The past year tested supply chain resilience, particularly for those battling it out in the electronics shortage market. For electronics manufacturers, finding the right distribution partner can help.
Navigating the electronics shortage market is far from the only supply chain challenge for electronics manufacturers. In the best of times, the supply chain is subject to a myriad of risks including issues related to supply/demand imbalances, logistics, trade, and demand.
With increased complexity comes greater risk and more need for resilience. This reality is hitting the headlines even in mainstream publications. Last week, the current U.S. presidential administration issued an executive order on supply chains, underscoring the critical nature of these activities.
In speaking about shortfalls in semiconductor supply, President Biden said, “We need to make sure these supply chains are secure and reliable. I’m directing senior officials in my administration to work with industrial leaders to identify solutions to this semiconductor shortfall and work very hard with the House and Senate.”
Collaboration is key. Having the right sourcing partner can help electronics manufacturers navigate the electronics shortage market, and address potential risks to increase responsiveness and agility.
Staying ahead in the electronics shortage market
Recovery and resilience
Supply chain resilience essentially refers to an organization’s ability to quickly recognize, react, and recover from a disruption. Unfortunately, many organizations find it difficult to tackle their risk profile. Since building resiliency can be costly and time consuming, the effort is tempting to put off. For example, 94% of supply chain executives report they care about supply chain resilience and yet only two thirds say they fund it appropriately, according to a recent Jabil report. More than half cite quick recovery and multi-sourcing as key supply chain resiliency goals.
Although contingency plans are core to navigating challenges, it’s also important to team up with the right supply chain partners to achieve the highest levels of responsiveness. The right distribution partner can spot upcoming and emerging risks more quickly, and offer opportunities to manage the overall risk profile of its customers as well.
Capture deeper visibility
Supply chain visibility is a critical component to resilience. “Risk management principles should be applied, at a minimum, to tiers one and two in company supply chains,” according to a recent article in the Harvard Business Review (HBR). “Beyond tier two, the risks should at least be understood.”
Especially for components that present a high revenue impact and have a volatile risk profile, there are several measures that OEMs should have in place to ensure resiliency. HBR puts these on the top of the list:
- Monitor suppliers 24/7.
- Buy insurance to cover profits lost from a disruptive event at critical suppliers’ sites.
- Work with sole-source suppliers to develop an alternate source.
- Know where suppliers build and store your parts and raw materials.
- Ask sole-source suppliers to build and store parts at alternate sites.
- Identify and monitor the sub-tier suppliers that your Tier 1 suppliers use for critical parts or materials.
- Ensure Tier 1 suppliers have comprehensive risk management programs (i.e., they map and monitor their suppliers, adding alternate sources for their highest-risk suppliers).
For many manufacturers, the above is a tall order, but a strong distribution partner has the hand on the pulse of its supply base, and access to alternatives. The right trusted partner can help by:
- Enhancing the supply chain with diverse and flexible solutions to ensure on-time delivery.
- Expanding market visibility to let OEMs plan inventory and order management.
- Extend customer purchasing power.
- Maintain a deep and broad reach into the global market, to achieve viability into inventory information.
- Building safe inventory zones to address lead time issues.
- Maintaining vendor selection processes and quality inspections to safeguard against product issues.
To summarize: By partnering with the right supply chain partner, OEMs can take a more proactive stance to increase supply chain resilience.