customers. When these changes emerged their supply chain management philosophies and the resulting supply chain experienced a dramatic overhaul. Much of what had been produced in house was outsourced and suppliers were asked to do much more.

Creating a Turnkey Solution
It became apparent to ADI that in order to seize upon this moment of change we needed to evolve ourselves. Discussions with many of our customers revealed they sought a one-stop-shop solution to their electronics needs. Customers no longer had the inclination or resources to manage dozens and dozens of suppliers' delivery of components, printed circuit boards, board assemblies, cable and harnesses, and complete box builds. The solution: ADI would replace dozens of suppliers by providing the products and services customers wanted — all from a single source.

Thus the company, American Distributors Inc., has accomplished what few in industry have been able to achieve: integrating two unique business competencies into a truly single-source full-service provider. Located in Northern New Jersey, ADI for many years had simply been a distributor of electronic components and related hardware. The distribution arm of ADI quickly expanded to include locations in Henlow, England to meet the needs of our European customers and to Melbourne Florida, to provide crystals and related products.

Our customers' needs and our vision to keep and grow our customers resulted in a business plan that continues to differentiate us from other distributors or contract electronic manufacturers, even though we are both.

We began the process of remaking ADI into a single source provider by purchasing an existing through-hole technology manufacturer in Oklahoma. This saw the creation of American Manufacturing Services (AMS). We moved AMS into a modernized location and established business processes and management systems to enable us to meet or exceed the rapidly changing requirements of our customers. Shortly after establishing AMS to provide PCB assemblies, cable and harnesses, and full box builds, we added surface mount board assembly at our Randolph NJ facility. We had established a full turnkey business in support of industry needs.

ADI had become materials managers, commodity integrators, and electronics manufacturers. This synergy of multiple business disciplines established ADI early on as the "go-to" shop to achieve single-source procurement for distributed and manufactured electronics. As our customers continued to refine their definition of who and what they are, we further refined our own identity right along with them. We determined with our customers' help that they also wanted a supply logistics solution. Our customers asked for and we delivered products to point-of-use just in time, using call-off and Kanban tools. Our customers also indicated they required safety stocks to address ever-changing delivery requirements of their customers; the need was for us to be agile and able to quickly respond to spare parts needs. ADI has been able to provide those logistics solutions.

Making it Possible
We work for a customer base largely of end users in the aviation, aerospace, and defense sectors, plus a grouping of customers who are medical, industrial, and commercial OEMs. These customers expect their supply chain to build upon the ISO 9001 QMS scheme and embed the sector specific requirements as contained in the International Aerospace Quality Group (IAQG) Aerospace Standards. ADI is unique in that it not only serves industry as an electronics distributor, it also provides added value contract manufacturing services in circuit card assembly and box builds.

Enhanced customer confidence begins with the standardization of the QMS which establishes and defines business processes. ISO 9001 has become the baseline standard by which ADI has developed its QMS. A standardized QMS provides the framework to address critical customer confidence concerns such as: mitigating commercial risks, improved management systems leading to reduced costs, improved efficiency, and increased profitability. Our continual efforts to deliver customer satisfaction has accounted for the improvements necessary to the QMS.

In 2004 ADI became accredited and registered through Lloyd's Registered Quality Assurance to AS9100 at its Randolph, New Jersey headquarters. It further became accredited to AS9120 at both its New Jersey headquarters and its facilities in Henlow, UK. The ADI family of businesses continued to expand its QMS reach by registering its Okemah, Oklahoma EMS facility, American Manufacturing Services, to AS9100 in September of 2009.

"The advanced quality management systems in place at all three business locations not only satisfy the aerospace industry sector, but also directly benefit our entire non-aerospace customer base by providing world class performance through out our organization," says VP of Operations, Robert Urgo.

We have also developed a model of incorporating "AQMS" and "Lean" to achieve compatible values that, once again, differentiate ADI from other electronics distributors and electronics manufacturing services providers. "While a robust AQMS is the foundation for delivering customer confidence and satisfaction, it is only the starting point. Lean business practices must be a part of the overall business plan to sustain value to the customer," adds Quality Manager Elizabeth Wizner. ADI utilizes lean tools for workplace standardization and organization; process scrutiny and improvement through value stream mapping; mistake-proofing; and focused Kaizen events. It is the application of lean thinking that serves as the check and balance for the AQMS. Businesses can no longer rely on a baseline QMS alone to deliver sustainable value to its customers. ADI has long recognized that fact and as a result began a journey in 1987 with its first registration to ISO 9002.

Greater than the Parts
When you combine the strengths of AS9120 Distribution and AS9100 Manufacturing the sum total is greater than its parts. A customer had recently outsourced a printed circuit assembly to ADI. As part of that outsourcing, we were provided customer-furnished stock of components to be exhausted before procurement of new components. A typical contract manufacturer would simply have used the customer furnished material. As part of our operation, all customer-furnished materials are inspected and validated. It was found that one of the components provided was actually a counterfeit that had found its way into the supply chain. This fact was further corroborated with an independent lab and the customer was notified. Although they were not happy with the fact they had procured and used counterfeit components they were nevertheless quite pleased with the service we offered. The customer was able to take appropriate actions to mitigate the further use of counterfeit components in their systems. Our distribution experience was directly responsible for the detection of this counterfeit before it could be used in any manufacturing activities.

On another occasion a customer was engaged in a project that comprised the management of some 40 suppliers along with the added value work required at their own facility. ADI was asked to provide a logistics solution to managing the supply chain and provide kits for the in-house added-value portions. Since we are a distributor, the logistic and supply chain management solution was certainly not difficult. To our customer's delight, we not only took over the supply chain management, but were able to perform the added value that our customer had been performing at a cost savings. The net results were our customer realized a savings by issuing a single P.O. to us for a high level sub-assembly. They no longer needed to manage 40 suppliers and the P.O.'s for each and the high costs of internal processing. This customer was able to win a larger market share by reducing cost, increasing their profit margin while also obtaining a faster to market turn time.

We also had a customer who was experiencing a large number of line stoppages as a direct result of part shortages. We were asked to devise a plan to eliminate these part shortages and line stoppages. Rather than a customer-managed two-bin approach, we suggested we would install a direct line-feed Kanban-based system to control piece parts. The effect of this decision was to place inventory under ADI's control at the point of use. We used diagnostic tools to determine rates of use and replenishment levels. Inventory was billed to the customer only when used, not at the time of delivery. We were able to eliminate line stoppages complete for the past six years, reduce our customer cost of inventory, and address issues for the customer that had not been originally designed or considered.

Keeping Focused
As industry morphs at the speed of light into the global economy suppliers must be agile and flexible while delivering sustainable value. "Providing world class customer satisfaction has always been the cornerstone of success for ADI," states David Beck, President, "but how to deliver on increasingly demanding customer expectation is our greatest challenge." ADI continues to build on that with AQMS registration to AS9100 and AS9120 while incorporating lean thinking. It is through these integrated efforts that ADI positions itself in a global economy to deliver sustained value and world-class customer confidence to a wide array of end users and OEMs internationally.

Contact: ADI|American Distributors, Inc., 2 Emery Avenue, Randolph, NJ 07869 800-877-0510 fax: 973-328-2302 E-mail: Web:

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