Can your electronics inventory sustain the impact of unexpected events? Here are 3 inventory management strategies to mitigate the threat of shortages

The global scope of original equipment manufacturers (OEMs) in the electronics industry makes them particularly vulnerable to disruption. In an average week, over 100 disruptive events take place — natural disasters, factory fires, mergers and acquisitions, shifting government policies, evolving human health concerns — according to Resilinc. Some will directly impact the global electronics supply chain and, by extension, the electronics inventory of OEMs.

How organizations prepare for and respond to unexpected events can make all the difference between a supply chain that functions and one that falters.

3 ways to safeguard your electronics inventory at a time of global disruption

1. Take a proactive inventory stance 

Today, many companies take a reactive approach to supply chain disruptions, but some advance planning and investment can reduce risk, particularly for those with very complex supply chains.  According to McKinsey, some best practices for being proactive include:

  • Implementing multi-sourcing strategies and diversifying operations.
  • Working closely with suppliers and performing regular audits as a general business practice.
  • Monitoring relevant risks, trends, and events (such as tariffs, business shifts, etc.) on an ongoing basis.
  • Automating basic supply chain activities whenever possible.
  • Implementing supply chain risk management teams and processes.
  • Developing and assessing scenarios with different probabilities for pre-identified risks.

Although proactive inventory management  demands time and resources, it can ensure supply of critical components, bringing benefits such as customer satisfaction and business resilience.

2. Collaborate: Sharing is caring

Leading organizations share business intelligence with supply chain partners. Historically, limited visibility into component availability and cost has been seen as strategic. But when the unexpected occurs, such as the COVID-19 pandemic, sharing knowledge becomes critical to success — and a lack of information flow can hamstring businesses.

The 2020 Trends in Electronics Sourcing report by Dimensional Research found  “over 53% of executive supply chain leaders in global manufacturing companies believe that their product launches have been delayed or canceled.”

By working from the same data and assumptions, partners can help build and implement a sourcing strategy to keep product levels balanced and product moving through the supply chain. Sharing data also supports the shift from a reactive stance to a proactive one. The level and quantity of data shared between an OEM and its partners directly increase the quality of the planning and management that can be done.

3. Keep an eye on the marketplace

As important as having a plan and sharing it with partners is keeping an eye on the larger landscape. Especially as we enter 2021, the unprecedented level of unexpected events has created a reactionary policy climate that sends the market into lockdown globally with little warning.

Unexpected events do not happen all at once but unfold over time — and the impact ripples through the supply chain. Knowing the market before events occur provides a baseline and continued vigilance allows for course corrections as things shift. By monitoring as many external sources as possible, OEMs can get a handle on electronics inventory risks that may be lurking on the horizon and understand the best path forward.

To summarize: Although predicting a specific global event may be impossible, staying alert for upcoming challenges, keeping partners close and informed, and maintaining a wide view of the overall marketplace can position OEMs to gracefully navigate unexpected challenges to their electronics inventory.

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