Hard Drive Supply Chain Project Management

5 Effective Ways to Save Big on Your Hard Drive Supply Chain

20:08 23 May in Hard Drives

In my last blog post, I talked about the potential effects that the introduction of the new 5 TB and 6 TB drives can have on the open market. The introduction of higher capacity drives into the market does not cause an impact so great that it warrants a dramatic shift in buying strategy. However, there are always a few things that hard drive buyers and supply chain strategists can do in order to save money, secure their supply chain and properly manage product life cycle. I sat down with our Director of Trading Jared Solomon and he offered the following advice:

1. Be “open” to buying from the Open Market.

Some of the world’s top-tier manufacturers have partnered with, utilized and fully accepted the open market. While purchasing new product from authorized distributors almost always makes the most sense when it comes to saving money, don’t discount independent distributors. Because some independent distributors have direct relationships with the hard drive manufacturers, they also can act as disposition partners for new, factory excess product. The result? Competitive offers that provide cost-savings for buyers.

2. Negotiate direct contracts that offer full credit value for failures within the warranty period.

An excellent way to optimize your budget is to secure full credit value for the longest period of time possible. Generally, hard drives depreciate in market value over time. In other words, a specific model of drive will go down in price once it’s been on the market for awhile. This fact works in your favor if you can replace failed drives for their full, or original, credit value. To fully maximize your cost-savings under this system, opt for recertified drives as your replacement drives. Because recertified drives are the lowest cost option, you will “stretch” the value of available credit for replacement drives even further.

3. Qualify multiple manufacturers.

When certifying drives in new products, you can protect your supply chain and potentially save money by specking in drives from different manufacturers. By maintaining this type of part number flexibility, you can avoid hiccups in the supply chain in the event that a manufacturer is unable to supply parts. For example, when extreme flooding put a halt to WD operations in Thailand, manufacturers who could use alternate brands of drives were not as dramatically affected by such a cataclysmic upset to the hard drive market.

4. Take advantage of creative inventory solutions.

Another way to potentially save money is to have your distributor assist you with balance sheet mitigation. Let your distributor hold your inventory for you and arrange for scheduled billing and shipments. That way, you not only lock in pricing, but you also are keeping your inventory off of your books until you need it.

Hard Drive Supply & Demand

5. Flash branded firmware on to generic drives to broaden your supply options.

Another unique way to save money when purchasing hard drives is to take advantage of an independent distributor’s ability to flash firmware onto generic drives. When it comes to older servers, there’s the possibility that the server’s original type of drives will no longer be available from the hard drive OEM. Therefore, when it comes time to replace used or failed drives, hard drive OEMs will require that you purchase a newer — and more expensive — replacement drive.

You can avoid these higher prices by having firmware flashed onto a generic drive. Doing this allows you to get the specific type of drive you originally purchased for your servers, without the cost of having to purchase the latest and greatest drives that are being sold for your system.

Simply summarized, the “going rate” for a hard drive is only a starting point. There are many alternative solutions available to you, and a little creativity goes a long way. Even in legacy markets, looking outside the box will uncover new tactics that lead to lower failure rates, lower cost, and more efficient supply chain management.

Jared Solomon

jared.solomon@horizontechnology.com