Matthew Thorpe, Farnell’s Director of Sales for the Northern Europe region, explains how forensic planning and preparation can lay the foundation for a reliable supply in volatile markets.
The electronics industry was concerned about Brexit, but its impact on the supply chain was minimal. The coronavirus pandemic was another story. This sector was hit by: Global shortage of semiconductors. Increased logistics costs due to rising sea container charges (almost 10 times higher). A serious shortage of truck drivers. Significant disruption of marine cargo due to staff illness or isolation. Pressure on suppliers that not only will return to pre-pandemic levels, but that demand for home-based technology systems and home-based entertainment will rise beyond all expectations, rather than being relaxed as regulations begin to be relaxed. Has increased.
External forces beyond the control of manufacturers and suppliers have reduced the capacity of air cargo, but national deliveries have made it difficult to move components due to regional blockades and other restrictions. There was a risk that the semiconductor supplier had an inventory of surplus parts and could not reach the customers who needed it.
Electronic components are experiencing the worst supply problems in any commodity market. Prices are rising across the board, and the industry cannot afford these costs alone and may inevitably pass them on to customers.
While these issues were challenging enough, it was virtually impossible to predict how long the supply chain would be affected by Covid-led constraints. Some observers predict that the problem will continue until 2023, and the semiconductor market will not be able to confirm actual stability until 2024, especially for discrete, power, analog, and microcontroller products. Rebuilding capacity takes time.
So how can the industry protect against future product shortages, rising logistics costs, or potential cargo disruptions? Furnell already believed that semiconductor manufacturers and suppliers needed to build a significant level of resilience in order to face future catastrophic events.
The company tackled many potential supply problems a few years ago by deciding to make a large investment in the breadth and depth of global inventories. Therefore, by the time the pandemic occurred, the company’s warehouse had more components than at any other time in the past. Furnell has also facilitated investment in digital products, strengthened relationships with the world’s largest semiconductor suppliers, and brought new supplier partners across its product range. As post-pandemic demand increased, customers who benefited from Furnell being part of Avnet also had easier access to their products.
One of the lessons learned by Furnell is that through forensic planning and preparation, manufacturers and suppliers are as flexible as possible in responding to major changes in market dynamics. Neither the supply chain nor the market wants to be pulled in this way and by external forces. Furnell found that by acting early and strengthening the supply chain (and all of its partners), we can provide our customers with access to the products they need, even in the most demanding market conditions.
https://electronics-sourcing.com/2022/05/18/how-to-prepare-for-market-disruptions/ How to prepare for market turmoil