A newly developed calculator enables electronics customers—as well as suppliers and manufacturers—to measure, in hard numbers, the savings potential they can derive from using distribution.

The Supply Chain Savings Calculator was developed in collaboration between the National Electronic Distributors Assn. and Texas A & M University. Research done at the university determined that a broad line semiconductor supplier, for example, could potentially save 25 percent to 64 percent of a product's total cost by using an authorized distributor.

"The tool is a valuable resource for any organization looking to quantify its existing logistics, inventory and sales expenses, versus the cost of using a distributor," said Robin Gray, Jr., executive vice president of NEDA. "It helps identify when it would be more cost effective to use distributors, or to buy and sell products direct from the manufacturer."

Dr. Barry Lawrence, director of the Supply Chain Systems Laboratory and associate professor of the industrial distribution program at Texas A&M, explained that the calculator quantifies cost savings to the manufacturer based on a number of variables associated in dealing with a large number of customers, as opposed to a limited number of distributors.

"Our research debunks the myth that using a distributor always adds costs to the supply chain," he summarized. "In our research findings, the typical manufacturer saved between 25 to 64 percent of their overall product costs by using a distributor to sell its products."

Information on the NEDA Supply Chain Savings Calculator is available at www.nedassoc.org