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Mixed signals create a complex forecast for the electronic shortage market. Take shelter from the instability by shoring up your best practices.

The electronic market is riddled with mixed signals about how long the current shortage is going to last. From OCM to distributor to EMS providers, different views are floating out there about the electronic shortage market. Cutting through all that white noise shouldn’t take time away from your daily responsibilities, so let’s get right to it. We’ve narrowed down three best practices for procurement and supply chain professionals navigating this unprecedented, complex market.

Three solutions to address the electronic shortage market head-on.

1. Stay timely

In the current electronic shortage market changes unfold quickly. Monitoring the market requires real-time information. It’s not surprising that the start of the global pandemic in 2020 sparked major supply chain issues, but since then a series of unexpected events conspired to worsen the supply forecast. The unpredictable nature of events tripping up the global supply chain these days means that you need market insight that is timely and relevant to anchor you. When instability threatens, having the most current knowledge about market conditions puts you one step ahead of the competition.

2. Think proactively

This is a lesson from 2020 that automotive manufacturers are still painfully living out well into 2021. In the automotive industry the performance differences are clear for those that moved proactively when facing the shortages in 2020. Those that did stock up on 6 to 9 months of strategic inventory are weathering the current storms. Those that did not seize that opportunity are starting to make a recovery, but outcomes remain uncertain.

This is in large part because of the long lead time for chip manufacturing. It takes years to build capacity, and pressure was building prior to 2020. With more investment in expanding capacity, supply will grow, but demand is growing as well from the desire for upgrades and increased connectivity.  In the long term, semiconductor manufacturers will continue to grow to meet demand, but that doesn’t help when lines are currently down. Proactively addressing the electronic shortage market will require creativity and a willingness to rethink historical processes, such as the just-in-time supply structure, and focusing instead on a long-term strategic supply model.

3. Source globally

The world’s supply chains are complex and deeply interwoven. This is both an asset to the electronic supply chain and a challenge. Because of the intermeshed networks of supply, even when the reasons underlying the current shortages resolve, we are likely to continue to face ongoing, unexpected impacts.

While the Ever Given grounding in the Suez Canal was just a blip in the larger picture of electronic supply chain disruptions, the sheer scope of the global electronics supply chain means that unexpected issues could arise at any time. The upside of all this? Global sourcing means more avenues for supply. Take advantage of a global supply network by establishing a relationship with a trusted supply chain partner who can provide you with the access you need to get your supply chain under control.

In summary, our three recommendations for these uncertain times in the electronic shortage market:

  • Closely monitor market awareness and real-time information to stay above the water.
  • Take a proactive approach in planning during uncertain supply chain forecasts.
  • Think beyond the standard factory-direct lines of procurement.

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