{"id":5319,"date":"2021-05-04T09:30:16","date_gmt":"2021-05-04T13:30:16","guid":{"rendered":"https:\/\/a2globalelectronics.com\/?p=5319"},"modified":"2021-05-04T15:35:19","modified_gmt":"2021-05-04T19:35:19","slug":"responding-to-lifetime-buy-events-how-do-organizational-biases-affect-you","status":"publish","type":"post","link":"https:\/\/a2globalelectronics.com\/ja\/obsolescence-management\/responding-to-lifetime-buy-events-how-do-organizational-biases-affect-you\/","title":{"rendered":"Responding to Lifetime Buy Events: How Do Organizational Biases Affect You?"},"content":{"rendered":"<h5 class=\"wp-block-heading\" id=\"h-market-pressures-force-daily-decisions-with-major-tradeoffs-in-the-world-of-electronic-components-purchasing-these-decisions-are-impacted-by-the-unique-biases-of-the-buyer-lifetime-buy-events-raise-the-stakes-and-bring-biases-into-greater-focus\">Market pressures force daily decisions with major tradeoffs in the world of electronic components purchasing. These decisions are impacted by the unique biases of the buyer. Lifetime buy events raise the stakes and bring biases into greater focus.<\/h5>\n\n\n\n<p>Balanced supply forecasting: the holy grail of procurement. Cost reduction, timely order fulfillment, and satisfied customers all await those who can achieve the proper balance. Planning for supply and demand of electronic parts involves intense market knowledge and strategy.<\/p>\n\n\n\n<p>Through extensive experience, we\u2019ve observed that organizational biases often inform decision-making strategies. Those biases come into sharp relief when lifetime buy decisions are on the table. Knowing and understanding common buyer biases can help you strategize around lifetime buy events.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-the-three-buyer-types-understanding-common-biases\">The three buyer types: understanding common biases<\/h2>\n\n\n\n<p>To simplify the vast field of unique players in procurement, we\u2019ve broken it down to three major categories of buyers that we\u2019ve encountered during lifetime buy events. Each buyer profile we\u2019ve identified has its own strengths \u2014 and ways to improve on the quest to balanced supply chain forecasting.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-buyer-1-don-t-stop-the-line\">Buyer #1: Don\u2019t stop the line<\/h3>\n\n\n\n<p>Often buyers believe that the wrath of management and praise from sales comes primarily from making sure that enough material is on hand to meet production goals. When faced with a lifetime buy event, this buyer will bend strategy towards ensuring enough parts are on hand in the future.<\/p>\n\n\n\n<p>While this strategy is proactive, it does carry risk. Buyer #1 will need help venting excess inventory at some time in the future. Getting a good ROI for excess inventory then becomes critical. While we are currently in a shortage market, swings will occur in the future. Taking time to <a href=\"https:\/\/a2globalelectronics.com\/ja\/excess-inventory\/excess-inventory-the-common-aftermath-of-electronic-component-shortages\/\">consider a plan<\/a> for eliminating excess inventory in the future will mitigate Buyer #1\u2019s risks.\u00a0<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"alignright size-large is-resized\"><a href=\"https:\/\/a2globalelectronics.com\/ja\/high-reliability\/3-reasons-you-need-a-reliable-supply-chain-partner-for-your-high-reliability-parts\/\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/a2globalelectronics.com\/wp-content\/uploads\/2021\/03\/0z6-ijjanl8-1024x576.jpg\" alt=\"\" class=\"wp-image-4947\" width=\"512\" height=\"288\"\/><\/a><figcaption><strong><span style=\"color:#f7941d\" class=\"has-inline-color\"><a href=\"https:\/\/a2globalelectronics.com\/ja\/high-reliability\/3-reasons-you-need-a-reliable-supply-chain-partner-for-your-high-reliability-parts\/\">\u8a73\u7d30\u306f\u3053\u3061\u3089<\/a><\/span><\/strong><\/figcaption><\/figure><\/div>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-buyer-2-inventory-is-not-your-friend\">Buyer #2: Inventory is not your friend<\/h3>\n\n\n\n<p>Keeping inventory to a minimum whenever possible is Buyer #2\u2019s mission. In fact, this buyer\u2019s performance metrics may tie in directly with their ability to turn inventory and keep their company\u2019s working capital moving. This common lifetime buy event strategy creates pressure to fill shortages in the future.<\/p>\n\n\n\n<p>Buyer #2\u2019s strategy will likely need to evolve when faced with <a href=\"https:\/\/a2globalelectronics.com\/ja\/shortage-mitigation\/survive-the-electronics-shortage-help-strengthening-supply-chain-resilience\/\">current market shortages<\/a>. Buyers with a lean inventory approach should keep a close eye on establishing and maintaining the relationships they need for ongoing procurement in a shortage market.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-buyer-3-believing-the-forecast\">Buyer #3: Believing the forecast<\/h3>\n\n\n\n<p>The third buyer walks the tightrope between <a href=\"https:\/\/a2globalelectronics.com\/ja\/obsolescence-management\/the-art-of-electronic-components-supply-forecasting\/\">forecasting<\/a> and reality. Buyer #3 seeks to balance production needs against working capital pressures caused by excess inventory. Inevitably, after a lifetime buy event this buyer will face imbalances between what should have been and what actually was.<\/p>\n\n\n\n<p>Confronting the reality of how a forecast plays out builds knowledge and resiliency \u2014 but it also requires a nimble response. Independent distributors can assist this buyer in balancing inventory to production targets, but it\u2019s worth investing in these relationships up front. Establishing strong connections to ease the forecast\/reality gap is critical.<\/p>\n\n\n\n<p>Pair your strategy with support to succeed with lifetime buy events<\/p>\n\n\n\n<p>When facing a lifetime buy event, it\u2019s helpful to understand the built-in biases that shape decision making. To stay nimble, buyers don\u2019t need to change their style, but rather prepare to adjust course later with the help and support of partnerships with independent distributors.<\/p>\n\n\n\n<p><strong>\u8a73\u7d30\u306f\u3053\u3061\u3089<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><a href=\"https:\/\/a2globalelectronics.com\/ja\/high-reliability\/strategically-sourcing-high-reliability-parts-during-times-of-supply-chain-disruption\/\">Strategically Sourcing High-Reliability Parts During Times of Supply Chain Disruption<\/a><\/li><li><a href=\"https:\/\/a2globalelectronics.com\/ja\/obsolescence-management\/independent-distributors-prove-indispensable-during-end-of-life-market-imbalances\/\">Independent Distributors Prove Indispensable During End-of-Life Market Imbalances<\/a><\/li><li><a href=\"https:\/\/a2globalelectronics.com\/ja\/obsolescence-management\/end-of-life-management-the-reactive-vs-proactive-approach\/\">End-of-Life Management: The Reactive vs. Proactive Approach<\/a><\/li><\/ul>\n\n\n\n<p><\/p>","protected":false},"excerpt":{"rendered":"<p>When facing a lifetime-buy event, it\u2019s helpful to understand the built-in biases that shape decision-making. To stay nimble, know your style and understand how a supportive independent partner can help mitigate risk. <\/p>","protected":false},"author":4,"featured_media":5339,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"off","_et_pb_old_content":"<!-- wp:paragraph -->\n<p>Electronic components supply forecasting is a true balancing act that, when done right, can lead to cost reduction, timely order fulfillment, and satisfied customers. Consider these areas when planning ahead for supply and demand of electronic parts.<\/p>\n<!-- \/wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p><a href=\"https:\/\/a2globalelectronics.com\/services\/global-sourcing\/\">Electronic components supply forecasting<\/a>, when done skillfully, makes sure that the right number of parts are on hand, without saddling the organization with too much expensive inventory.<\/p>\n<!-- \/wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>If incoming purchased goods match the outgoing end product, then that critical balance has been achieved.&nbsp; More art than science, <a href=\"https:\/\/www.michiganstateuniversityonline.com\/resources\/supply-chain\/why-forecasting-is-essential-in-supply-chain-management\/\">forecasting can optimize the supply chain<\/a> in ways that cut costs,&nbsp; increase efficiency, and generally improve business outcomes.&nbsp;&nbsp;&nbsp;<\/p>\n<!-- \/wp:paragraph -->\n\n<!-- wp:heading -->\n<h2 id=\"h-qualitative-or-quantitative-what-s-the-best-method\">Qualitative or quantitative: What\u2019s the best method?&nbsp;<\/h2>\n<!-- \/wp:heading -->\n\n<!-- wp:paragraph -->\n<p>There are two inventory forecasting methods that procurement professionals can leverage to make solid forecasting decisions: quantitative or qualitative. Qualitative forecasting takes its cues from subjective opinions and insights, while quantitative forecasting leverages historical demand data to make an educated guess.&nbsp;<\/p>\n<!-- \/wp:paragraph -->\n\n<!-- wp:heading -->\n<h2 id=\"h-which-is-better\"><strong>Which is better?<\/strong><\/h2>\n<!-- \/wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The answer is both. By using more than one method organizations can gain better insights into what\u2019s going on in their specific supply chain and in the general marketplace. Quantitative forecasting often uses past sales data (and the ability to make a prediction is only as good as the data\u2014so going further back in history is preferable). This method also takes into account factors such as demand trends and seasonality.&nbsp; Qualitative forecasting, meanwhile, relies on educated deductions based on gathering information from both inside and outside of the organization.&nbsp; Whenever possible it\u2019s good to pursue a hybrid model.&nbsp;<\/p>\n<!-- \/wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Further, organizations should do both short and long-term forecasting of electronic components. Short-term methods look at roughly a calendar year and are critical to inventory planning, replenishment, and procurement. The short timeframe is subject to many variables such demand fluctuations and lean-time variations. Long-term demand forecasting, on the other hand, can be used in major strategic and investment decisions, such as new product planning.&nbsp;<\/p>\n<!-- \/wp:paragraph -->\n\n<!-- wp:heading -->\n<h2 id=\"h-electronic-components-supply-forecasting-by-type\">Electronic components supply forecasting by type&nbsp;<\/h2>\n<!-- \/wp:heading -->\n\n<!-- wp:paragraph -->\n<p>There are many types of electronic components supply forecasting that can help organizations improve business planning. Here are a few:&nbsp;<\/p>\n<!-- \/wp:paragraph -->\n\n<!-- wp:list -->\n<ul><li><strong>Supply forecasting: <\/strong>This method looks at the supplier base and tries to gauge what product these suppliers will have and in what quantities.&nbsp;<\/li><li><strong>Demand forecasting:<\/strong> This method analyzes potential customer demand for an end product for some period of time (whether it is a week, a month, or a quarter.) Other considerations: cultural trends, seasonality, and consumer confidence.&nbsp;<\/li><li><strong>Price forecasting:<\/strong> This method puts how supply and demand shifts may affect components prices. It also considers other factors that may impact prices such as potential weather events, economic trends, etc.&nbsp;<\/li><\/ul>\n<!-- \/wp:list -->\n\n<!-- wp:embed {\"url\":\"https:\/\/youtu.be\/vy0b7jwWjAU\",\"type\":\"video\",\"providerNameSlug\":\"youtube\",\"responsive\":true,\"className\":\"wp-embed-aspect-16-9 wp-has-aspect-ratio\"} -->\n<figure class=\"wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\nhttps:\/\/youtu.be\/vy0b7jwWjAU\n<\/div><figcaption>Contact A2 Global for a Lifecycle Assessment on your current inventory. <\/figcaption><\/figure>\n<!-- \/wp:embed -->\n\n<!-- wp:heading -->\n<h2 id=\"h-the-why-s-of-a-solid-forecast\">The why\u2019s of a solid forecast<\/h2>\n<!-- \/wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Forecasting is an essential part of a robust supply chain plan. It touches every aspect of the organization, including budgeting, financial planning, sales and marketing plans, raw material planning, production planning, and risk assessment and\u202fmitigation. It can help businesses succeed in a variety of ways:&nbsp;<\/p>\n<!-- \/wp:paragraph -->\n\n<!-- wp:list {\"ordered\":true,\"type\":\"1\"} -->\n<ol type=\"1\"><li><strong>Capacity planning:&nbsp; <\/strong>Using data about current inventory levels, availability, and expected orders, forecasting can be used to effectively schedule production, improved capacity utilization, and knowledgeable allocation of resources.<\/li><li><strong>Supplier and partner relations: <\/strong>A well-informed allows the organization to set expectations with suppliers and distributor partners. It also may give purchasing manager a better negotiating position.&nbsp;<\/li><li><strong>Inventory optimization: <\/strong>Optimization of inventory leads to reduction of products being over- or understocked.&nbsp;<\/li><li><strong>Budgeting:<\/strong> By having a rolling forecast (created through forecasting) to fall back on, you can correct early and often and avoid the need for big course corrections.&nbsp;<\/li><li><strong>Risk assessment and mitigation: <\/strong>A solid forecast gets an organization out in front of potential problems by identifying and measuring the likelihood of potential risks.&nbsp;<\/li><li><strong>Component life cycle monitoring:<\/strong> Every component has a measurable lifecycle and good forecasting allows organizations to be ready when a part reaches its natural conclusion of availability.&nbsp;<\/li><\/ol>\n<!-- \/wp:list -->\n\n<!-- wp:paragraph -->\n<p><strong>To summarize: <\/strong>&nbsp;Electronic components supply forecasting done well delivers a number of business benefits. By choosing the right method, OEMs can apply gathered wisdom to make better business decisions throughout the entire lifecycle of the products it makes and purchases.<\/p>\n<!-- \/wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p><strong>Read more<\/strong><\/p>\n<!-- \/wp:paragraph -->\n\n<!-- wp:list -->\n<ul><li><a href=\"https:\/\/a2globalelectronics.com\/high-reliability\/strategically-sourcing-high-reliability-parts-during-times-of-supply-chain-disruption\/\">Strategically Sourcing High-Reliability Parts During Times of Supply Chain Disruption<\/a><\/li><li><a href=\"https:\/\/a2globalelectronics.com\/obsolescence-management\/independent-distributors-prove-indispensable-during-end-of-life-market-imbalances\/\">Independent Distributors Prove Indispensable During End-of-Life Market Imbalances<\/a><\/li><li><a href=\"https:\/\/a2globalelectronics.com\/shortage-mitigation\/survive-the-electronics-shortage-help-strengthening-supply-chain-resilience\/\">To Survive In The Electronics Shortage Market, Get Help Strengthening Supply Chain Resilience<\/a><\/li><\/ul>\n<!-- \/wp:list -->\n\n<!-- wp:paragraph -->\n<p><\/p>\n<!-- \/wp:paragraph -->","_et_gb_content_width":"","content-type":"","footnotes":""},"categories":[16],"tags":[64,104,134,169,167,183,101,168,51,187],"class_list":["post-5319","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-obsolescence-management","tag-a2-global","tag-electronic-components","tag-electronics-inventory","tag-end-of-life","tag-eol","tag-independent-distributors","tag-inventory-management","tag-ltb","tag-obsolescence-management","tag-supply-forecasting"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.3 (Yoast SEO v27.4) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Responding to Lifetime Buy Events: How Do Organizational Biases Affect You? - A2 Global Electronics + Solutions<\/title>\n<meta name=\"description\" content=\"When facing a lifetime-buy event, it\u2019s helpful to understand the built-in biases that shape decision-making. 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