{"id":20711,"date":"2022-11-04T11:38:06","date_gmt":"2022-11-04T15:38:06","guid":{"rendered":"https:\/\/a2globalelectronics.com\/?p=20711"},"modified":"2022-11-04T13:08:00","modified_gmt":"2022-11-04T17:08:00","slug":"putting-the-impacts-of-inflation-on-the-global-electronics-supply-chain-into-perspective","status":"publish","type":"post","link":"https:\/\/a2globalelectronics.com\/ja\/global-sourcing\/putting-the-impacts-of-inflation-on-the-global-electronics-supply-chain-into-perspective\/","title":{"rendered":"Putting the Impacts of Inflation on the Global Electronics Supply Chain Into Perspective"},"content":{"rendered":"

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Around the world, prices are rising<\/a> at rates not seen in decades. <\/strong><\/h2>\n

Although economists had predicted a global trend toward stabilization this year, world events have derailed these trends. Between geopolitical conflict and the delays due to lockdowns\u2014particularly in China<\/a>\u2014supply chain shortages have persisted, threatening the health of the global economy.\u00a0But just as supply chain issues have led to increased inflationary rates, these rates are directly correlated<\/a> to further issues in the supply chain. And the global electronics supply chain certainly hasn\u2019t been immune to these pressures.<\/strong><\/p>\n

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Zooming in on inflation<\/b><\/h3>\n

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It is important to note, first, that inflationary rates are not rising at a consistent level <\/span>worldwide<\/span><\/a>. For example, inflation is growing at a <\/span>slower pace in Japan and China<\/span><\/a> in comparison to European countries and those in the Americas. This jagged spike in inflation, compounded with the supply chain issues, has led to a potential crisis <\/span>whereby a third of the global economy<\/span><\/a> could shrink in the next year. <\/span><\/p>\n

How are central banks responding to this? <\/span>By lifting rates<\/span><\/a>. These quickly rising rates can potentially compound the economic stress felt by many.<\/span><\/p>\n

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Global electronics supply chain impacts<\/b><\/h3>\n

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As <\/span>IPC\u2019S June report<\/span><\/a> demonstrated, nine in ten electronic manufacturers are dealing with rising material costs. Similarly, this report elucidates three main economic pressures: geopolitical strains, inflationary pressure, and residual lockdowns. And, though bottlenecks have eased in the last year, supply capacity remains limited. Coupled with the global shortage of transportation workers and drivers, many supply chain issues are here to stay\u2014at least for the time being. This has led to a shortage of available products due to the aforementioned <\/span>limited competition<\/span><\/a>, hence dramatic price increases.\u00a0<\/span><\/p>\n

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How can you prepare?<\/b><\/h3>\n

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The current political and economic situation requires professional resilience at all levels. As we\u2019ve <\/span>discussed in previous articles<\/span><\/a>, this is a time to diversify your strategies as much as possible. With that in mind, here are a few techniques your organization can utilize to navigate the complexities of the current global electronic components supply chain and subsequent inflation issues.\u00a0<\/span><\/p>\n

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Bolster supply chain visibility<\/i><\/b><\/h4>\n

Robust Supply Chain Visibility (SCV) allows organizations to track parts as they travel from supplier to manufacturer to consumer. The <\/span>scope of this tracking<\/span><\/a> is contingent on both the product and the technology used to monitor tracking. Investing in SCV and other supply chain management technologies is important for <\/span>tracking production<\/span><\/a> through various stages. Gaining increased visibility creates a more agile environment while strengthening decision-making and allowing data to play a more central role in operations.<\/span><\/p>\n

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Be flexible with production<\/i><\/b><\/h4>\n

How can your products be <\/span>designed with flexibility<\/span><\/a> at the forefront of their engineering? By implementing <\/span>alternative electronic components<\/span><\/a> in your design, your organization can work to ensure a continuous supply of crucial parts. The necessary factors to examine when considering part alternatives include availability, lead times, lifecycle, risk, and suppliers. Through detailed specification sheets and partnering with distributors specializing in alternative sourcing, you can mitigate the impact of <\/span>unpredictable circumstances<\/span><\/a> in the market.<\/span><\/p>\n

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Maximize your bill of materials<\/i><\/b><\/h4>\n

Because production costs for electronics are not driven by the price of just one part, organizations need to keep their <\/span>bill of materials<\/span><\/a> (BOMs) up to date. Regularly extending these updates across the organization ensures that every division knows the most updated BOM. More than most, the electronics sector requires a <\/span>multi-focused approach<\/span><\/a>. Organizations <\/span>must account <\/span><\/a>for every individual part, along with how each of these parts, or their alternatives, can be sourced in the event of shortages, shutdowns, or other unforeseen cicumstances.<\/span><\/p>\n

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Partner with a distributor that has global access to components<\/i><\/b><\/h4>\n

The importance of <\/span>global sourcing<\/span><\/a> helps organizations <\/span>make use of resources<\/span><\/a>, technologies, and skills that are not as readily available in their own countries. In preparation for inflationary periods, it is integral for your organization to reevaluate its global sourcing strategies at every possible level. <\/span>
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<\/span>One critical method is to examine and evaluate differing global inflation rates and prioritize sources that minimize the effects of inflation on your organization. But perhaps the most essential method is vetting your suppliers. While you may have <\/span>practice with this stateside<\/span><\/a>, do not underestimate the benefits of working with a vendor who is experienced at vetting suppliers in different regions of the world.<\/span><\/p>\n

As we stare down a global rise in costs and inflation, now is the time to think through your electronics supply chain preparations. By following these suggested strategies, your organization will be better equipped to respond to the resulting inflationary period. Increasing resiliency goes beyond simply responding in times of crisis: these are the building blocks to streamlining your organization long after inflation subsides.<\/span><\/p>\n

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Read more:<\/b><\/p>\n